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Exhibit 10.24
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made as of this 15th day
of October, 1998, by and between XXXXXXXXX STEEL, INC., a California corporation
(the "Company"), XXXXXX STEEL COMPANY, a Delaware Corporation (the "Parent")
(solely as to Sections 5 and 25), and XXX X. XXXXXX, an individual
("Executive").
RECITALS
Company desires to employ Executive, and Executive desires to be
employed by Company, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations, and warranties contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Definitions. As used herein:
(a) "Parent Confidential Information" shall mean confidential,
proprietary information or trade secrets of Parent and its
subsidiaries, whether now existing, or acquired, developed, or made
available anytime in the future to or by Parent or its subsidiaries,
including, without limitation, the following: (1) customer and vendor
lists and related information as compiled by Parent and its
subsidiaries, including name, address, contact persons, pricing, sale
and contract terms and conditions, and contract expirations; (2)
Parent's and its subsidiaries' internal practices and procedures; (3)
Parent's and its subsidiaries' financial condition and financial
results of operation; (4) information relating to Parent's and its
subsidiaries' strategic planning, sales, financing, bonding and
insurance, purchasing, marketing, promotion, distribution, and selling
activities; (5) all information that Executive has a reasonable basis
to consider confidential or that is treated by Parent or its
subsidiaries as confidential; and (6) any and all information having
independent economic value to Parent or its subsidiaries that is not
generally known to, and not readily ascertainable by proper means by,
persons who can obtain economic value from its disclosure or use.
Executive acknowledges that such information is Parent Confidential
Information whether disclosed to or learned by Executive or originated
by Executive during his employment by Company or any of its
subsidiaries. In the event that information is not clearly and
obviously publicly available, the information shall be presumed to be
confidential.
(b) "Termination" shall mean termination of Executive's
employment with Company pursuant to Sections 15 through 19 hereof.
2. Term of Agreement. This Agreement will commence as of October 15,
1998 and shall terminate five (5) years from such date, unless earlier
terminated in accordance with, and subject to, the other provisions hereof (the
"Term"). The parties may extend the Term for additional one-year terms by mutual
written agreement.
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3. Position with Company. During the Term, Executive shall serve as
President of Company, shall devote his full time and efforts to the affairs of
Company, and shall faithfully and diligently perform all duties commensurate
with such position, including, without limitation, those duties reasonably
requested by Company's Board of Directors. In addition, Executive shall be
subject to and comply with the Company's policies and procedures.
4. Salary/Bonus.
(a) Executive shall be entitled to receive a minimum base
salary from Company in the amount of $240,000 annually (prorated as
appropriate), payable in equal installments in accordance with
Company's general salary payment policies in effect during the Term
hereof (the "Minimum Base Salary"). The Minimum Base Salary shall be
reviewed annually in December and may be increased at such times and in
such amounts as Company's Board of Directors shall determine taking
into account Executive's performance and duties, and such other factors
as it deems appropriate.
(b) In addition to the Minimum Base Salary, Executive shall be
entitled to receive an annual bonus, payable on or before the 90th day
after the end of Company's fiscal year during each year of this
Agreement (prorated for partial years during the Term) equal to four
and one-half percent (4-1/2%) of Company's income before taxes for the
most recent twelve month period ending on the last day of Company's
fiscal year, after a home office charge mutually agreed upon in writing
and before any goodwill arising from the acquisition of Company by
Parent (the "Annual Bonus"). Company's income before taxes shall be as
determined by Company's independent auditors in accordance with
generally accepted accounting principles as in effect on the date of
such determination and in conjunction with Company's fiscal year end
audit. Notwithstanding the foregoing, in the event the Annual Bonus for
any year (prorated as appropriate) does not equal or exceed $135,000
(the "Minimum Bonus"), then Company shall pay to Executive, at the time
required for payment of the Annual Bonus, the Minimum Bonus. In its
discretion, the Board of Directors of the Company may award additional
bonuses to Executive from time to time.
5. Stock Options. Effective as of the date hereof, Parent shall grant
Executive an option to acquire 9,000 shares of Parent common stock, par value
$.001 per share, under the existing option plan of Parent for similar executives
at the closing market price of such shares, as reported on the Nasdaq National
Market on the date hereof. In addition, Executive shall be entitled to
additional options if Company's income before taxes (calculated in accordance
with the applicable provisions of paragraph 4 above) exceeds $3,000,000 in any
year (prorated as appropriate), as more fully set forth on Schedule A attached
hereto and entitled "Incentive Stock Option Plan." In addition, the Board of
Directors of Parent will review Executive's option position annually and in its
discretion may award Executive additional options.
6. Benefit Plans / Other Benefits. Executive shall be entitled to
participate in the Company's benefit plans of general application and for
similar executives, including its health insurance program; provided, however,
that nothing herein shall restrict Company's ability to terminate or modify any
benefit plan or arrangement.
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7. Expenses and Related Matters. Company shall pay for or reimburse
Executive for all ordinary and necessary business expenses incurred or paid by
Executive in furtherance of Company's business and provide Executive with a
Company automobile or an automobile allowance, all subject to and in accordance
with Company's policies and procedures of general application and for similar
executives and with applicable tax laws.
8. Covenants of Employee. Executive hereby covenants and agrees that,
during the term of this Agreement and for a period of twelve months after any
Termination of employment, Executive will not:
(a) Engage, directly or indirectly, either as principal,
partner, joint venturer, director, officer, employee, consultant or
independent contractor, agent, or proprietor or in any other manner
participate in the ownership, management, operation, or control of any
person, firm, partnership, limited liability company, corporation, or
other entity which engages in the business of providing any products or
services, including, without limitation, engineering, detailing, steel
fabrication and erection and joist manufacturing, which are competitive
with those products or services offered or sold by Parent or its
subsidiaries within any jurisdiction in which Parent or its
subsidiaries does or proposes to do business.
(b) Directly or indirectly solicit for employment (whether as
an employee, consultant, independent contractor, or otherwise) any
person who is or was at any time within six (6) months of Termination
an employee, consultant, independent contractor or the like of Parent
or any of its subsidiaries, unless Parent gives its written consent to
such employment or offer of employment.
(c) Call on or directly or indirectly solicit or divert or
take away from Parent or any of its subsidiaries (including, without
limitation, by divulging to any competitor or potential competitor of
Parent or its subsidiaries) any person, firm, corporation, or other
entity who is, or during the preceding twelve months was, a customer or
prospective customer of Parent or any of its subsidiaries.
9. Confidentiality and Nondisclosure. It is understood that in the
course of Executive's employment with Company, Executive will become acquainted
with Parent Confidential Information. Executive recognizes that Parent
Confidential Information has been developed or acquired at great expense, is
proprietary to Parent or its subsidiaries, and is and shall remain the exclusive
property of Parent. Accordingly, Executive hereby covenants and agrees that he
will not, without the express written consent of Parent, during Executive's
employment with Company or its subsidiaries and thereafter or until such time as
Parent Confidential Information becomes generally known, or readily
ascertainable by proper means, by persons unrelated to Parent or its
subsidiaries, disclose to others, copy, make any use of, or remove from Parent's
or its subsidiaries' premises any Parent Confidential Information, except as
Executive's duties for Company or its subsidiaries may specifically require.
10. Acknowledgment; Relief for Violation. Executive hereby agrees that
the period of time provided for in Sections 8 and 9 and the territorial
restrictions and other provisions and restrictions set forth therein are
reasonable and necessary to protect Parent, its subsidiaries and
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its and their successors and assigns in the use and employment of the good will
of the business conducted by Parent and its subsidiaries. Executive further
agrees that damages cannot compensate Parent in the event of a violation of
Section 8 or 9, and that, if such violation should occur, injunctive relief
shall be essential for the protection of Parent, its subsidiaries, and its and
their successors and assigns. Accordingly, Executive hereby covenants and agrees
that, in the event any of the provisions of Sections 8 and 9 shall be violated
or breached, Parent and any subsidiary shall be entitled to obtain injunctive
relief against Executive, without bond but upon due notice, in addition to such
further or other relief as may appertain at equity or law. Obtainment of such an
injunction by Parent shall not be considered an election of remedies or a waiver
of any right to assert any other remedies which Parent has at law or in equity.
No waiver of any breach or violation hereof shall be implied from forbearance or
failure by Parent to take action thereon. Executive hereby agrees that he has
such skills and abilities that the provisions of Sections 8 and 9 will not
prevent him from earning a living. Executive agrees to pay any and all
reasonable costs and expenses, including attorneys' fees, incurred by Parent and
any subsidiary in enforcing any provision of this Agreement.
11. Extension During Breach. Executive agrees that the time period
described in Sections 8 and 9 shall be extended for a period equal to the
duration of any breach of such provisions by Executive.
12. No Conflicts of Interest.
(a) During the period of Executive's employment with Company,
Executive will not independently engage in the same or a similar line
of business as Parent or its subsidiaries, or, directly or indirectly,
serve, advise, or be employed by any individual, firm, partnership,
association, corporation, or other entity engaged in the same or
similar line or lines of business.
(b) Executive is not a promoter, director, employee, or
officer of, or consultant or independent contractor to, a business
organized for profit, nor will Executive become a partner, promoter,
director, employee, or officer of, or consultant or independent
contractor to, such a business while employed by Company or its
subsidiaries without first obtaining the prior written approval of
Parent. Executive disclaims any such relationship or position with any
such business. Should Executive become a promoter, director, employee,
or officer of, or a consultant or independent contractor to, a business
organized for profit upon obtaining such prior written approval,
Executive understands that Executive has a continuing obligation to
advise Parent at such time of any activity of Parent or such other
business that presents Executive with a conflict of interest as an
employee of Company.
(c) Should any matter of dealing in which Executive is
involved, or hereafter becomes involved, on his own behalf or as an
employee of Company, appear to present a possible conflict of interest
under any policy of Parent or any subsidiary then in effect, Executive
will promptly disclose the facts to Parent's Board of Directors so that
a determination can be made as to whether a conflict of interest does
exist. Executive will take whatever action is requested of Executive
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by Parent or its Board of Directors to resolve any conflict which it
finds to exist, including severing the relationship which creates the
conflict.
13. Return of Company Materials and Parent Confidential Information.
Upon Termination, Executive shall promptly deliver to Company the originals and
all copies of any and all materials, documents, notes, manuals, or lists
containing or embodying Parent Confidential Information or relating directly or
indirectly to the business of Parent or its subsidiaries in the possession or
control of Executive.
14. No Agreement With Others. Executive represents, warrants, and
agrees that Executive is not a party to any agreement with any other person or
business entity, including former employers, that in any way affects Executive's
employment by Company or relates to the same subject matter of this Agreement or
conflicts with his obligations under this Agreement, or restricts Executive's
services to Company.
15. Termination for Cause. Company shall have the right to terminate
Executive for Cause at any time if the Board of Directors of Parent determines,
in its reasonable discretion, that any of the following events have occurred:
(a) Executive willfully fails to perform his duties hereunder
(whether by reason of drug or alcohol addiction or otherwise), or
otherwise materially breaches this Agreement;
(b) Executive refuses or fails to follow any lawful direction
of Company's Board of Directors or violates any lawful rule or
regulation established by Company from time to time regarding the
conduct of its businesses and such failure or violation could have a
material adverse effect on or be materially disruptive to the business;
or
(c) Executive is charged with or convicted of committing a
felony or crime (other than routine traffic violations), or engages in
conduct involving fraud, moral turpitude, dishonesty, gross misconduct,
embezzlement, theft, conduct that is detrimental to Company or could
have an adverse impact on the standing or reputation of Executive or
Company.
Company shall provide written notice of a termination for Cause hereunder and,
with respect to a purported violation of subsection (a) or (b) above that is
curable in such time period, shall afford Executive an opportunity to cure or
disprove the purported violation for the ten-day period following such notice.
Upon a termination for Cause, Executive shall be entitled to receive only his
Minimum Base Salary, the amount of any unpaid Annual Bonus earned in any
complete fiscal year of the Company preceding the date of Termination, and any
benefits as are due Executive through the effective date of such Termination.
16. Termination Upon Voluntary Resignation. Executive may resign his
employment with Company at any time and shall provide Company with not less than
90 days prior written notice thereof. In the event Executive voluntarily resigns
his employment with Company, Executive shall be entitled to receive only such
Minimum Base Salary, the amount of any unpaid Annual Bonus earned in any
complete fiscal year of the Company preceding the date of
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Termination, and any benefits as are due Executive through the effective date of
such resignation.
17. Termination Upon Death of Executive. If during the term of this
Agreement Executive dies, then this Agreement shall terminate and Company shall
pay to the estate of Executive only the Minimum Base Salary, the amount of any
unpaid Annual Bonus earned in any complete fiscal year of the Company preceding
the date of Termination, and any benefits as are due Executive through the date
of his death.
18. Termination Upon Disability of Executive. If during the term of
this Agreement Executive is unable to perform the services required of Executive
pursuant to this Agreement for a continuous period of ninety (90) days due to
disability or incapacity by reason of any physical or mental illness (as
reasonably determined by Parent's Board of Directors), then Company shall have
the right to terminate this Agreement at the end of such ninety-day period by
giving written notice to Executive. Executive shall be entitled to receive only
such Minimum Base Salary, the amount of any unpaid Annual Bonus earned in any
complete fiscal year of the Company preceding the date of Termination, and any
benefits as are due Executive through the effective date of such Termination.
19. Termination by Company Other than for Cause, Death, Disability, or
Voluntary Resignation. Company may elect at any time to terminate Executive for
any reason other than for Cause, death, disability, or voluntary resignation of
Executive. If such Termination occurs, Executive shall be entitled to receive
the Minimum Base Salary and the Minimum Bonus over the twelve month period
following such Termination, and any benefits as are due Executive through the
date of such Termination.
20. Arbitration. Any dispute, controversy, or claim, whether
contractual or non-contractual, between the parties hereto arising directly or
indirectly out of or connected with this Agreement, relating to the breach or
alleged breach of any representation, warranty, agreement, or covenant under
this Agreement, unless mutually settled by the parties hereto, shall be resolved
by binding arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association (the "AAA"). Any arbitration shall be
conducted by arbitrators approved by the AAA and mutually acceptable to Company
and Executive. All such disputes, controversies, or claims shall be conducted by
a single arbitrator, unless the dispute involves more than $50,000 in the
aggregate in which case the arbitration shall be conducted by a panel of three
arbitrators. If the parties hereto are unable to agree on the arbitrator(s),
then the AAA shall select the arbitrator(s). The resolution of the dispute by
the arbitrator(s) shall be final, binding, nonappealable, and fully enforceable
by a court of competent jurisdiction under the Federal Arbitration Act. The
arbitrator(s) shall award compensatory damages to the prevailing party. The
arbitrator(s) shall have no authority to award consequential or punitive or
statutory damages, and the parties hereby waive any claim to those damages to
the fullest extent allowed by law. The arbitration award shall be in writing and
shall include a statement of the reasons for the award. The arbitration shall be
held in Phoenix, Arizona. The arbitrator(s) shall award reasonable attorneys'
fees and costs to the prevailing party.
21. Severability; Reformation. In the event any court or arbiter
determines that any of the restrictive covenants in this Agreement, or any part
thereof, is or are invalid or
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unenforceable, the remainder of the restrictive covenants shall not thereby be
affected and shall be given full effect, without regard to invalid portions. If
any of the provisions of this Agreement should ever be deemed to exceed the
temporal, geographic, or occupational limitations permitted by applicable laws,
those provisions shall be and are hereby reformed to the maximum temporal,
geographic, or occupational limitations permitted by law. In the event any court
or arbiter refuses to reform this Agreement as provided above, the parties
hereto agree to modify the provisions held to be unenforceable to preserve each
party's anticipated benefits thereunder.
22. Notices. All notices and other communications hereunder shall be in
writing and shall be sufficiently given if made by hand delivery, by telecopier,
or by registered or certified mail (postage prepaid and return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by it by like notice):
If to Parent
or Company : Xxxxxx Steel Company
000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
FAX: (000) 000-0000
Attention: President
With a copy to: Xxxxx & Xxxxxx L.L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Phone: (000) 000-0000
FAX: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
If to Executive: Xxx Xxxxxx
0000 Xxxxxx Xxxx Xxxxx
Xx Xxxxx, Xxxxxxxxxx 00000
Phone:
FAX:
With a copy to: Xxxxxx X. Xxxx, Xx., Esq.
Marks & Xxxxx
0000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Phone: 000-000-0000
FAX: 000-000-0000
All such notices and other communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; three business days
after being deposited in the mail, postage prepaid, if delivered by mail; and
when receipt is acknowledged, if telecopied.
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23. Counterparts. This Agreement may be executed in any number of
counterparts, and each counterpart shall constitute an original instrument, but
all such separate counterparts shall constitute one and the same agreement.
24. Governing Law. The validity, construction, and enforceability of
this Agreement shall be governed in all respects by the laws of the State of
California, without regard to its conflict of laws rules.
25. Assignment; Third Party Beneficiaries. This Agreement shall not be
assigned by operation of law or otherwise, except that Company may assign all or
any portion of its rights under this Agreement to any subsidiary or affiliate of
the Company, but no such assignment shall relieve Company of its obligations
hereunder, and except that this Agreement may be assigned to any corporation or
entity with or into which Company may be merged or consolidated or to which
Company transfers all or substantially all of its assets, and such corporation
or entity assumes this Agreement and all obligations and undertakings of Company
hereunder. Parent and its subsidiaries are third party beneficiaries hereof and
each may enforce this Agreement.
26. Further Assurances. At any time on or after the date hereof, the
parties hereto shall each perform such acts, execute and deliver such
instruments, assignments, endorsements and other documents and do all such other
things consistent with the terms of this Agreement as may be reasonably
necessary to accomplish the transaction contemplated in this Agreement or
otherwise carry out the purpose of this Agreement.
27. Gender, Number and Headings. The masculine, feminine, or neuter
pronouns used herein shall be interpreted without regard to gender, and the use
of the singular or plural shall be deemed to include the other whenever the
context so requires.
28. Waiver of Provisions. The terms, covenants, representations,
warranties, and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time to require performance of any provisions hereof shall, in no manner,
affect the right at a later date to enforce the same. No waiver by any party of
any condition, or breach of any provision, term, covenant, representation, or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation, or warranty of this Agreement.
29. Attorneys' Fees and Costs. If any legal action or any arbitration
or other proceeding is brought for the enforcement of this Agreement, or because
of an alleged dispute, breach, default, or misrepresentation in connection with
any of the provisions of this Agreement, the successful or prevailing party or
parties shall be entitled to recover reasonable attorneys' fees, accounting
fees, and other costs incurred in that action or proceeding, in addition to any
other relief to which it or they may be entitled.
30. Section and Paragraph Headings. The Article and Section headings in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
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31. Amendment. This Agreement may be amended only by an instrument in
writing executed by all parties hereto.
32. Expenses. Except as otherwise expressly provided herein, each party
shall bear its own expenses incident to this Agreement and the transactions
contemplated hereby, including without limitation, all fees of counsel,
consultants, and accountants.
33. Entire Agreement. This Agreement constitutes and embodies the full
and complete understanding and agreement of the parties hereto with respect to
the subject matter hereof, and supersedes all prior understandings or
agreements, whether oral or in writing.
34. Withholding. Executive acknowledges and agrees that payments made
to Executive by Company pursuant to the terms of this Agreement may be subject
to tax withholding and that Company may withhold against payments due Executive
any such amounts as well as any other amounts payable by Executive to Company.
35. Release. Receipt of any of the benefits to be provided to Executive
under this Agreement following termination of Executive's employment hereunder
shall be subject to Executive's compliance with any reasonable and lawful
policies or procedures of Company relating to employee severance including the
execution and delivery by Executive of a release reasonably satisfactory to
Company of any and all claims that Executive may have against Company or any
related person, except for the continuing obligations provided herein, and an
agreement that Executive shall not disparage Company or any of its directors,
officers, employees or agents.
36. Reimbursement of Membership Fee. Within thirty (30) days of the
commencement of this Agreement, Executive shall reimburse Company for the
$24,000 membership fee to San Diego Country Club, which the Company advanced on
Executive's behalf.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement or caused this Agreement to be duly executed on their respective
behalf, by their respective officers thereunto duly authorized, all as of the
day and year first above written.
XXXXXXXXX STEEL, INC., a California corporation
By: /s/ Xxx Xxxxxx
--------------------------------------------
Name:
Its:
XXXXXX STEEL COMPANY, a
Delaware corporation
(Solely as to Sections 5 and 25 hereof)
By: /s/ Xxxxxxx Xxxxxxx
--------------------------------------------
Name:
Its:
/s/ XXX X. XXXXXX
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SCHEDULE A
INCENTIVE STOCK OPTION PLAN
1. For any year during the Term of the Agreement, the Executive may be
eligible to receive options in addition to those received pursuant to
the terms and provisions of the Agreement if the Company earns a
minimum of Three Million Dollars ($3,000,000), before taxes, for the
fiscal year (the "Goal").
2. If the Company achieves the Goal for any fiscal year during the Term of
the Agreement, the Executive will be granted options to purchase Four
Thousand (4,000) shares of Parent common stock, par value $0.01 per
share, under the existing option plan of Parent at the closing market
price of such shares, as reported on the Nasdaq National Market on the
date of the grant.
3. For every full percentage point, up to five (5) percentage points, in
which the Goal is exceeded during any fiscal year, Executive will be
granted options to purchase Eight Hundred (800) shares of Parent common
stock, par value $0.01 per share, under the existing option plan of
Parent at the closing market price of such shares, as reported on the
Nasdaq National Market on the date of the grant.
4. For every full percentage point above five (5) percentage points,
without limitation, in which the Goal is exceeded during any fiscal
year, Executive will be granted options to purchase One Thousand Six
Hundred (1,600) shares of Parent common stock, par value $0.01 per
share, under the existing option plan of Parent at the closing market
price of such shares, as reported on the Nasdaq National Market on the
date of the grant.
5. All options will be granted on or about the date the Company's annual
financial statement audit is completed for the fiscal year for which
the Executive is eligible to receive options under this plan.
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