EXHIBIT 10.38
KEY EMPLOYEE EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") dated this 26th day of
September, 1997 (the "Effective Date") by and between Federal Bronze Alloys
Inc., a Delaware corporation (the "Company") which, is a wholly-owned subsidiary
of Metals USA, Inc., a Delaware corporation ("Metals"), and Xxxx Xxxxxxx
("Employee").
RECITALS
A. As of the Effective Date, the Company is engaged primarily in the
business of providing metals processing, metals fabricating, and/or specialty
metals services; and
B. Employee was previously an employee of Federal Bronze Products, Inc.
("FBP") and is now employed by the Company in a confidential relationship
wherein Employee, in the course of Employee's employment with the Company, has
and will continue to become familiar with and aware of information as to the
Company's and Metals' customers, specific manner of doing business, including
the processes, techniques and trade secrets utilized by the Company and Metals,
and future plans with respect thereto, all of which has been and will be
established and maintained at great expense to the Company and Metals; this
information is a trade secret and constitutes the valuable good will of the
Company and Metals; and
C. The parties desire to agree to the various matters described herein and
to memorialize those agreements herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, it is hereby agreed as follows:
AGREEMENTS
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as President. As such, Employee
shall have responsibilities, duties and authority reasonably and customarily
accorded to and expected of such position and will report directly to the
Chairman of the Company or such other party as is designated from time to time
by the Board of Directors of the Company (the "Board"). Employee hereby accepts
this employment upon the terms and conditions herein contained and, subject to
paragraph 3 hereof, agrees to devote Employee's full time, attention and efforts
to promote and further the business of the Company.
-1-
(b) Employee shall faithfully adhere to, execute and fulfill all policies
established by the Company, as such policies may be changed from time to time by
the Company.
2. COMPENSATION. For all services rendered by Employee, the Company shall
compensate Employee as follows:
(a) BASE SALARY. The base salary payable to Employee shall be $150,000 per
year, payable on a regular basis in accordance with the Company's standard
payroll procedures. On at least an annual basis, the Company will review
Employee's performance and may make increases to such base salary if, in its
discretion, any such increase is warranted.
(b) EMPLOYEE PERQUISITES, BENEFITS AND OTHER COMPENSATION. Employee shall
be entitled to receive additional benefits and compensation from the Company in
such form and to such extent as specified below:
(i) Admittance for participation for Employee and Employee's
dependent family members under health, hospitalization, disability,
dental, life and other insurance plans that the Company may have in effect
from time to time, with benefits provided to Employee under this clause
(i) to be at least equal to such benefits provided to Company employees
generally; provided, however, that in no event shall the benefits
described hereunder be reduced below the level of benefits presently
provided to Employee and Employee's dependent family members by the
Company.
(ii) Reimbursement for all business travel and other out-of-pocket
expenses reasonably incurred by Employee in the performance of Employee's
services pursuant to this Agreement. All reimbursable expenses shall be
appropriately documented in reasonable detail by Employee upon submission
of any request for reimbursement, and in a format and manner consistent
with the Company's expense reporting policy.
(iii) The Company and Metals shall provide Employee with other
employee perquisites as may be available to or deemed appropriate for
Employee by the Board or Metals, and participation in all other
Company-wide employee benefits as may be made available from time to time,
including bonus and stock option plans by Company or Metals, in their sole
discretion.
3. NON-COMPETITION AGREEMENT.
(a) Employee shall not, during the term of Employee's employment
hereunder, be engaged in any other business activity pursued for gain, profit or
other pecuniary advantage if such activity interferes with Employee's duties and
responsibilities hereunder. The foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or manner as
will neither require Employee's services in the operation or affairs of the
companies or enterprises in which such investments are made nor violate the
terms of this paragraph 3. In addition, Employee shall not, during the period of
Employee's employment by or with the Company, and for a period of one (1) year
immediately following the termination of Employee's employment under this
Agreement, directly or indirectly, for Employee or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
-2-
(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales
representative, in any business in direct competition with the Company or
Metals, within 200 miles of where FBP is located, conducts business, has
sales representatives or any area serviced by the Company (the
"Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of the Company in a managerial capacity for the
purpose or with the intent of enticing such employee away from or out of
the employ of the Company;
(iii) call upon any person or entity which is, at that time, or
which has been, within one (1) year prior to that time, a customer of the
Company within the Territory for the purpose of soliciting or selling
products or services in direct competition with the Company within the
Territory; or
(iv) call upon any prospective acquisition candidate, on Employee's
own behalf or on behalf of any competitor, which candidate was, to
Employee's actual knowledge after due inquiry, either called upon by the
Company or for which the Company made an acquisition analysis, for the
purpose of acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Employee from acquiring as an investment not more than one percent (1%)
of the capital stock of a competing business, whose stock is traded on a
national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to the Company
as a result of a breach of the foregoing covenant, and because of the immediate
and irreparable damage that could be caused to the Company for which they would
have no other adequate remedy, Employee agrees that the foregoing covenant may
be enforced by the Company in the event of breach by Employee, by injunctions
and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in this
paragraph 3 impose a reasonable restraint on Employee in light of the activities
and business of the Company on the date of the execution of this Agreement and
the current plans of the Company. It is further agreed by the parties hereto
that, in the event that Employee shall cease to be employed hereunder, and shall
enter into a business or pursue other activities not in competition with the
Company, or similar activities or business in locations the operation of which,
under such circumstances, does not violate clause (a) of this paragraph 3, and
in any event such new business, activities or location are not in violation of
this paragraph 3 or of Employee's obligations under this paragraph 3, if any,
Employee shall not be chargeable with a violation of this paragraph 3 if the
Company shall thereafter enter the same, similar or a competitive (i) business,
(ii) course of activities or (iii) location, as applicable.
(c) The covenants in this paragraph 3 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall thereby be reformed.
-3-
(d) All of the covenants in this paragraph 3 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of such covenants. It is specifically
agreed that the period of one (1) year following termination of employment
stated at the beginning of this paragraph 3, during which the agreements and
covenants of Employee made in this paragraph 3 shall be effective, shall be
computed by excluding from such computation any time during which Employee is in
violation of any provision of this paragraph 3.
4. PLACE OF PERFORMANCE
(a) Employee understands that Employee may be requested by the Board to
relocate from Employee's present residence to another geographic location in
order to more efficiently carry out Employee's duties and responsibilities under
this Agreement or as part of a promotion or other increase in duties and
responsibilities. In such event, if Employee agrees to relocate, the Company
will pay all relocation costs to move Employee, Employee's immediate family and
their personal property and effects. Such costs may include, by way of example,
but are not limited to, pre-move visits to search for a new residence,
investigate schools or for other purposes; temporary lodging and living costs
prior to moving into a new permanent residence; duplicate home carrying costs;
all closing costs on the sale of Employee's present residence and on the
purchase of a comparable residence in the new location; and added income taxes
that Employee may incur if any relocation costs are not deductible for tax
purposes. The general intent of the foregoing is that Employee shall not
personally bear any out-of-pocket cost as a result of the relocation, with an
understanding that Employee will use Employee's best efforts to incur only those
costs which are reasonable and necessary to effect a smooth, efficient and
orderly relocation with minimal disruption to the business affairs of the
Company and the personal life of Employee and Employee's family.
-4-
(b) Notwithstanding the above, if Employee is requested by the Board to
relocate and Employee refuses, such refusal shall not constitute "cause" for
termination of this Agreement under the terms of paragraph 5(a)(iii).
5. TERM; TERMINATION; RIGHTS ON TERMINATION.
(a) The term of this Agreement shall begin on the Effective Date and
continue for five (5) years (the "Term"), unless terminated sooner as herein
provided, and shall continue thereafter on a year-to-year basis on the same
terms and conditions contained herein in effect as of the time of renewal. This
Agreement and Employee's employment may be terminated in any one of the
following ways:
(i) DEATH. The death of Employee shall immediately terminate this
Agreement with no severance compensation due to Employee's estate.
(ii) DISABILITY. If, as a result of incapacity due to physical or
mental illness or injury, Employee shall have been absent from full-time
duties hereunder for four (4) consecutive months, then thirty (30) days
after receiving written notice (which notice may occur before or after the
end of such four (4) month period, but which shall not be effective
earlier than the last day of such four (4) month period), the Company may
terminate Employee's employment hereunder provided Employee is unable to
resume full-time duties with or without reasonable accommodation at the
conclusion of such notice period. PROVIDED, HOWEVER, IF COMPANY'S
THEN-EXISTING DISABILITY (SHORT/LONG TERM) PROGRAM PROVIDES MORE BENEFITS,
THEN COMPANY'S DISABILITY PROGRAM SHALL CONTROL. Also, Employee may
terminate Employee's employment hereunder if Employee's health should
become impaired to an extent that makes the continued performance of
Employee's duties hereunder hazardous to Employee's physical or mental
health or life, provided that Employee shall have furnished the Company
with a written statement from a qualified doctor to such effect and
provided, further, that, at the Company's request made within thirty (30)
days of the date of such written statement, Employee shall submit to an
examination by a doctor selected by the Company who is reasonably
acceptable to Employee or Employee's doctor. In the event this Agreement
is terminated as a result of Employee's disability, Employee shall receive
from the Company, in a lump-sum payment due within ten (10) days of the
effective date of termination, the base salary at the rate then in effect
for whatever time period is remaining under the term of this Agreement or
for one (1) year, whichever amount is greater; provided, however, that any
such payments shall be reduced by the amount of any disability insurance
payments payable to the Employee as a result of such disability.
(iii) GOOD CAUSE. The Company may terminate the Agreement
immediately for good cause, which shall be: (1) Employee's willful,
material and irreparable breach of this Agreement; (2) Employee's gross
negligence in the performance or intentional nonperformance of any of
Employee's material duties and responsibilities hereunder; (3) Employee's
willful dishonesty, fraud or misconduct with respect to the business or
-5-
affairs of the Company which materially and adversely affects the
operations or reputation of the Company; (4) Employee's conviction of a
felony crime; or (5) Employee's confirmed positive illegal drug test
result (subject to Company's drug program, if applicable). In the event of
a termination for good cause, Employee shall have no right to any
severance compensation.
(iv) WITHOUT CAUSE. At any time after the commencement of
employment, the Company or Employee may, without cause, terminate this
Agreement and Employee's employment, effective thirty (30) days after
written notice is provided to the other. Should Employee be terminated by
the Company without cause, Employee shall receive from the Company, in a
lump-sum payment due on the effective date of termination, at the base
salary at the rate then in effect for whatever time period is remaining
under the Term or one (1) year, whichever is greater, and the
noncompetition provisions of paragraph 3 hereof shall not apply. If
Employee resigns or otherwise terminates Employee's employment without
cause, the provisions of paragraph 3 hereof shall apply, except that
Employee shall receive no severance compensation.
(b) EFFECT OF TERMINATION. Upon termination of this Agreement for any
reason provided above, Employee shall be entitled to receive all compensation
earned and all benefits and reimbursements due through the effective date of
termination. Additional compensation subsequent to termination, if any, will be
due and payable to Employee only to the extent and in the manner expressly
provided herein. All other rights and obligations of the Company and Employee
under this Agreement shall cease as of the effective date of termination, except
that the Company's obligations under paragraph 9 herein and Employee's
obligations under paragraphs 3, 6, 7, 8 and 10 herein shall survive such
termination in accordance with their terms unless otherwise provided herein.
(c) MATERIAL BREACH BY COMPANY. If termination of Employee's employment
arises out of the Company's failure to pay Employee on a timely basis the
amounts to which Employee is entitled under this Agreement or as a result of any
other material breach of this Agreement by the Company, as determined by a court
of competent jurisdiction or pursuant to the provisions of paragraph 15 below,
the Company shall pay, in a lump sum payment, as liquidated damages, the base
salary at the rate then in effect for whatever time period is remaining under
the Term or one (1) year, whichever is greater and the provisions of paragraph 3
shall not apply.
6. RETURN OF COMPANY PROPERTY. All records, designs, patents, business
plans, financial statements, manuals, memoranda, lists and other property
delivered to or compiled by Employee by or on behalf of the Company, Metals or
their representatives, vendors or customers which pertain to the business of the
Company or Metals shall be and remain the property of the Company or Metals, as
the case may be, and be subject at all times to their discretion and control.
Likewise, all correspondence, reports, records, charts, advertising materials
and other similar data pertaining to the business, activities or future plans of
the Company or Metals which is collected by Employee shall be delivered promptly
to the Company without request by it upon termination of Employee's employment.
-6-
7. INVENTIONS. Employee shall disclose promptly to the Company any and all
significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are conceived or made by Employee,
solely or jointly with another, during the period of employment or within one
(1) year thereafter, and which are directly related to the business or
activities of the Company and which Employee conceives as a result of Employee's
employment by the Company. Employee hereby assigns and agrees to assign all
Employee's interests therein to the Company or its nominee. Whenever requested
to do so by the Company, Employee shall execute any and all applications,
assignments or other instruments that the Company shall deem necessary to apply
for and obtain Letters Patent of the United States or any foreign country or to
otherwise protect the Company's interest therein.
8. TRADE SECRETS. Employee agrees that Employee will not, during or after
the Term of this Agreement with the Company, disclose the specific terms of the
Company's relationships or agreements with their respective significant vendors
or customers or any other significant and material trade secret of the Company
whether in existence or proposed, to any person, firm, partnership, corporation
or business for any reason or purpose whatsoever.
9. INDEMNIFICATION. In the event Employee is made a party to any
threatened, pending or contemplated action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
or Metals against Employee), by reason of the fact that Employee is or was
performing services under this Agreement, then the Company shall advance and
indemnify Employee against all expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement, as actually and reasonably incurred by
Employee in connection therewith. In the event that both Employee and the
Company are made a party to the same third party action, complaint, suit or
proceeding, the Company agrees to engage counsel, and Employee agrees to use the
same counsel, provided that if counsel selected by the Company shall have a
conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and the Company shall pay all reasonable
attorneys' fees of such separate counsel. The Company shall not be required to
pay the fees of more than one law firm except as described in the preceding
sentence, and shall not be required to pay the fees of more than two law firms
under any circumstances. Further, while Employee is expected at all times to use
Employee's best efforts to faithfully discharge Employee's duties under this
Agreement, Employee cannot be held liable to the Company or Metals for errors or
omissions made in good faith where Employee has not exhibited gross, willful and
wanton negligence and misconduct or performed criminal and fraudulent acts which
materially damage the business of the Company or Metals.
-7-
10. NO PRIOR AGREEMENTS. Employee hereby represents and warrants to the
Company that the execution of this Agreement by Employee and Employee's
employment by the Company and the performance of Employee's duties hereunder
will not violate or be a breach of any agreement with a former employer, client
or any other person or entity. Further, Employee agrees to indemnify the Company
for any claim, including, but not limited to, attorneys' fees and expenses of
investigation, by any such third party that such third party may now have or may
hereafter come to have against the Company based upon or arising out of any
non-competition agreement, invention or secrecy agreement between Employee and
such third party which was in existence as of the date of this Agreement.
11. ASSIGNMENT; BINDING EFFECT. Employee understands that Employee has
been selected for employment by the Company on the basis of Employee's personal
qualifications, experience and skills. Employee agrees, therefore, that Employee
cannot assign all or any portion of Employee's performance under this Agreement.
Subject to the preceding two (2) sentences, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties hereto and their
respective heirs, legal representatives, successors and assigns.
12. COMPLETE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto relating to the subject matter hereof and supersedes any
other employment agreements or understandings, written or oral, between the
Company and Employee. This Agreement is not a promise of future employment.
Employee has no oral representations, understanding or agreements with the
Company or any of its officers, directors or representatives covering the same
subject matter as this Agreement. This written Agreement is the final, complete
and exclusive statement and expression of the agreement between the Company and
Employee and of all the terms of this Agreement, and it cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous oral or
written agreement. This written Agreement may not be later modified except by a
further writing signed by a duly authorized officer of the Company and Employee,
and no term of this Agreement may be waived except by writing signed by the
party waiving the benefit of such term.
-8-
13. NOTICE. Whenever any notice is required hereunder, it shall be given
in writing addressed as follows:
To The Company: Federal Bronze Alloys Inc.
c/o Metals USA, Inc.
Attn: President
Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telephone: 713/000-0000
Fax: 713/000-0000
with a copy to: Metals USA, Inc.
Attn: Xxxx Xxxxxxx, General Counsel
Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telephone: 713/000-0000
Fax: 713/000-0000
To Employee: Xxxx Xxxxxxx
00 Xxxxxxx Xxxxx Xxxx
Xxxxxx, Xxx Xxxxxx
Notice shall be deemed given and effective on the earlier of three (3)
days after the deposit in the U.S. mail of a writing addressed as above and sent
first class mail, certified, return receipt requested, or when actually received
by means of hand delivery, delivery by Federal Express or other courier service,
or by facsimile transmission. Either party may change the address for notice by
notifying the other party of such change in accordance with this paragraph 13.
14. SEVERABILITY; HEADINGS. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in any way to describe, interpret, define or limit the extent or intent of the
Agreement or of any part hereof.
15. ARBITRATION. With the exception of paragraphs 3 and 8, any unresolved
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration, conducted before a panel of three (3)
arbitrators in New Jersey, in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association
("AAA") then in effect, provided that Employee shall comply with the Company's
grievance procedures in an effort to resolve such dispute or controversy before
resorting to arbitration, and provided further that the parties may agree to use
arbitrators other than those provided by the AAA. The arbitrators shall not have
the authority to add to, detract from, or modify any provision hereof not to
award punitive damages to any injured party. The arbitrators shall have the
authority to order back-pay, severance compensation, vesting of options (or cash
compensation in lieu of vesting of options), reimbursement of costs, including
those incurred to enforce this Agreement, and interest thereon in the event the
arbitrators determine that Employee was terminated without disability or good
cause, as defined in paragraph 5(a)(ii) and 5(a)(iii), respectively, or that the
Company has otherwise materially breached this Agreement. A decision by a
majority of the arbitration panel shall be final and binding. Judgment may be
entered on the arbitrator's award in any court having jurisdiction. The direct
expense of any arbitration proceeding shall be borne by the Company.
-9-
16. GOVERNING LAW. This Agreement shall in all respects be construed
according to the laws of the State of New Jersey.
17. COUNTERPARTS. This Agreement may be executed simultaneously in two (2)
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMPANY:
FEDERAL BRONZE ALLOYS INC.
By:
Name:
Title:
EMPLOYEE:
Xxxx Xxxxxxx
-10-
