Employment Agreement
Exhibit 10.22
Agreement made as of January 15, 2004, by and between
Builders FirstSource, Inc., a Delaware corporation (the
“Company”), and Xxxxxx X. Xxxxx (the
“Executive”).
Whereas, the
Company desires that Executive serve as the President of the
Southeast Group Division of the Company, and Executive desires
to hold such positions under the terms and conditions of this
Agreement; and
Whereas, the Board
of Directors of the Company (the “Company Board”) has
approved and authorized the Company to enter into this Agreement
with Executive.
Now, therefore, in
consideration of the mutual covenants and agreements set forth
herein, and intending to be legally bound hereby, the parties
agree as follows:
1. Employment. The Company
hereby employs Executive, and Executive hereby accepts
employment with the Company, upon the terms and subject to the
conditions set forth herein.
2. Term.
(a) Subject to Section 2(b) hereof, the term of
employment by the Company of Executive pursuant to this
Agreement (as the same may be extended, the “Term”)
shall commence on January 15, 2004 (the “Effective
Date”), and terminate on the first anniversary thereof.
(b) Commencing on the first anniversary of the Effective
Date and on each subsequent anniversary thereof, the Term shall
automatically be extended for one (1) additional year
unless, not later than ninety days (90) prior to any such
anniversary date, either party hereto shall have notified the
other party hereto in writing that such extension shall not take
effect.
3. Position. During the
Term, Executive shall serve as the President of the Southeast
Group Division of the Company, supervising the conduct of the
business and affairs of the Company and performing such other
duties as the Company Board shall determine.
4. Duties. During the Term,
Executive shall devote his full time and attention during normal
business hours to the business and affairs of the Company,
except vacations in accordance with the Company’s policies
and for illness or incapacity, in accordance with Section 6
hereof.
5. Salary and Bonus.
(a) During the Term, the Company shall pay to Executive a
base salary at the rate of $320,000 per year (the “Base
Salary”), subject to adjustments pursuant to the terms of
Section 5(b) hereof.
(b) On or prior to each anniversary hereof during the Term
(assuming the Term of the Agreement is extended pursuant to
Section 2(b) hereof), the Company Board or the Compensation
Committee of the Company Board (the “Compensation
Committee”) shall review the Base Salary and may, in its
sole discretion, increase the Base Salary based upon performance
and merit. Executive’s Base Salary shall not be decreased
below the amount set forth in Section 5(a) hereof. The Base
Salary shall be payable to Executive in substantially equal
installments in accordance with the Company’s normal
payroll practices, but in no event less often than semi-monthly.
(c) For the Company’s fiscal year ending
December 31, 2004, and for each fiscal year during the Term
thereafter, Executive shall be eligible to receive an annual
cash bonus equal to the amount provided for in the
Company’s Annual Cash Incentive Plan (“Annual
Incentive Plan”) (which currently provides for a target
bonus percentage of 100% of Executive’s Base Salary), which
Annual Incentive Plan is approved by the Company Board or the
Compensation Committee thereof. Executive’s target bonus
percentage under the Annual Incentive Plan shall not be reduced
below 100% of his Base Salary.
6. Vacation, Holidays and Sick
Leave. During the Term, Executive shall be
entitled to paid vacation, paid holidays and sick leave in
accordance with the Company’s standard policies for its
senior executive officers.
7. Business
Expenses. Executive shall be reimbursed for
all reasonable and necessary business expenses incurred by him
in connection with his employment, including, without
limitation, expenses for travel and entertainment incurred in
conducting or promoting business for the Company upon timely
submission by Executive of receipts and other documentation as
required by the Internal Revenue Code of 1986, as
amended (the “Code”), and in accordance with the
Company’s normal expense reimbursement policies.
8. Health, Welfare and Related
Benefits. During the Term, Executive and
eligible members of his family shall be eligible to participate
fully in all (a) health and dental benefits and insurance
programs; (b) life and short- and long-term disability
benefits and insurance programs; and (c) defined
contribution and equity compensation programs, all as available
to senior executive officers of the Company generally.
9. Confidentiality, Non-Competition.
(a) Executive acknowledges that: (i) the Executive
has, and his employment hereunder will require that Executive
continue to have, access to and knowledge of Confidential
Information (as hereinafter defined); (ii) the direct and
indirect disclosure of any such Confidential Information to
existing or potential competitors of the Company or its
subsidiaries would place the Company at a competitive
disadvantage and would do damage, monetary or otherwise, to the
Company’s businesses; and (iii) the engaging by
Executive in any of the activities prohibited by this
Section 9 may constitute improper appropriation
and/or use
of such Confidential Information. Executive expressly
acknowledges that the Confidential Information constitutes a
protectable business interest of the Company. As used herein,
the term “Confidential Information” shall mean
information of any kind, nature or description which is
disclosed to or otherwise known to the Executive as a direct or
indirect consequence of his association with the Company, which
information is not generally known to the public or in the
businesses in which such entities are engaged or which
information relates to specific investment opportunities within
the scope of their business which were considered by the Company
during the Term; provided, however, that
“Confidential Information” shall not be deemed to
include information which (i) is or becomes generally
available to the public other than as a result of a disclosure
by the Executive, (ii) becomes available to the Executive
on a non-confidential basis from a source other than the
Company, provided that such source is not bound by any
contractual, legal or fiduciary obligation with respect to such
information or (iii) was in the Executive’s possession
prior to being furnished by the Company.
(b) During the Term of this Agreement and for a period of
one year after the termination of Executive’s employment
hereunder (upon expiration of the Term or otherwise), Executive
shall not, directly or indirectly, whether individually, as a
director, stockholder, owner, manager, member, partner,
employee, consultant, principal or agent of any business, or in
any other capacity, use for his own account, utilize or make
known, disclose, furnish or make available to any person, firm
or corporation any of the Confidential Information, other than
to authorized officers, directors and employees of the Company
in the proper performance of the duties contemplated herein, or
as required by a court of competent jurisdiction or other
administrative or legislative body; provided that,
prior to disclosing any of the Confidential Information to a
court or other administrative or legislative body, Executive
shall promptly notify the Company so that the Company may seek a
protective order or other appropriate remedy. Executive agrees
to return all Confidential Information, including all
photocopies, extracts and summaries thereof, and any such
information stored electronically on tapes, computer disks or in
any other manner to the Company at any time upon request by the
Company and upon the termination of his employment for any
reason.
(c) During the Term of this Agreement and for a period of
one year after termination of Executive’s employment
hereunder (upon expiration of the Term or otherwise), Executive
shall not, directly or indirectly, own any interest in, operate,
join, control or participate as a partner, member, director,
manager, principal, officer, or agent of, enter into the
employment of, act as a consultant or advisor to, or perform any
services for, any entity (in those geographic areas in which the
Company or any of its subsidiaries, as of the date of
termination of the Executive’s employment hereunder, have
material operations) which entity is engaged in competition with
the Company or any of its subsidiaries. An entity shall be
deemed to be engaged in competition with the Company or its
subsidiaries if it engages in a business which is the same as or
substantially similar to any business engaged in by the Company
or such subsidiary during the Term.
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(d) During the Term of this Agreement and for a period of
two years after termination of Executive’s employment
hereunder (upon expiration of the Term or otherwise), Executive
shall not, directly or indirectly, hire, solicit or recruit for
hire any employee of the Company or any of its subsidiaries or
encourage any employee of the Company or any of its subsidiaries
to terminate his or her employment in order to obtain employment
by any other person, firm or corporation.
(e) Executive acknowledges that(A) in connection with
rendering the services to be rendered by Executive hereunder,
Executive will have access to and knowledge of Confidential
Information, the disclosure of which would place the Company or
its subsidiaries at a competitive disadvantage, causing
irreparable injury, and (B) the services to be rendered by
Executive hereunder are of a special and unique character, which
gives this Agreement a peculiar value to the Company, the loss
of which may not be reasonably or adequately compensated for by
damages in an action at law, and that a material breach or
threatened breach by Executive of any of the provisions
contained in this Section 9 will cause the Company
irreparable injury. Executive, therefore, agrees that the
Company shall be entitled, in addition to any other right or
remedy, to a temporary, preliminary and permanent injunction,
without the necessity of proving the inadequacy of monetary
damages or the posting of any bond or security, enjoining or
restraining Executive from any such violation or threatened
violations.
(f) Executive further acknowledges and agrees that due to
the uniqueness of his services and confidential nature of the
information he will possess, the covenants set forth herein are
reasonable and necessary for the protection of the business and
goodwill of the Company; and it is the intent of the parties
hereto that if, in the opinion of any court of competent
jurisdiction, any provision set forth in this Section 9 is
not reasonable in any respect, such court shall have the right,
power and authority to modify any and all such provisions in
such a manner as to such court shall appear not unreasonable and
to enforce the remainder of this Section 9 as so modified.
10. Termination of
Agreement. The employment by the Company of
Executive pursuant to this Agreement shall not be terminated
prior to the end of the Term, except as set forth in this
Section 10.
(a) By Mutual Consent.
(i) The employment by the Company of Executive pursuant to
this Agreement may be terminated at any time by the mutual
written agreement of the Company and Executive.
(ii) In the event that (i) Executive’s employment
is terminated by mutual consent pursuant to this
Section 10(a), and (ii) Executive and the Company
determine at that time that it is in their mutual best interest
for Executive to continue to be bound after his termination by
the provisions of Section 9 of this Agreement for the
periods set forth therein, then the parties may enter into an
agreement to that effect, in exchange for which Executive would
be entitled to the compensation provided for in
Section 10(e) hereof.
(b) Death. The employment by the
Company of Executive pursuant to this Agreement shall be
terminated upon the death of Executive, in which event
Executive’s spouse or heirs shall receive the following:
(i) Executive’s Base Salary and benefits to be paid or
provided to Executive under this Agreement through the Date of
Termination and (ii) continuation of Executive’s Base
Salary and the health and welfare benefits provided for pursuant
to Sections 8(a) and 8(b) hereof (“Health
Benefits”) for a period of one (1) year after the Date
of Termination.
(c) Disability. The
employment by the Company of Executive pursuant to this
Agreement may be terminated by written notice to Executive at
the option of the Company in the event that as a result of the
Executive’s incapacity due to physical or mental illness
(which physical or mental illness shall be confirmed in writing
by a physician or other medical expert acceptable to both
parties), the Executive is unable to perform his duties,
services and responsibilities hereunder or shall have been
absent from his duties hereunder on a full-time basis for ninety
(90) consecutive days or for an aggregate of ninety
(90) days or more in any six (6) month period, and
within thirty (30) days after notice is given by the
Company (which notice may be delivered no earlier than thirty
days prior to the expiration of such ninety
(90) consecutive days or six month period, as the case may
be), the Executive shall not have returned to the performance of
his duties hereunder on a full-time basis. In the event the
employment by the Company of Executive is terminated pursuant to
this Section 10(c), Executive shall be entitled to receive
the following: (i) all Base Salary and benefits to be paid
or provided to Executive under this Agreement through the Date
of Termination and (ii) continuation of his Base Salary and
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Health Benefits for a period of one (1) year after the Date
of Termination; provided, however, that amounts
payable to Executive under this Section 10(c) shall be
reduced by the proceeds of any short-
and/or
long-term disability payments under the Company plans referred
to in Section 8 hereof to which Executive may be entitled
during such period.
(d) By the Company for Cause. The
employment of Executive pursuant to this Agreement may be
terminated by the Company by written notice to Executive
(“Notice of Termination”) for Cause (as hereafter
defined). In the event the employment by the Company of
Executive is terminated pursuant to this Section 10(d),
Executive shall be entitled to receive all Base Salary and
benefits to be paid or provided to Executive under this
Agreement through the Date of Termination and no more.
(e) By the Company Without
Cause. The employment by the Company of
Executive pursuant to this Agreement may be terminated by the
Company at any time without Cause by delivery of a Notice of
Termination to Executive. In the event the employment by the
Company of Executive is terminated pursuant to this
Section 10(e), Executive shall be entitled to receive the
following: (i) all Base Salary and benefits to be paid or
provided to Executive under this Agreement through the Date of
Termination, (ii) continuation of his Base Salary and
Health Benefits for a period of one (1) year after the Date
of Termination, and (iii) an amount equal to his Average
Bonus Compensation (as hereafter defined).
(f) By Executive. The employment
of Executive by the Company pursuant to this Agreement may be
terminated by Executive by written notice to the Company of his
resignation (a “Notice of Resignation”) at any time.
In the event the employment by the Company of Executive is
terminated pursuant to this Section 10(f), Executive shall
be entitled to receive all Base Salary and benefits to be paid
or provided to Executive under this Agreement through the Date
of Termination and no more; provided, however, that if Executive
terminates his employment due to (i) a material adverse
diminution of Executive’s job title or responsibilities
from those currently in effect; or (ii) a relocation of
Executive’s principal place of employment more than
100 miles from its current location without his consent,
then Executive shall instead be entitled to the compensation
provided for in Section 10(e) hereof.
(g) Non-Renewal. In the event
that at any time during the Term (as it may be extended) the
Company notifies Executive of its intent not to renew this
Agreement pursuant to Section 2(b) hereof, and Executive
then delivers a Notice of Resignation to the Company within
ninety (90) days of receipt of such notice of non-renewal,
Executive shall be entitled to receive the following:
(i) all Base Salary and benefits to be paid or provided to
Executive under this Agreement through the Date of Termination,
(ii) continuation of his Base Salary and Health Benefits
for a period of one (1) year after the Date of Termination,
and (iii) an amount equal to his Average Bonus Compensation.
(h) Previously Earned
Bonus. Notwithstanding any other provision of
this Section 10, in the event that Executive’s
employment pursuant to this Agreement is terminated at a time
when Executive shall have earned a bonus under the Annual
Incentive Plan for performance during the prior fiscal year
which has not yet been paid, Executive shall be paid such bonus
in addition to the amounts otherwise provided for in this
Section 10. Such bonus shall be paid in accordance with the
Company’s normal practices.
(i) Date of
Termination. Executive’s Date of
Termination shall be: (i) if the parties hereto mutually
agree to terminate this Agreement pursuant to Section 10(a)
hereof, the date designated by the parties in such agreement;
(ii) if Executive’s employment by the Company is
terminated pursuant to Section 10(b), the date of
Executive’s death; (iii) if Executive’s
employment by the Company is terminated pursuant to
Section 10(c), the last day of the applicable period
referred to in Section 10(c) hereof; (iv) if
Executive’s employment by the Company is terminated
pursuant to Section 10(d), the date on which a Notice of
Termination is given; and (v) if Executive’s
employment by the Company is terminated pursuant to
Sections 10(e), 10(f) or 10(g), the date the Notice of
Termination or Notice of Resignation, as the case may be, is
given.
(j) Payment of Post-Termination
Compensation. After Executive’s Date of
Termination, all payments of Base Salary and Average Bonus
Compensation to Executive pursuant to this Section 10 shall
be paid in accordance with the Company’s normal payroll
practices, but in no event less often than semi-monthly. In the
event of a breach by Executive of Section 9 of this
Agreement during the applicable period following his Date
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of Termination, Executive agrees (i) that the Company shall
have no further obligation to make any payments to Executive
under Section 10 of the Agreement and (ii) that any
payments of Base Salary or Average Bonus Compensation previously
made to Executive after his Date of Termination shall be
returned to the Company.
11. Representations.
(a) The Company represents and warrants that this Agreement
has been authorized by all necessary corporate action of the
Company and is a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms.
(b) Executive represents and warrants that he is not a
party to any agreement or instrument which would prevent him
from entering into or performing his duties in any way under
this Agreement and that this Agreement is a valid and binding
agreement of Executive enforceable against Executive in
accordance with its terms.
12. Successors. This
Agreement is a personal contract and the rights and interests of
Executive hereunder may not be sold, transferred, assigned,
pledged, encumbered, or hypothecated by him, except as otherwise
expressly permitted by the provisions of this Agreement. This
Agreement shall inure to the benefit of and be enforceable by
Executive and his personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If Executive should die while any amount would still
be payable to him hereunder had Executive continued to live, all
such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to his devisee,
legatee or other designee or, if there is no such designee, to
his estate.
13. Entire Agreement. This
Agreement contains all the understandings between the parties
hereto pertaining to the matters referred to herein, and
supersedes any other undertakings and agreements (other than any
stock option agreement between Executive and the Company),
whether oral or in writing, previously entered into by them with
respect thereto. Executive represents that, in executing this
Agreement, he does not rely and has not relied upon any
representation or statement made by the Company not set forth
herein with regard to the subject matter or effect of this
Agreement or otherwise.
14. Termination; Amendment or Modification;
Waiver.
(a) This Agreement may be terminated at any time by mutual
written consent of the Company and Executive.
(b) No provision of this Agreement may be amended or waived
unless such amendment or waiver is agreed to in writing, signed
by Executive and by a duly authorized officer of the Company. No
waiver by any party hereto of any breach by another party hereto
of any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same time, any prior
time or any subsequent time.
15. Notices. All notices and
other communications required or permitted to be given hereunder
shall be in writing and shall be (i) delivered by hand,
(ii) delivered by a nationally recognized commercial
overnight delivery service, (iii) mailed postage prepaid by
first class mail or (iv) transmitted by facsimile
transmitted to the party concerned at the address or telecopier
number set forth below:
To Executive at:
Xxxxxx X. Xxxxx
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
To the Company at:
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: General Counsel
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with copies to:
JLL Partners
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile:
(000) 000-0000
Attention: Xxxxxx Xxxxx
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile:
(000) 000-0000
Attention: Xxxxxx X. Xxxxxx
Such notices shall be effective: (i) in the case of hand
deliveries when received; (ii) in the case of an overnight
delivery service, on the next business day after being placed in
the possession of such delivery service, with delivery charges
prepaid; (iii) in the case of mail, seven (7) days
after deposit in the postal system, first class mail, postage
prepaid; and (iv) in the case of facsimile notices, when
electronic confirmation of receipt is received by the sender.
Any party may change its address and telecopy number by written
notice to the other given in accordance with this
Section 15; provided, however, that such
change shall be effective when received.
16. Severability. If any
provision or clause of this Agreement or the application of any
such provision or clause to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid
and unenforceable to any extent, the remainder of this Agreement
or the application of such provision or clause to such person or
circumstances other than those to which it is so determined to
be invalid and unenforceable, shall not be affected thereby, and
each provision or clause hereof shall be validated and shall be
enforced to the fullest extent permitted by law.
17. Survivorship. The
respective rights and obligations of the parties hereunder shall
survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and
obligations.
18. Governing Law. This
Agreement will be governed by and construed in accordance with
the laws of the State of Delaware, without regard to its
conflicts of law principles.
19. Headings. All
descriptive headings of sections and paragraphs in this
Agreement are intended solely for convenience, and no provision
of this Agreement is to be construed by reference to the heading
of any section or paragraph.
20. Withholding. All
payments to Executive under this Agreement shall be reduced by
all applicable withholding required by federal, state or local
law.
21. Specific
Performance. Each party hereto acknowledges
that money damages would be both incalculable and an
insufficient remedy for any breach of this Agreement by such
party and that any such breach would cause the other parties,
irreparable harm. Accordingly, each party hereto also agrees
that, in the event of any breach or threatened breach of the
provisions of this Agreement by such party, the other parties
shall be entitled to equitable relief without the requirement of
posting a bond or other security, including in the form of
injunctions and orders for specific performance, in addition to
all other remedies available to such other parties at law or in
equity.
22. Counterparts. This
Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together shall
constitute one and the same instrument.
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23. Definitions.
(a) “Cause” means the determination, in
good faith, by the Company Board, after notice to Executive that
one or more of the following events has occurred: (i) any
act of gross negligence, fraud, willful misconduct or moral
turpitude by Executive materially injuring the interest,
business or reputation of the Company, or any of its parents,
subsidiaries or affiliates; (ii) Executive’s
conviction of any felony; (iii) violation by Executive of
the Company’s Drug Policy; (iv) any misappropriation
or embezzlement of the property of the Company, or any of its
parents, subsidiaries or affiliates; or (v) any material
breach by Executive of this Agreement, including, without
limitation, a material breach of Section 9 hereof, which
breach, to the extent it is capable of being cured, remains
uncorrected for a period of thirty (30) days after receipt
by Executive of written notice from the Company setting forth
such breach.
(b) “Average Bonus Compensation”
shall mean an amount equal to the average of the annual
bonus amounts earned by Executive under the Company’s
Annual Incentive Plan during the two most recent fiscal years
ended prior to Executive’s Date of Termination.
[Signature
Page Follows]
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In witness whereof, the parties hereto have executed and
delivered this Employment Agreement as of the date first above
written.
| By: |
|
Xxxxx Xxxxxxx
Chief Executive Officer
Executive
Xxxxxx X. Xxxxx
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