EXHIBIT 10.1
EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of October
20, 2005 (the "Effective Date") between BLUELINX CORPORATION, a Georgia
corporation (the "Company"), and XXXXXXX X. XXXXXXX ("Executive").
RECITALS:
WHEREAS, the Company desires to employ Executive as the Chief Executive
Officer of the Company, and Executive desires to accept employment as the Chief
Executive Officer of the Company; and
WHEREAS, as of the Effective Date, the Company shall employ Executive on
the terms and conditions set forth in this Agreement, and Executive shall be
retained and employed by the Company to perform such services under the terms
and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Certain Definitions. Certain words or phrases with initial capital
letters not otherwise defined herein are to have the meanings set forth in
paragraph 8.
2. Employment. The Company shall employ Executive, and Executive accepts
employment with the Company, as of the Effective Date, upon the terms and
conditions set forth in this Agreement for the period beginning on the Effective
Date and ending as provided in paragraph 5 (the "Employment Period").
3. Position and Duties.
(a) During the Employment Period, Executive shall serve as the Chief
Executive Officer of the Company and BlueLinx Holdings Inc. ("BHI") and shall
have the normal duties, responsibilities and authority of an executive serving
in such position, subject to the power of the Board of Directors of the Company
(the "Company Board") and the Board of Directors of BHI (the "BHI Board"), to
provide oversight and direction with respect to such duties, responsibilities
and authority, either generally or in specific instances. The Executive also
shall hold similar titles, offices and authority with BHI's direct and indirect
subsidiaries, as requested by the BHI Board from time to time, subject to the
oversight and direction of the respective boards of directors of such entities.
(b) During the Employment Period, the Executive shall be included in
the management's slate for election as a member of the BHI Board. Subject, as
required, to reelection by BHI's stockholders, Executive shall serve as a member
of the BHI Board, with no additional remuneration payable to Executive for that
service. Upon the Date of Termination, Executive shall, at the BHI Board's
request, resign from the Board, the BHI Board and any other board or committee
of the Company, BHI or any of their respective subsidiaries or affiliates.
(c) During the Employment Period, Executive shall devote Executive's
reasonable best efforts and Executive's full professional time and attention
(except for permitted vacation periods and reasonable periods of illness or
other incapacity) to the Business and affairs of the Company, BHI and their
respective subsidiaries and affiliates. Executive shall perform Executive's
duties and responsibilities to the best of Executive's abilities in a diligent,
trustworthy and business-like manner. During the Employment Period, Executive
shall not serve as a director or a principal of another company or any
charitable or civic organization without the Board's prior consent.
Notwithstanding the foregoing, during the Employment Period, Executive may
continue to serve on the board of directors of Consolidated Container Company
and may also render charitable and civic services so long as such services do
not materially interfere with Executive's ability to discharge his duties
hereunder.
(d) Executive shall perform Executive's duties and responsibilities
with his principal office located in the Atlanta, Georgia metropolitan area.
4. Compensation and Benefits.
(a) Signing Bonus and Stock Options. Contemporaneously with
Executive's commencement of employment with the Company, the Company shall pay
Executive a signing bonus of $600,000. Contemporaneously with the execution
hereof, the Compensation Committee of the BHI Board has granted Executive stock
options with respect to 750,000 shares of the common stock of BHI, which shall
vest in annual increments of 20% over a five year period, all in accordance with
a stock option agreement in the form attached hereto as Exhibit A.
(b) Salary. The Company agrees to pay Executive a salary during the
Employment Period in installments based on the Company's payroll practices as
may be in effect from time to time. The Executive's salary shall be at the rate
of $700,000 per year for 2005 and 2006, $750,000 per year for 2007, and $800,000
per year for 2008, in each case prorated for the portion of a year during which
Executive is employed pursuant to this Agreement (as in effect from time to
time, "Base Salary").
(c) Annual Bonus.
(i) For each of fiscal years 2006 (subject to subparagraph
4(c)(ii) below), 2007 and 2008, Executive shall be eligible to receive an annual
bonus, with the annual bonus potential to be between 75% of Base Salary (i.e.,
75% upon achievement of annual "target" performance goals) and a maximum of 150%
of Base Salary (i.e., 150% upon achievement of annual "maximum" performance
goals), with the "target" and "maximum" based upon satisfaction of performance
goals and bonus criteria to be defined and approved by the Compensation
Committee of the BHI Board in advance for each fiscal year. The Company shall
pay any such annual bonus earned to Executive in accordance with the terms of
the applicable bonus plan.
(ii) For fiscal year 2006, notwithstanding whether the
performance goals for fiscal 2006 are satisfied in accordance with subparagraph
4(c)(i) above, Executive shall be entitled to receive a minimum bonus equal to
50% of Base Salary, prorated based on the number of days actually employed
during fiscal year 2006 if Executive is not employed for such
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full fiscal year (the "Contractual Bonus"). To the extent that Executive is
entitled to a bonus payment under subparagraph 4(c)(i), the Contractual Bonus
shall constitute a portion of, and shall not be in addition to, the amounts so
payable to Executive.
(iii) For each of fiscal years 2006, 2007 and 2008, Executive
is entitled to receive an annual targeted bonus equivalent to $750,000 in value,
as so determined by the Compensation Committee of the BHI Board, payable in the
form of awards of stock options and/or shares of restricted stock under the
BHI's long term equity incentive plan as then in effect, all on such terms and
conditions as the Compensation Committee of the BHI Board shall determine in
accordance with the provisions of such plan. Such bonus award shall be subject
to such time and performance-based vesting conditions as are established by the
Compensation Committee of the BHI Board.
(d) Expense Reimbursement. The Company shall reimburse Executive for
all reasonable expenses incurred by Executive during the Employment Period in
the course of performing Executive's duties under this Agreement in accordance
with the Company's policies in effect from time to time with respect to travel,
entertainment and other business expenses, and subject to the Company's
requirements applicable generally with respect to reporting and documentation of
such expenses. In order to be entitled to expense reimbursement, the Executive
must be employed as Chief Executive Officer on the date the Executive incurred
the expense.
(e) Standard Executive Benefits Package. Executive is entitled
during the Employment Period to participate, on the same basis as the Company's
other senior executives, in the Company's Standard Executive Benefits Package.
The Company's "Standard Executive Benefits Package" means those benefits
(including insurance, vacation and other benefits, but excluding, except as
hereinafter provided in paragraph 6, any severance pay program or policy of the
Company) for which substantially all of the executives of the Company are from
time to time generally eligible, as determined from time to time by the Board. A
summary of such benefits available to Executive as in effect on the date of this
Agreement is attached hereto as Exhibit B.
(f) Indemnification. The Indemnification Agreement, dated December
13, 2004, between BHI and the Executive remains and shall remain in effect until
amended or terminated in accordance with its terms.
(g) Professional Fees. Promptly following receipt of invoices
therefor, the Company will reimburse Executive for Executive's reasonable
professional fees and costs (and related disbursements) incurred in connection
with Executive's negotiation and execution of this Agreement, in an amount not
to exceed $10,000.
(h) Additional Compensation/Benefits. The Compensation Committee of
the BHI Board, in its sole discretion, will determine any compensation or
benefits to be provided to Executive during the Employment Period other than as
set forth in this Agreement, including, without limitation, any future grant of
stock options or other equity awards.
(i) Disgorgement of Compensation. If BHI or the Company is required
to prepare an accounting restatement due to material noncompliance by BHI or the
Company, as a
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result of misconduct, with any financial reporting requirement under the federal
securities laws, to the extent required by law Executive will reimburse the
Company for (i) any bonus or other incentive-based or equity-based compensation
received by Executive from the Company (including such compensation payable in
accordance with this paragraph 4 and paragraph 6) during the 12-month period
following the first public issuance or filing with the Securities and Exchange
Commission (whichever first occurs) of the financial document embodying that
financial reporting requirement; and (ii) any profits realized by Executive from
the sale of BHI's securities during that 12-month period.
5. Employment Period.
(a) Subject to subparagraph 5(b), the Employment Period will
commence on the Effective Date and will continue until, and will end upon,
December 31, 2008 (the "Renewal Date"); except that on the Renewal Date, unless
either party shall have given the other 30-days' written notice otherwise, the
Employment Period will be extended automatically for one additional year.
(b) Notwithstanding subparagraph 5(a), the Employment Period will
end upon the first to occur of any of the following events: (i) Executive's
death; (ii) the Company's termination of Executive's employment on account of
Disability; (iii) the Company's termination of Executive's employment for Cause
(a "Termination for Cause"); (iv) the Company's termination of Executive's
employment without Cause (a "Termination without Cause"); (v) Executive's
termination of Executive's employment for Good Reason (a "Termination for Good
Reason"); or (vi) Executive's termination of Executive's employment for any
reason other than Good Reason (a "Voluntary Termination").
(c) Any termination of Executive's employment under subparagraph
5(b) (other than 5(b)(i)) must be communicated by a Notice of Termination
delivered by the Company or Executive, as the case may be, to the other party.
(d) Executive will be deemed to have waived any right to a
Termination for Good Reason based on the occurrence or existence of a particular
event or circumstance constituting Good Reason unless Executive delivers a
Notice of Termination within 45 days from the date Executive first became aware
of the event or circumstance.
6. Post-Employment Period Payments.
(a) At the Date of Termination, regardless of the reason for
termination of employment, Executive will be entitled to (i) any Base Salary
that has accrued but is unpaid, any annual bonus that has been earned for the
fiscal year prior to the year in which the Date of Termination occurs, but is
unpaid, any reimbursable expenses that have been incurred but are unpaid, and
any unexpired vacation days that have accrued under the Company's vacation
policy but are unused, as of the end of the Employment Period, which amount
shall be paid in a lump sum in cash within 30 days of the Date of Termination,
(ii) any plan benefits that by their terms extend beyond termination of
Executive's employment (but only to the extent provided in any such benefit plan
in which Executive has participated as a Company employee and excluding, except
as hereinafter provided in paragraph 6, any Company severance pay program or
policy)
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and (iii) any benefits to which Executive is entitled in accordance with Part 6
of Subtitle B of Title I of the Employee Retirement Income Security Act of 1974,
as amended ("COBRA"). Except as specifically described in this subparagraph 6(a)
and in the succeeding subparagraphs of this paragraph 6 (under the circumstances
described in those succeeding subparagraphs), from and after the Date of
Termination Executive shall cease to have any rights to salary, bonus, expense
reimbursements or other benefits from the Company, BHI or any of their
subsidiaries or affiliates.
(b) If Executive's employment terminates on account of Executive's
death, Disability, Voluntary Termination, Termination for Cause or the end of
the Employment Period in accordance with Section 5(a), the Company will make no
further payments to Executive except as contemplated in subparagraph 6(a).
(c) If Executive's employment terminates on account of a Termination
without Cause or a Termination for Good Reason, Executive shall be entitled to
the following:
(1) payment equal to two times Executive's annual base salary in effect
immediately prior to the Date of Termination, plus two times the cash
bonus amount received by the Executive for the fiscal year prior to the
year of the termination of Executive's employment, payable in twenty-four
equal monthly installments commencing six months after the Date of
Termination;
(2) a lump sum payment, payable six months after the Date of Termination, in
cash in an amount equal to the contributions the Company would have made
(excluding any salary reduction contributions pursuant to an election of
the Executive) for the benefit of the Executive to the Company's qualified
salaried 401(k) plan (if the Company is making matching contributions or
other contributions to the salaried 401(k) plan at the time of the
Executive's termination), assuming (i) the Executive continued as an
employee of the Company for a period of two years beginning on the
Executive's Date of Termination, and (ii) the Executive during such period
contributed six percent of his base salary (as in effect immediately prior
to the Date of Termination) to the 401(k) plan;
(3) continued participation in the Company's medical and dental plans, on the
same basis as active employees participate in such plans, until the
earlier of (i) Executive's eligibility for any such coverage under another
employer's or any other medical or dental insurance plans or (ii) the
second anniversary of the Date of Termination; except that in the event
that participation in any such plan is barred, the Company shall reimburse
Executive on a monthly basis for any premiums paid by Executive to obtain
benefits (for Executive and his dependents) equivalent to the benefits he
is entitled to receive under the Company's benefit plans. Executive agrees
that the period of coverage under such plans (or the period of
reimbursement if participation is barred) shall count against the plans'
obligation to provide continuation coverage pursuant to COBRA;
(4) up to $25,000 in aggregate outplacement services to be used within one
year of the Date of Termination, the scope and provider of which shall be
selected by Executive in his sole discretion; and
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(5) to the extent not theretofore paid or provided, any other amounts or
benefits required to be paid or provided or which the Executive is
eligible to receive under any plan, program, policy or practice or
contract or agreement of the Company (such other amounts and benefits
shall be hereinafter referred to as the "Other Benefits").
(d) The Company shall have no obligation to make any payments in
accordance with subparagraph 6(c) if Executive declines to sign and return a
Release Agreement or revokes the Release Agreement within the time provided in
the Release Agreement.
(e) Executive is not required to mitigate the amount of any payment
or benefit provided for in this Agreement by seeking other employment or
otherwise.
7. Competitive Activity; Confidentiality; Non-solicitation.
(a) Confidential Information.
(i) The Executive shall hold in a fiduciary capacity for the
benefit of the Company and BHI all secret or confidential information, knowledge
or data relating to the Company, BHI or any of their respective subsidiaries and
affiliates, and their respective businesses, which shall have been (i) obtained
by the Executive during the Executive's employment by the Company, BHI or any of
their respective subsidiaries and affiliates or (ii) acquired by the Company,
BHI or any of their respective subsidiaries and affiliates from Georgia-Pacific
Corporation, and which shall not be or become public knowledge (other than by
acts by the Executive or representatives of the Executive in violation of this
Agreement) ("Confidential Information"). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or BHI or as may otherwise be required by law or legal
process, communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it.
(ii) All files, records, documents, drawings, specifications,
data, computer programs, customer or vendor lists, specific customer or vendor
information, marketing techniques, business strategies, contract terms, pricing
terms, discounts and management compensation of the Company, BHI or any of their
respective subsidiaries and affiliates, whether prepared by the Executive or
otherwise coming into the Executive's possession, shall remain the exclusive
property of the Company, BHI or any of their respective subsidiaries and
affiliates, and the Executive shall not remove any such items from the premises
of the Company, BHI or any of their respective subsidiaries and affiliates,
except in furtherance of the Executive's duties.
(iii) It is understood that while employed by the Company, the
Executive will promptly disclose to the Company, and assign to the Company the
Executive's interest in any invention, improvement or discovery made or
conceived by the Executive, either alone or jointly with others, which arises
out of the Executive's employment. At the Company's request and expense, the
Executive will reasonably assist the Company, BHI or any of their respective
subsidiaries and affiliates during the period of the Executive's employment by
the Company and thereafter in connection with any controversy or legal
proceeding relating to such
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invention, improvement or discovery and in obtaining domestic and foreign patent
or other protection covering the same.
(iv) As requested by the Company and at the Company's expense,
from time to time and upon the termination of the Executive's employment with
the Company for any reason, the Executive will promptly deliver to the Company,
BHI or any of their respective subsidiaries and affiliates all copies and
embodiments, in whatever form, of all Confidential Information in the
Executive's possession or within his control (including, but not limited to,
memoranda, records, notes, plans, photographs, manuals, notebooks,
documentation, program listings, flow charts, magnetic media, disks, diskettes,
tapes and all other materials containing any Confidential Information)
irrespective of the location or form of such material. If requested by the
Company, the Executive will provide the Company with written confirmation that
all such materials have been delivered to the Company as provided herein.
(b) Non-Solicitation. During his employment with the Company and for
a period of two years following the termination of the Executive's employment
for any reason, the Executive shall not solicit or attempt to solicit, (a) any
party who is a customer of the Company, BHI or any of their respective
subsidiaries and affiliates, for the purpose of marketing, selling or providing
to any such party any services or products offered by the Company, BHI or any of
their respective subsidiaries and affiliates to such customer other than general
solicitations to the public and not directed specifically at a customer of the
Company, (b) any party who is a vendor of the Company, BHI or any of their
respective subsidiaries and affiliates to sell similar products or (c) any
employee of the Company, BHI or any of their respective subsidiaries and
affiliates to terminate such employee's employment relationship with the
Company, BHI and any of their respective subsidiaries and affiliates in order,
in either case, to enter into a similar relationship with the Executive, or any
other person or any entity in competition with the Company, BHI or any of their
respective subsidiaries and affiliates (other than with respect to general
employment solicitations to the public and not directed specifically at
employees of the Company, BHI and any of their respective subsidiaries and
affiliates).
(c) Non-Competition. During Executive's employment by the Company
and for a period of two years following the termination of the Executive's
employment for any reason, the Executive shall not, whether individually, as a
director, manager, member, stockholder, partner, owner, employee, consultant or
agent of any business, or in any other capacity, other than on behalf of the
Company, BHI or any of their respective subsidiaries and affiliates, organize,
establish, own, operate, manage, control, engage in, participate in, invest in,
permit his name to be used by, act as a consultant or advisor to, render
services for (alone or in association with any person, firm, corporation or
business organization), or otherwise assist any person or entity that engages in
or owns, invests in, operates, manages or controls any venture or enterprise
which engages or proposes to engage in the building products distribution
business in the United States or Canada (the "Business"). Notwithstanding the
foregoing, nothing in this Agreement shall prevent the Executive from owning for
passive investment purposes not intended to circumvent this Agreement, less than
five percent (5%) of the publicly traded voting securities of any company
engaged in the Business (so long as the Executive has no power to manage,
operate, advise, consult with or control the competing enterprise and no power,
alone or in conjunction with other affiliated parties, to select a director,
manager, general partner, or similar governing official of the competing
enterprise other than in connection with the normal
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and customary voting powers afforded the Executive in connection with any
permissible equity ownership).
(d) Remedies; Specific Performance. The parties acknowledge and
agree that the Executive's breach or threatened breach of any of the
restrictions set forth in this paragraph 7 will result in irreparable and
continuing damage to the Company, BHI and their respective subsidiaries and
affiliates for which there may be no adequate remedy at law and that the Company
and BHI shall be entitled to equitable relief, including specific performance
and injunctive relief as remedies for any such breach or threatened or attempted
breach. The Executive hereby consents to the grant of an injunction (temporary
or otherwise) against the Executive or the entry of any other court order
against the Executive prohibiting and enjoining him from violating, or directing
him to comply with any provision of this paragraph 7. The Executive also agrees
that such remedies shall be in addition to any and all remedies, including
damages, available to the Company and BHI against him for such breaches or
threatened or attempted breaches. In addition, without limiting the remedies of
the Company and BHI for any breach of any restriction on the Executive set forth
in this paragraph 7, except as required by law, the Executive shall not be
entitled to any payments set forth in paragraph 6 hereof if the Executive
breaches the covenant applicable to the Executive contained in this paragraph 7
and the Company, BHI and their respective subsidiaries and affiliates will have
no obligation to pay any of the amounts that remain payable by the Company under
paragraph 6.
(e) Communication of Contents of Agreement. During Executive's
employment and for two years thereafter, Executive will communicate his
obligations under this paragraph 7 to any person, firm, association,
partnership, corporation or other entity which Executive intends to be employed
by, associated with, or represent.
(f) The existence of any claim, demand, action or cause of action of
Executive against the Company, whether predicated upon this Agreement or
otherwise, is not to constitute a defense to the Company's enforcement of any of
the covenants or agreements contained in paragraph 7. The Company's rights under
this Agreement are in addition to, and not in lieu of, all other rights the
Company may have at law or in equity to protect its confidential information,
trade secrets and other proprietary interests.
(g) Extension. If a court of competent jurisdiction finally
determines that Executive has violated any of Executive's obligations under this
paragraph 7, then the period applicable to those obligations is to automatically
be extended by a period of time equal in length to the period during which those
violations occurred.
8. Definitions.
(a) "Cause" means, as determined by the BHI Board in good faith:
(i) a material breach of the duties and responsibilities of
Executive;
(ii) Executive's (x) commission of a felony or (y) commission
of any misdemeanor involving willful misconduct (other than minor violations
such as traffic violations) if such misdemeanor causes material damage to the
property, business or reputation of BHI or the Company;
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(iii) acts of dishonesty by Executive resulting or intending
to result in personal gain or enrichment at the expense of the Company, BHI or
their respective subsidiaries and affiliates;
(iv) Executive's material breach of any provision of this
Agreement;
(v) Executive's failure to follow the lawful written
directions of the Company Board or the BHI Board;
(vi) conduct by Executive in connection with his duties
hereunder that is fraudulent, unlawful or willful and materially injurious to
the Company, BHI or their respective subsidiaries and affiliates;
(vii) Executive's engagement in habitual insobriety or the use
of illegal drugs or substances;
(viii) Executive's failure to cooperate fully, or failure to
direct the persons under Executive's management or direction, or employed by, or
consultants or agents to, the Company (or its subsidiaries and affiliates) to
cooperate fully, with all corporate investigations or independent investigations
by the Board or the BHI Board, all governmental investigations of the Company or
its subsidiaries and affiliates, and all orders involving Executive or the
Company (or its subsidiaries and affiliates) entered by a court of competent
jurisdiction;
(ix) Executive's material violation of BHI's Code of Conduct
(including as applicable to senior financial officers), or any successor codes;
(x) Executive's engagement in activities prohibited by
paragraph 7; or
(xi) Notwithstanding the foregoing, no termination of the
Executive's employment shall be for "Cause" until (i) there shall have been
delivered to the Executive a copy of a written notice setting forth the basis
for such termination in reasonable detail, and (ii) the Executive shall have
been provided an opportunity to be heard in person by the Board (with the
assistance of the Executive's counsel if the Executive so desires). No act, or
failure to act, on the Executive's part shall be considered "willful" unless the
Executive has acted or failed to act with a lack of good faith and with a lack
of reasonable belief that the Executive's action or failure to act was in the
best interests of the Company. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the BHI Board or the Company
Board or based upon the advice of counsel for BHI or the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. Any termination of the
Executive's employment by the Company hereunder shall be deemed to be a
termination other than for Cause unless it meets all requirements of this
Section 8(a)(xi).
(b) "Date of Termination" means (i) if Executive's employment is
terminated by the Company for Disability, 30 days after the Company gives Notice
of Termination to Executive (provided that Executive has not returned to the
performance of Executive's duties on a full-time basis during this 30-day
period), (ii) if Executive's employment is terminated by Executive for Good
Reason, the date specified in the Notice of Termination (but in no event
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prior to 30 days following the delivery of the Notice of Termination), and (iii)
if Executive's employment is terminated by the Company for any other reason, the
date on which a Notice of Termination is given; except that if within 30 days
after any Notice of Termination is given to Executive by the Company, Executive
notifies the Company that a dispute exists concerning the termination, the Date
of Termination is to be the date the dispute is finally determined, whether by
mutual written agreement of the parties or upon final judgment, order or decree
of a court of competent jurisdiction (the time for appeal thereof having expired
and no appeal having been perfected).
(c) "Disability" means the determination by the Company, in
accordance with applicable law, based on information provided by a physician
selected by the Company or its insurers and reasonably acceptable to Executive
or Executive's legal representative that, as a result of a physical or mental
injury or illness, Executive has been unable to perform the essential functions
of his job with or without reasonable accommodation for a period of (i) 90
consecutive days or (ii) 180 days in any one-year period.
(d) "Good Reason" means, without the consent of Executive, (A) the
assignment to Executive of any duties inconsistent in any material adverse
respect with Executive's position (including offices, titles and reporting
requirements), authority, duties or responsibilities immediately following the
Effective Date, or any other action by the Company which results in a material
diminution in such position, authority, duties or responsibilities; (B) a
reduction by the Company in Executive's Base Salary or benefits, other than
pursuant to a reduction generally applicable to senior executives of the
Company; (C) the Company's requiring Executive to be based at any office or
location outside of the metropolitan area of Atlanta, Georgia; or (D) any
failure by the Company to comply with and satisfy the requirements for any
assignment of its rights and obligations under paragraph 13. "Good Reason" shall
not include for purposes of (A) through (D) an isolated, insubstantial and
inadvertent action not taken in bad faith which is remedied by the Company
within ten (10) business days after receipt of notice thereof given by
Executive.
(e) "Notice of Termination" means a written notice that indicates
those specific termination provisions in this Agreement relied upon and that
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive's employment under the provision so
indicated. For purposes of this Agreement, no purported termination by either
party is to be effective without a Notice of Termination.
(f) "Release Agreement" means an agreement, substantially in a form
approved by the Company, pursuant to which Executive releases all current or
future claims, known or unknown, arising on or before the date of the release
against the Company, its subsidiaries and its officers.
(g) "Standard Executive Benefits Package" means those benefits
(including, without limitation, retirement, insurance and other welfare
benefits, but excluding, except as provided in paragraph 6, any severance pay
program or policy of the Company) for which substantially all of the Company's
senior executives are from time to time generally eligible, as determined from
time to time by the Board.
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9. Executive Representations. Executive represents to the Company that (a)
the execution, delivery and performance of this Agreement by Executive does not
and will not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which Executive is
a party or by which Executive is bound, (b) Executive is not a party to or bound
by any employment agreement, noncompete agreement or confidentiality agreement
with any other person or entity and (c) upon the execution and delivery of this
Agreement by the Company, this Agreement will be the valid and binding
obligation of Executive, enforceable in accordance with its terms.
10. Withholding of Taxes. The Company shall withhold from any amounts
payable under this Agreement all federal, state, city or other taxes that the
Company is required to withhold under any applicable law, regulation or ruling.
11. American Jobs Creation Act. Notwithstanding anything to the contrary
in this Agreement, in the event that it is determined that any payment to be
made under this Agreement is considered "nonqualified deferred compensation"
subject to Section 409A of the American Jobs Creation Act of 2004, such payment
will be delayed for six months following the Date of Termination; provided,
however, that the parties believe that amounts payable pursuant to Sections
6(c)(3) and 6(c)(4) will not constitute nonqualified deferred compensation so
long as final Regulations ultimately promulgated pursuant to Section 409A of the
Internal Revenue Code contain provisions substantively equivalent to the
provisions of Section 1.409A-1(b)(9) of the proposed Regulations published by
the Department of the Treasury on October 4, 2005 with respect to Section 409A.
12. Excess Parachute Payments.
(a) In the event that it shall be determined, based upon the advice
of the independent public accountants for BHI or the Company (the
"Accountants"), that any payment, benefit or distribution by the Company, BHI or
any of their respective subsidiaries or affiliates (a "Payment") constitute
"parachute payments" under Section 280G(b)(2) of the Code, as amended, then, if
the aggregate present value of all such Payments (collectively, the "Parachute
Amount") exceeds 2.99 times the Executive's "base amount", as defined in Section
280G(b)(3) of the Code (the "Executive Base Amount"), the amounts constituting
"parachute payments" which would otherwise be payable to or for the benefit of
Executive shall be reduced to the extent necessary so that the Parachute Amount
is equal to 2.99 times the Executive Base Amount (the "Reduced Amount");
provided that such amounts shall not be so reduced if the Executive determines,
based upon the advice of the Accountants, that without such reduction Executive
would be entitled to receive and retain, on a net after tax basis (including,
without limitation, any excise taxes payable under Section 4999 of the Code), an
amount which is greater than the amount, on a net after tax basis, that the
Executive would be entitled to retain upon his receipt of the Reduced Amount.
(b) If the determination made pursuant to clause (a) of this
paragraph 9 results in a reduction of the payments that would otherwise be paid
to Executive except for the application of clause (a) of this paragraph 9,
Executive may then elect, in his sole discretion, which and how much of any
particular entitlement shall be eliminated or reduced and shall advise the
Company in writing of his election within ten days of the determination of the
11
reduction in payments. If no such election is made by Executive within such
ten-day period, the Company may elect which and how much of any entitlement
shall be eliminated or reduced and shall notify Executive promptly of such
election.
(c) As a result of the uncertainty in the application of Section
280G of the Code at the time of a determination hereunder, it is possible that
payments will be made by the Company which should not have been made under
clause (a) of this paragraph 12 ("Overpayment") or that additional payments
which are not made by the Company pursuant to clause (a) of this paragraph 12
should have been made ("Underpayment"). In the event that there is a final
determination by the Internal Revenue Service, or a final determination by a
court of competent jurisdiction, that an Overpayment has been made, any such
Overpayment shall be repaid by Executive to the Company together with interest
at the applicable Federal rate provided for in Section 7872(f)(2) of the Code.
In the event that there is a final determination by the Internal Revenue
Service, a final determination by a court of competent jurisdiction or a change
in the provisions of the Code or regulations pursuant to which an Underpayment
arises, any such Underpayment shall be promptly paid by the Company to or for
the benefit of Executive, together with interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the Code.
13. Successors and Assigns. This Agreement is to bind and inure to the
benefit of and be enforceable by Executive, the Company and their respective
heirs, executors, personal representatives, successors and assigns, except that
neither party may assign any rights or delegate any obligations hereunder
without the prior written consent of the other party. Executive hereby consents
to the assignment by the Company of all of its rights and obligations under this
Agreement to any successor to the Company by merger or consolidation or purchase
of all or substantially all of the Company's assets, provided that the
transferee or successor assumes the Company's liabilities under this Agreement
by agreement in form and substance reasonably satisfactory to Executive.
14. Survival. Subject to any limits on applicability contained therein,
paragraph 7 will survive and continue in full force in accordance with its terms
notwithstanding any termination of the Employment Period.
15. Choice of Law. This Agreement is to be governed by the internal law,
and not the laws of conflicts, of the State of New York.
16. Severability. Whenever possible, each provision of this Agreement is
to be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, that invalidity, illegality or unenforceability is not to affect
any other provision or any other jurisdiction, and this Agreement is to be
reformed, construed and enforced in the jurisdiction as if the invalid, illegal
or unenforceable provision had never been contained herein.
17. Notices. Any notice provided for in this Agreement is to be in writing
and is to be either personally delivered, sent by reputable overnight carrier or
mailed by first class mail, return receipt requested, to the recipient at the
address indicated as follows:
12
Notices to Executive:
To the address listed in the personnel records of the Company.
Notices to the Company:
BlueLinx Corporation
0000 Xxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
or any other address or to the attention of any other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement is to be deemed to have been given when so
delivered, sent or mailed.
18. Amendment and Waiver. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and Executive, and
no course of conduct or failure or delay in enforcing the provisions of this
Agreement is to affect the validity, binding effect or enforceability of this
Agreement.
19. Complete Agreement. This Agreement embodies the complete agreement and
understanding between the parties with respect to the subject matter hereof and
effective as of its date supersedes and preempts any prior understandings,
agreements or representations by or between the parties, written or oral, that
may have related to the subject matter hereof in any way.
20. Counterparts. This Agreement may be executed in separate counterparts,
each of which are to be deemed to be an original and both of which taken
together are to constitute one and the same agreement.
21. Attorney's Fees. In the event that Executive substantially prevails on
at least one substantive issue in any dispute in connection with this Agreement,
Executive shall be entitled to recover all attorneys' fees, costs and
disbursements incurred by Executive in connection with such dispute.
"Substantially prevailing", within the meaning of this Section 21, includes
Executive's agreement to dismiss any proceeding upon the Company's payment of
the sums allegedly due or performance of the covenants allegedly breached.
[ SIGNATURE PAGE TO FOLLOW ]
13
The parties are signing this Agreement as of the date stated in the
introductory clause.
BLUELINX CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Counsel & Secretary
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxx
14
EXHIBIT A
FORM OF STOCK OPTION AGREEMENT
BLUELINX HOLDINGS INC.
EQUITY INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AWARD AGREEMENT
Participant Xxxxxxx X. Xxxxxxx
Number of Shares 750,000 Shares
Option Price $13.50
Grant Date October 20, 2005
Option Period Grant Date through tenth anniversary of Grant Date (the "Option
Period")
Type of Option Nonqualified Stock Option
RELATIONSHIP TO PLAN. This Option is granted pursuant to the BlueLinx Holdings
Inc. (the "Company") Equity Incentive Plan (the "Plan") and is in all respects
subject to the terms, conditions and definitions of the Plan (including, but not
limited to, provisions concerning exercise, restrictions on Options,
termination, nontransferability and adjustment of the number of the Shares). The
Participant hereby accepts this Option subject to all the terms and provisions
of the Plan. The Participant further agrees that all decisions under and
interpretations of the Plan by the Administrator shall be final, binding and
conclusive upon the Participant and his or her heirs. All capitalized terms used
herein and not otherwise defined herein shall have the same meanings ascribed to
them in the Plan. If there is any inconsistency between the terms of this Award
Agreement and the terms of the Plan, the Plan's terms shall completely supersede
and replace the conflicting terms of this Award Agreement.
VESTING
REGULAR VESTING. The Participant shall become vested in a percentage of his or
her total stock option in accordance with the following schedule, subject to
accelerated vesting upon a Liquidity Event, as defined in the Plan (which shall
not include the sale or spin-off of any real estate held, directly or
indirectly, by the Company):
A-1
PERCENTAGE OF
OPTION VESTED
-------------
First anniversary of Grant Date 20%
Second anniversary of Grant Date 20%
Third anniversary of Grant Date 20%
Fourth anniversary of Grant Date 20%
Fifth anniversary of Grant Date 20%
LIQUIDITY EVENT. Notwithstanding the provisions related to regular vesting
described above, upon a Liquidity Event (which shall not include the sale or
spin-off of any real estate held, directly or indirectly, by the Company), all
unvested Options shall become immediately vested and exercisable.
EXERCISABILITY OF OPTION. Unless otherwise provided in this Award Agreement or
the Plan, this Option shall entitle the Participant to purchase, in whole at any
time or in part from time to time, to the extent the Option is vested in
accordance with the vesting schedule herein, the Shares subject to this Option,
and each such right of purchase shall be cumulative and shall continue, unless
sooner exercised or terminated as herein provided, during the remaining Option
Period. Any fractional number of Shares resulting from the application of the
foregoing percentages shall be rounded to the next higher whole number of
Shares, but shall not exceed the total number of Shares covered by this Option.
MANNER OF EXERCISE AND PAYMENT. Subject to the terms and conditions of this
Award Agreement and the Plan, this Option may be exercised by delivery of
written notice to the Secretary of the Company, at the Company's principal
executive office. Such notice (a) shall state (i) that the person exercising
this Option is entitled to exercise this Option, (ii) that such person is
electing to exercise this Option and (iii) the number of Shares in respect of
which this Option is being exercised and (b) such person or persons shall (i)
deliver this Award Agreement to the Secretary of the Company who shall endorse
thereon a notation of such exercise and (ii) provide satisfactory proof as to
the right of such person or persons to exercise the Option.
The notice of exercise shall be accompanied by the full Option Price for the
Shares in respect of which this Option is being exercised, in cash or by
certified check.
Upon receipt of notice of exercise and full payment for the Shares in respect of
which this Option is being exercised, the Company shall take such action as may
be necessary to effect the transfer to the Participant of the number of Shares
as to which such exercise was effective.
REQUIREMENTS TO BECOME A STOCKHOLDER. The Participant shall not be deemed to be
the holder of, or to have any of the rights of a holder with respect to, any
Shares subject to this Option until (i) this Option shall have been exercised
pursuant to the terms of this Award Agreement and the Participant shall have
paid the full Option Price for the number of Shares in respect of which this
Option was exercised and (ii) the Company shall have issued and delivered a
certificate representing the Shares to the Participant.
A-2
WITHHOLDING OF TAXES. The Company shall have the right to deduct from any
distribution of cash to the Participant an amount equal to the federal, state
and local income taxes and other amounts as may be required by law to be
withheld (the "Withholding Taxes") with respect to this Option. If the
Participant is entitled to receive Shares upon exercise of this Option, the
Participant shall pay the Withholding Taxes to the Company in cash prior to the
issuance of such Shares.
TERMINATION OF EMPLOYMENT OR RELATIONSHIP. Unless otherwise determined by the
Administrator, in its sole discretion, the Option Period shall terminate and
shall be treated in accordance with the following should any of the following
provisions become applicable:
(i) In the event of a Participant's termination of employment or
relationship for Cause, any unexercised portion of the Option
granted to the Participant will terminate as of the date of such
termination of employment or relationship.
(ii) In the event of a Participant's termination of employment or
relationship by the Company or a subsidiary other than for Cause or
the Participant resigns from employment or relationship for any
reason, (other than on account of death or Disability), (i) any
unvested portion of the Participant's Option shall terminate and
(ii) any portion of the Participant's Option that was vested and
exercisable on the date of his or her termination of employment or
relationship shall remain exercisable for a period of 3 months after
the date of termination, and any portion of such Option not
exercised within such 3 month period shall be forfeited; provided,
however, that in no event may such Option be exercised after the
expiration of the Option Period.
(iii) In the event a Participant's employment or relationship shall
terminate on account of death or Disability, (i) any unvested
portion of the Participant's Option shall terminate and (ii) the
Participant (or his or her personal representative) may exercise all
vested and exercisable Options within the earlier of (x) one year
from the date of such death or Disability or (y) the expiration of
the Option Period.
TRANSFERABILITY. The Option granted hereunder shall not be transferable other
than by will or by the laws of descent and distribution. During the lifetime of
the Participant, the Option shall be exercisable only by the Participant. Any
portion of the Option exercisable at the date of the Participant's death and
transferred by will or by the laws of descent shall be exercisable in accordance
with the terms of the Option by the executor or administrator, as the case may
be, of the Participant's estate (each, a "Designated Beneficiary") for the
period provided herein with respect to termination of employment as a result of
the Participant's death.
NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Award Agreement or in the
Plan shall confer upon the Participant any right to continue such Participant's
relationship with the Company or a subsidiary thereof, nor shall it give any
Participant the right to be retained in the employ of the Company or a
subsidiary or interfere with or otherwise restrict in any way the rights of the
Company or a subsidiary, which rights are hereby expressly reserved, to
terminate
A-3
any Participant's employment or relationship at any time for any reason, except
as may be set forth in an employment agreement between the Participant and the
Company or a subsidiary of the Company.
MODIFICATION OF AWARD AGREEMENT. This Agreement may be modified, amended,
suspended or terminated, and any terms or conditions may be waived, but only by
a written instrument executed by the parties hereto.
INVESTMENT REPRESENTATION. The Participant or his Designated Beneficiary, as the
case may be, shall deliver to the Administrator at the time of any exercise of
an Option, a written representation that the Shares to be acquired upon such
exercise are to be acquired for such Participant's or Designated Beneficiary's
own account and not with a view to, or for resale in connection with, any
distribution. Delivery of such representation prior to the delivery of any
Shares issued upon exercise of an Option shall be a condition precedent to the
right of the Participant or his Designated Beneficiary to purchase any Shares.
SEVERABILITY. Should any provision of this Agreement be held by a court of
competent jurisdiction to be unenforceable or invalid for any reason, the
remaining provisions of this Agreement shall not be affected by such holding and
shall continue in full force in accordance with their terms.
GOVERNING LAW. The validity, interpretation, construction and performance of
this Award Agreement shall be governed by the laws of the State of New York
without giving effect to the conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Award
Agreement as of the date indicated below.
BLUELINX HOLDINGS INC.
By:
------------------------------
Name: Xxxxxxx Xxxxxxx
Title: General Counsel & Secretary
PARTICIPANT
By:
-----------------------------
Name: Xxxxxxx X. Xxxxxxx
Address:
A-4
EXHIBIT B
EXECUTIVE BENEFITS PACKAGE
The following benefits will be provided as for other salaried employees
Salaried 401(k) Plan
Medical and Dental Insurance
The following benefits will be provided Xx. Xxxxxxx:
- Life Insurance - $950,000.00
- AD&D Insurance - $250,000.00
- Personal excess liability coverage - $6,000,000.00
- Annual physical - up to $1,800.00
- Annual auto allowance - $10,000.00
- Annual tax/accounting allowance - up to $6,000.00
- Annual Country Club dues allowance - up to $8,000.00
B-1
