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Exhibit 10.34
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"Agreement"), dated as of November 15, 1996, by and between ProSource Services
Corporation (the "Company"), and Xxxxx X. Xxxxxx (the "Employee").
RECITALS
WHEREAS, the Company (f/k/a BKDA Corporation) and the Employee
are parties to an Employment Agreement, dated July 1, 1992 (the "Original
Agreement").
WHEREAS, the Employee and Onex Management U.S. Inc. ("Onex")
are parties to a letter agreement, dated July 21, 1992 (the "Onex Consulting
Agreement").
WHEREAS, the Company and the Employee desire to amend and
restate in its entirety the Original Agreement as hereinafter provided.
WHEREAS, Onex and the Employee desire to terminate the Onex
Consulting Agreement.
NOW, THEREFORE, the parties agree as follows:
1. EFFECTIVENESS AND EMPLOYMENT. The Company shall employ the
Employee and the Employee shall be employed by the Company as of the date of
this Agreement (the "Commencement Date").
2. TERM. The term of this Agreement and the employment of the
Employee hereunder shall commence as of the Commencement Date, continue until
July 1, 1997, and automatically shall be extended for an unlimited number of
successive one-year periods unless terminated (a) by the Company or the Employee
effective as of July 1, 1997 or any subsequent
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anniversary thereof upon the giving of written notice of such party's intention
to terminate on or before January 1 of the year in which such employment is to
terminate, or (b) as provided in Section 5.
3. POSITIONS AND DUTIES; PLACE OF PERFORMANCE.
(a) POSITIONS AND DUTIES. The Employee shall be employed as
Chairman of the Board of the Company and shall have the duties, responsibilities
and authority as may from time to time be assigned to him by the Company's Board
of Directors (the "Board") that are consistent with and normally associated with
such position and, without additional compensation, shall serve as a member of
the Board and as chairman of the Board of Directors of ProSource Inc. (f/k/a
Onex Distribution, Inc.) ("ProSource") and shall hold such offices at ProSource
and its subsidiaries, as ProSource's board of directors determines. The Employee
shall devote substantially all of his business time, effort, and energies
exclusively to the business of the Company, ProSource and its other
subsidiaries, and shall not serve as an active principal or a director or
officer of any other company or entity without the prior written consent of the
Board, except that the Employee may serve, without such consent, as a director
or officer of any company on the board of which he is currently serving and of
any trade association, civic, educational or charitable organization unless the
Board determines that such service interferes with the performance of Employee's
duties hereunder.
(b) PLACE OF PERFORMANCE. The Employee shall be based in
the Miami, Florida metropolitan area, except for required travel on the
Company's business.
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4. COMPENSATION AND BENEFITS.
(a) BASE SALARY. Effective as of the Commencement Date, the
Company shall pay the Employee a base salary at the rate of $425,000 per year
through December 31, 1996 and thereafter at the rate of $450,000 per year (the
"Base Salary"), payable in accordance with the Company's normal payroll
practices for senior executives. The Board shall review the Base Salary
annually; the Employee shall be entitled to such increases in his Base Salary as
may be determined from time to time by the Board or pursuant to its delegation.
If the Base Salary is increased, the new salary shall thereafter constitute the
"Base Salary" for purposes of this Agreement.
(b) BONUSES. In addition to Base Salary, the Employee may
receive a cash bonus. The bonus shall be determined in accordance with any
applicable executive management bonus or incentive compensation plan in effect
at the date of determination or, if no such plan is in effect, by the Board or
the appropriate committee thereof, in its sole discretion.
(c) OTHER BENEFIT PLANS AND FRINGE BENEFITS. The Employee
shall be eligible to (i) participate in ProSource's Amended and Restated
Management Option Plan (1995) and 1996 Stock Option Plan, (ii) participate in
all employee benefit plans maintained by the Company for its senior management
executives during the employment term, (iii) receive all fringe benefits for
which his status and level of employment qualify him in accordance with the
Company's usual plans, policies, and arrangements, and (iv) be reimbursed for up
to $6,000 for actual expenses incurred for, among other things, financial
consulting and tax planning and preparation and legal advice.
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(d) VACATION. Employee shall be entitled to four weeks of
paid vacation annually. Employee shall determine, in his reasonable discretion,
the timing of such vacation.
(e) AUTOMOBILE. During the term of his employment, the
Company shall pay to Employee on a monthly basis an amount equal to $1,500 to
cover the monthly cost of an automobile of his choice and related expenses,
including insurance on, maintenance of, and fuel for, the automobile.
(f) INITIATION FEES/CLUB DUES. The Employee shall receive
$7,000 each year for club memberships, including country clubs, luncheon clubs,
health clubs, and airline travel clubs.
5. TERMINATION.
(a) COMPENSATION AND BENEFITS. Except as otherwise provided
in this Section or Section 7, upon termination of the Employee's employment
hereunder, his right to compensation hereunder shall cease except that the
Employee shall be entitled to receive his Base Salary and benefits up to the
Date of Termination (as defined in Section 5(e)) or for the period required by
law, except that any bonus payable pursuant to Section 4(b) shall be prorated to
the Date of Termination.
(b) DEATH AND DISABILITY. The Employee's employment
hereunder shall terminate upon his death and may be terminated by the Company
due to Employee's Disability. For purposes of this Agreement, "Disability" shall
mean the determination by the Board that the Employee is physically or mentally
incapacitated and has been unable for a period of six consecutive months, or for
shorter periods aggregating six months in any period of 12
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consecutive months, to perform the duties for which he was responsible
immediately before the onset of his incapacity. To assist the Board in making
such a determination, the Employee shall, as reasonably requested by the Board,
(i) make himself available for medical examinations, without cost to Employee,
by a physician chosen by the Board and approved by the Employee, whose approval
shall not unreasonably be withheld, and (ii) grant the Board and any such
physician access to all relevant medical information concerning him, arrange to
furnish copies of medical records to such physician, and use his best efforts to
cause his own physicians to be available to discuss his health with such
physician. The determination of the physician chosen in accordance with the
preceding sentence shall be final and binding on the Company and the Employee.
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Employee's
employment hereunder may be terminated by the Company for Cause. For purposes of
this Agreement, the term "Cause" shall mean (i) the Employee's conviction of a
crime involving actual dishonesty against the Company or any of its affiliates,
(ii) gross negligence or gross misconduct by the Employee against the Company or
another employee, or in carrying out his duties and responsibilities, or (iii) a
breach of the provisions of Section 6(a) or (b) hereof, that is harmful to the
Company or any of its affiliates. In any case described in this Section 5(c),
the Board shall give the Employee written notice, in accordance with Section
5(e), that the Company intends to terminate his employment for Cause (the
"Preliminary Cause Notice"). The Preliminary Cause Notice shall specify the
particular act or acts or failure to act that is or are the basis for the
decision to so terminate the Employee's employment for Cause. The Board shall
give the Employee an opportunity to meet with the Board to defend such act or
acts or failure to
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act within 30 calendar days of Employee's receipt of such notice and to correct
such act or failure to act within 30 business days following such meeting. If
the Employee fails to correct such act or failure to act within the 30 business
days following the meeting, the Employee's employment by the Company shall be
terminated under this Section 5(c) for Cause as of the Date of Termination.
(d) COMPENSATION UPON TERMINATION WITHOUT CAUSE OR FOR
DISABILITY.
(i) If the Company terminates the Employee's employment
hereunder without Cause or for disability in accordance with Section 5(b):
(A) In addition to the amounts paid to the Employee
pursuant to Section 5(a), in lieu of any further salary payments to the Employee
for any period subsequent to the Date of Termination, the Company shall pay to
the Employee, during the one-year period commencing on the Date of Termination,
an amount equal to (1) the Employee's annual Base Salary in effect as of the
Date of Termination plus (2) a cash bonus in an amount equal to the pro rata
portion of the actual incentive payment that Employee would have received under
the management incentive plan for the year in which the Date of Termination
occurs but for Employee's termination. Except as provided in Section 7, the
amount described in clause (1) of this Paragraph (A) shall be paid in
substantially equal monthly payments during the 12-month period following the
Date of Termination, except that the Company may determine, in its sole
discretion, to pay such amount (or any portion remaining during such period if
periodic payments have commenced) in a single lump sum in cash or, if so
requested by the Employee, in two lump sums. The amount described in clause (2)
of this Paragraph (A) shall be paid at the same time as
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payments are or would have been made under the incentive plan in effect on the
Date of Termination.
(B) For the one-year period following the Date of
Termination, the Company shall continue to provide the Employee (and his
eligible dependents, if any) with (1) group health and life insurance benefits
and long-term disability insurance coverage (or the economic equivalent thereof)
at the level in effect on the Date of Termination, (2) the perquisite allowance
referred to in Section 4(c)(iv), and (3) the benefits referred to in Sections
4(e) and 4(f); provided that if the Employee is employed by another employer
within such one-year period such benefits and insurance coverage shall cease
except for insurance coverage for conditions existing on the date of employment
by an employer other than the Company, and further provided that, at the
expiration of the extended period of insurance coverage provided under this
clause (i)(B), the Employee (and his eligible dependents, if any) shall be
entitled to the full period of coverage provided him under Section 4980B of the
Internal Revenue Code of 1986, as amended, unless other employment has been
obtained.
(C) The Company shall reimburse Employee for actual costs
incurred in seeking reemployment, including costs of outplacement services up to
a maximum of $25,000.
(e) NOTICE OF TERMINATION; DATE OF TERMINATION. Any
termination of the Employee's employment, other than by reason of his death,
shall be communicated by the terminating party by a written notice of
termination (the "Notice of Termination"). The Notice of Termination shall (i)
indicate the specific termination provision in this Agreement upon which the
termination is based, (ii) set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated,
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and (iii) specify the Date of Termination. For purposes of this Agreement, "Date
of Termination" shall mean (i) if the Employee's employment is terminated by his
death, the date of his death, and (ii) in all other cases, the later of the date
of actual receipt of the Notice of Termination and the date specified in such
notice. The Date of Termination shall not occur prior to the completion of the
cure period described in Section 5(c) if termination is for Cause.
(f) NO MITIGATION; NO OFFSET. In the event of any
termination of the Employee's employment under this Section 5, the Employee
shall be under no obligation to seek other employment and there shall be no
offset against any amounts due the Employee under this Agreement on account of
any remuneration that the Employee may obtain from any subsequent employment.
Any amounts due under this Section 5 are in the nature of liquidated damages and
not in the nature of a penalty.
6. COVENANTS.
(a) CONFIDENTIALITY. The Employee acknowledges that he has
acquired and will acquire confidential information respecting the business of
the Company. Accordingly, the Employee agrees that he will not willfully
disclose, at any time (during the employment term or thereafter), any such
confidential information to any unauthorized third party without the consent of
the Company as authorized by the Board. For this purpose, information shall be
considered confidential only if such information is proprietary to the Company
and has not been made publicly available prior to its disclosure by the
Employee. There shall be no breach of this Section 6(a) if the disclosure does
not have an adverse effect on the Company's business or operations, or otherwise
harm or damage the Company.
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(b) COMPETITIVE ACTIVITY. (i) If Employee's employment
hereunder is terminated, Employee shall not, without the written consent of the
Board, during the twelve-month period following the Date of Termination,
directly, individually or as an employee, agent, partner, shareholder,
consultant or in any other capacity, participate in, engage in or have a
financial interest or management position or other interest in any business
operation or any enterprise that is in direct competition with the Company. The
ownership of an interest constituting not more than 1% of the outstanding debt
or equity in a corporation the shares of which are traded on a recognized stock
exchange or trade in the over-the-counter market, even though that corporation
may be a competitor of the Company or any of its subsidiaries, shall not be
deemed financial participation in a competitor.
(ii) The Employee shall not, without the written consent of the Board,
during the employment term and through the first anniversary of his Date of
Termination, directly or indirectly, either for his own benefit or for the
benefit of any other person, solicit to take away, or take away any customers
doing business with the Company on the Date of Termination or who were being
solicited to become customers as of the Date of Termination or recruit, induce,
or encourage any employee of the Company or any affiliate of the Company to
terminate such employee's employment with the Company or such affiliate, except
that nothing herein shall prohibit the Employee from giving a reference or a
recommendation to any third party with respect to any such employee.
(c) REMEDY FOR BREACH AND MODIFICATION. The Employee
acknowledges that the provisions of this Section 6 are reasonable and necessary
for the protection of the Company and that the Company will be irrevocably
damaged if such provisions
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are not specifically enforced. Accordingly, the Employee agrees that, in
addition to any other relief or remedies available to the Company, the Company
shall be entitled to seek and obtain an appropriate injunction or other
equitable remedy from a court with proper jurisdiction for the purposes of
restraining the Employee from any actual or threatened breach of such
provisions, and no bond or security will be required in connection therewith. If
any provision of this Section 6 is deemed invalid or unenforceable, such
provision shall be deemed modified and limited to the extent necessary to make
it valid and enforceable.
7. SECTION 280G PAYMENTS. If the aggregate present value of
the Employee's payments under this Agreement, and any plan, program, or
arrangement maintained by the Company constitutes an "excess parachute payment"
(within the meaning of Section 280G(b)(1) of the Internal Revenue Code of 1986,
as amended (the "Code")) and the excise tax on such payment would cause the net
parachute payments (after taking into account federal, state and local income
and excise taxes) to which the Employee otherwise would be entitled to be less
than what the Employee would have netted (after taking into account federal,
state and local taxes) had the present value of his total parachute payments
equaled $1.00 less than three times his "base amount" (within the meaning of
Code Section 280(G)(b)(3)(A)), the Employee's total "parachute payments" (within
the meaning of Code Section 280G(b)(2)(A)) shall be reduced (by the minimum
possible amount) so that their aggregate present value equals $1.00 less than
three times such base amount. For purposes of this calculation, it shall be
assumed that the Employee's tax rate will be the maximum marginal federal, state
and local income tax rate on earned income, with such maximum federal rate to be
computed with regard to Code Section 1(g), if applicable. If the Employee and
the Company are unable to agree as to
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the amount of the reduction described above, if any, the Employee shall select a
law firm or accounting firm from among those regularly consulted (during the
twelve-month period immediately prior to the change in control that resulted in
the characterization of the payments as parachute payments) by the Company
regarding federal income tax or employee benefit matters and such law firm or
accounting firm shall determine the amount of such reduction and such
determination shall be final and binding upon the Employee and the Company.
8. INDEMNIFICATION. The Company shall indemnify, defend, and
hold the Employee harmless, to the maximum extent permitted by law, from any and
all claims, litigation, or suits arising out of the activities of the Employee
reasonably taken in the performance of his duties hereunder, including all
reasonable expenses and professional fees that may relate thereto. The Company
shall obtain a directors and officers liability insurance policy covering the
Employee in a sufficient amount to provide such indemnification if such coverage
is available on commercially reasonable terms, and shall maintain such policy
during the employment term (and for so long thereafter as is practicable in the
circumstances taking into account the availability of such insurance).
9. TERMINATION OF ONEX CONSULTING AGREEMENT. Onex and the
Employee agree that the Onex Consulting Agreement is hereby terminated.
10. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida applicable to
agreements made and to be performed in that State.
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(b) NOTICE. Any notice, consent, request or other
communication made or given in connection with this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or mailed by
registered or certified mail, return receipt requested, to those listed below at
their following respective addresses or at such other address as each may
specify by notice to the others:
To the Employee, to his attention at:
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
To the Company:
ProSource Services Corporation
000 Xxxxxxxx Xxx, 00xx Xxxxx
Xxxxx Xxxxxx, Xxxxxxx 00000
Attention: President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
To Onex:
Onex Management U.S. Inc.
000 Xxx Xxxxxx
00xx Xxxxx
X.X. Xxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Xxxxxx
Attention: Xxxxxxx X. Xxxxxx
Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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With copies (in the case of notices to
the Employee or the Company) to:
Xxxxxxx X. Xxxxxx
Vice President
Onex Corporation
000 Xxx Xxxxxx
00xx Xxxxx
X.X. Xxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxx X. Xxxxxxxxx, Esq.
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(c) ENTIRE AGREEMENT; AMENDMENT. This Agreement shall
supersede any and all existing agreements between the Employee and the Company
or any of its affiliates and the Employee and Onex or any of its affiliates
relating to the terms of the Employee's employment during the employment term.
It may not be amended except by a written agreement signed by both parties.
(d) WAIVER. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver thereof or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
(e) ASSIGNMENT. Except as otherwise provided in this
Section 9(e), this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their
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respective heirs, representatives, successors and assigns. This Agreement shall
not be assignable by the Employee and shall be assignable by the Company only to
any corporation or other entity resulting from the reorganization, merger, or
consolidation of the Company with any other corporation or entity or any
corporation or entity to or with which the Company's business or substantially
all of its business or assets may be sold, exchanged, or transferred, and it
must be so assigned by the Company to, and accepted as binding upon it by, such
other corporation or entity in connection with any such reorganization, merger,
consolidation, sale, exchange, or transfer (the provisions of this sentence also
being applicable to any such successive transaction).
(f) HEADINGS. Section headings are used herein for
convenience of reference only and shall not affect the meaning of any provision
of this Agreement.
(g) RULES OF CONSTRUCTION. Whenever the context so
requires, the use of the masculine gender shall be deemed to include the
feminine and vice versa, and the use of the singular shall be deemed to include
the plural and vice versa.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
By and on behalf of
PROSOURCE SERVICES CORPORATION
By: /s/ Xxxxxx X. Highland
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Xxxxxx X. Highland
President
XXXXX X. XXXXXX
/s/ Xxxxx X. Xxxxxx
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For purposes of Section 9 only:
ONEX MANAGEMENT U.S. INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title:
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