EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT is made and entered into between
Strategic Distribution, Inc., a Delaware corporation (the "COMPANY"), and Xxxx
X. Xxxxxx (the "EXECUTIVE"), as of April 11, 1997.
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive, and the
Executive desires to accept employment with the Company, on the terms and
conditions set forth herein;
NOW, THEREFORE, on the basis of the foregoing premises and in
consideration of the mutual covenants and agreements contained herein, the
parties hereto agree as follows:
SECTION 1. EMPLOYMENT. The Company hereby agrees to employ the
Executive and the Executive hereby accepts employment with the Company, on the
terms and subject to the conditions hereinafter set forth. Subject to such
terms and conditions, the Executive shall serve as President and Chief Executive
Officer of the Company and, in such capacity, shall report directly to the Board
of Directors of the Company (the "BOARD OF DIRECTORS") and shall have such
duties, functions, responsibilities and authority as are consistent with the
Executive's position as the senior executive officer in charge of the general
management, business and affairs of the Company and subsidiaries of the Company
including, but not limited to, the development and implementation of strategies
and goals and internal policies and program designed to achieve the profit,
market share and product mix goals of the Company and its subsidiaries, together
with such additional duties, functions, responsibilities and authority
including, without limitation, serving as an officer and/or director of any
subsidiary of the Company, commensurate with the Executive's position as set
forth in this Agreement, as may be assigned to the Executive from time to time
by the Board of Directors. The Company shall use best efforts to have the
Executive nominated to the Board of Directors. The Executive shall generally
perform his duties at and from the Company's headquarters.
SECTION 2. TERM. Subject to the provisions and conditions of this
Agreement (including Section 6), the Executive's employment hereunder shall
commence on May 1, 1997 (the "Employment Commencement Date") and shall continue
during the period ending on the third anniversary of the Employment Commencement
Date (the "EMPLOYMENT TERM").
SECTION 3. COMPENSATION.
(a) SALARY. As compensation for the performance of the Executive's
services hereunder, the Company shall pay to the Executive a base salary (the
"SALARY") of Three Hundred Sixty Thousand Dollars ($360,000) per annum with
increases, if any, as may be approved in writing by the Board of Directors. The
Salary shall be payable in accordance with payroll practices of the Company as
the same shall exist from time to time. In no event shall the Salary be
decreased during the Employment Term.
(b) BONUS PLAN. The Executive shall be entitled to receive bonus
compensation consisting of cash and/or common stock of the Company ("BONUS") in
accordance with any management incentive plan or plans (including, without
limitation, any shared earnings plan) which may be established by the Board of
Directors of the Company for its executive officers and management.
Notwithstanding the foregoing, the Executive shall be entitled to receive a cash
bonus of not less than One Hundred Eighty Thousand Dollars ($180,000) in
consideration of services to be rendered to the Company in 1997.
(c) BENEFITS. In addition to the Salary and Bonus, the Executive
shall be entitled to participate in or to receive the same health, insurance,
pension, automobile allowance, severance, vacation, holiday, sick leave,
disability, profit sharing, 401(k) savings and other benefits as shall be
provided to executive officers of the Company generally, or as otherwise agreed
to by the parties.
(d) PAYING ENTITY. The Company may cause any one or more of its
subsidiaries to provide the salary and benefits to the Executive as are required
by this Agreement.
SECTION 4. EXCLUSIVITY. During the Employment Term, the Executive
shall devote substantially all of his time to the business of the Company, shall
faithfully serve the Company, shall in all respects conform to and comply with
the lawful directions and instructions given to him by the Board of Directors or
its designee in accordance with the terms of this Agreement, shall use his best
efforts to promote and serve the interests of the Company and shall not engage
in any other business activity, whether or not such activity shall be engaged in
for pecuniary profit, except that the Executive may engage in personal investing
and charitable activities that do not interfere in any material respect with the
services to be provided by the Executive hereunder. Notwithstanding the
foregoing, it is understood and agreed that the Executive is serving or
committed to serve, and will continue to serve (at his discretion), on the
boards of directors of GAF Materials Corporation and Xxxx Industries; to the
extent that the Executive wishes to serve on the board of directors of any other
for profit
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corporation, he will first obtain the consent of the Executive
Committee of the Board of Directors.
SECTION 5. REIMBURSEMENT FOR EXPENSES. The Company shall promptly
reimburse the Executive for all reasonable out-of-pocket travel, entertainment
and other business expenses incurred by the Executive during the term of this
Agreement and in the performance of his duties hereunder in accordance with the
Company's reimbursement policies in effect from time to time.
SECTION 6. TERMINATION.
(a) DEATH. This Agreement shall automatically terminate upon the
death of the Executive and upon such event, the Executive's estate shall be
entitled to receive the amounts specified in Section 6(f) below.
(b) DISABILITY. If the Executive is unable to perform the duties
required of him under this Agreement because of physical or mental disability,
this Agreement shall remain in full force and effect and the Company shall pay
all compensation required to be paid to the Executive hereunder, unless the
Executive is unable, as a result of injuries or illnesses that are substantially
related to each other, to perform the duties required of him under this
Agreement for an aggregate of ninety (90) days (whether or not consecutive)
during any twelve (12) month period during the term of this Agreement, in which
event this Agreement (other than Sections 7, 8, 9 and 12 hereof), including, but
not limited to, the Company's obligations to pay any Salary or to provide any
privileges under this Agreement, shall, upon written notice by the Company to
the Executive to such effect, terminate; PROVIDED, HOWEVER, that the foregoing
shall not prejudice the Executive's rights to continuing, existing insurance
benefits for which he is otherwise eligible, including disability benefits. In
case of any dispute as to whether the Executive is disabled within the meaning
of this Section 6(b), the determination of such disability for the period
specified shall be certified by a physician reasonably acceptable to both the
Company and the Executive, which physician's determination shall be final and
binding on the parties hereto. The Company shall be permitted to hire a
replacement of the Executive, so long as this Agreement shall remain in effect,
to serve in the event and for so long as the Executive shall be unable to
perform the duties required of him hereunder due to his disability for an
aggregate of thirty (30) days during any 12-month period during the term of this
Agreement.
(c) CAUSE. The Company may terminate this Agreement (other than
Sections 7, 8, 9 and 12 hereof) for "Cause." For purposes of this Agreement,
"CAUSE" shall mean: (i) the Executive's willful failure, gross neglect or
willful refusal to perform his duties hereunder which failure, neglect or
refusal shall not have been corrected by the Executive within thirty (30)
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days of receipt by the Executive of written notice from the Company of such
failure, neglect or refusal, which notice shall set forth the nature of said
failure, neglect or refusal; (ii) conviction of the Executive for the
commission of a felony; or (iii) the commission by the Executive of a proven
act of fraud or embezzlement against the Company. If the Executive's
employment is terminated for Cause, the Executive shall be entitled to
receive the amounts specified in Section 6(f) hereof. In the event of any
termination pursuant to this Section 6(c),the Company shall deliver to the
Executive written notice setting forth the basis for such termination, which
notice shall set forth the nature of the Cause, and the facts and
circumstances in connection therewith, which is the reason for such
termination.
(d) GOOD REASON. The Executive may terminate this Agreement for
"GOOD REASON" following a Substantial Breach (as defined below) if such
Substantial Breach shall not have been corrected by the Company within thirty
(30) days of receipt by the Company of written notice from the Executive of the
occurrence of such Substantial Breach, which notice shall specifically set forth
the nature of the Substantial Breach which, if not corrected, will entitle the
Executive at any time after such thirty (30) day notice period and by subsequent
written notice to terminate this Agreement. In the event of resignation by the
Executive following a Substantial Breach, the Executive shall be entitled to
receive the amounts specified in Section 6(f) hereof. An election by the
Executive to terminate his employment under this paragraph shall not be a breach
of this Agreement. The term "SUBSTANTIAL BREACH" means any material breach by
the Company of its obligations hereunder consisting of: (i) the failure of the
Company to pay the Executive the Salary or Bonus, if any, in accordance with
Section 3(a) and (b) hereof; (ii) the failure by the Company to substantially
maintain and continue the Executive's participation in benefit plans as provided
in Section 3(c) hereof; (iii) any material diminishment in the duties or
responsibilities of the Executive described in Section 1 including without
limitation a change in the functions which report, directly or indirectly, to
the Executive; (iv) any relocation of the Company's headquarters to a location
more than fifty (50) miles from the current headquarters of the Company without
the written consent of the Executive; (v) a merger, reorganization or other
business combination involving the Company if the Company is not the surviving
corporation; (vi) a sale of all or substantially all of the Company's assets; or
(vii) the acquisition, by a person (as such term is used in Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Act"))
other than a shareholder identified in the Company's most recent proxy
statement, of beneficial ownership (as such term is used in Rule 13d-3
promulgated under the Act) of thirty-three percent (33%) or more of the issued
and outstanding common stock of the Company; PROVIDED, HOWEVER, that the term
"SUBSTANTIAL BREACH" shall not include a termination of the Executive's
employment hereunder pursuant to Section 6(b) or
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(c) hereof. The date of termination of the Executive's employment under this
Section 6(d) shall be the effective date of any resignation specified in
writing by the Executive, which shall not be less than sixty (60) days after
receipt by the Company of written notice of such resignation, PROVIDED that
any resignation by the Executive shall not be effective pursuant to this
Section 6(d) if such Substantial Breach shall have been corrected by the
Company during the thirty (30) day period following notice by the Executive
of the existence thereof or if corrected thereafter prior to the date of
resignation by the Executive.
(e) WITHOUT CAUSE. The Company, by action of its Board of
Directors, may terminate this Agreement (other than Sections 7, 8, 9 and 12
hereof) without Cause upon the giving to the Executive of thirty (30) days'
prior written notice of such termination. If the Executive's employment is
terminated by the Company without Cause, the Executive shall be entitled to
receive the amounts specified in Section 6(f) hereof.
(f) PAYMENTS. In the event that the Executive's employment
hereunder terminates for any reason, the Company shall promptly pay to the
Executive all amounts accrued but unpaid hereunder through the date of
termination in respect of the Salary and for reimbursement of any expenses
pursuant to Section 5 hereof, and, in the case of any termination by reason
of death or physical or mental disability of the Executive pursuant to
Section 6(a) or 6(b) hereof, a pro rated portion of the Bonus, if any, which
the Executive would have been otherwise entitled to receive under Section
3(b) for the calendar year in which such termination occurs, such pro rated
portion being the portion of such Bonus corresponding to the period
commencing on January 1 of such year and ending on the date of termination.
In the event that the Executive's employment has been terminated by the
Company for Cause, the Company shall have no obligations to the Executive for
Salary, Bonus or other benefits herein provided accruing on or after the date
of termination except as set forth in the preceding sentence or as may be
otherwise provided by law. In the event that the Executive's employment with
the Company is terminated by the Company during the term of this Agreement or
thereafter without Cause or by the Executive with Good Reason, in addition to
the amounts specified in the first sentence of this Section 6(f), the
Executive shall continue to receive the Salary at the rate in effect
hereunder on the date of such termination periodically, in accordance with
the Company's prevailing payroll practices, until the last date of the
Employment Term or until the first anniversary of the termination date, if
longer, PLUS (i) the cost of the Executive's premiums for health care
benefits under COBRA or the cost of the Executive's premiums under any
replacement health insurance coverage obtained by the Executive containing
substantially the same coverage as provided to the Executive at such time,
which premiums shall be payable as and when the Salary would otherwise have
been payable as provided in this Agreement; and (ii) a pro rated portion of
the Bonus, if
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any, which the Executive would have otherwise been entitled to receive under
Section 3(b) for the calendar year in which the Executive is terminated pro
rated in the same manner as set forth in the first sentence of this Section
6(f). Without intending to limit the generality of Section 7, in the event
that the Executive accepts other employment or engages in his own business
prior to the last date of the Employment Term, the Executive shall forthwith
notify the Company and the Company shall be entitled to set off from amounts
due the Executive under this Section 6(f) in respect of his Salary the
amounts paid to the Executive in respect of such other employment or business
activity. Upon any termination of this Agreement, all of the rights,
privileges and duties of the Executive hereunder shall cease except for any
rights under this Section 6(f) and any obligations under Sections 7, 8, 9 and
12 hereunder.
SECTION 7. SECRECY AND NON-COMPETITION.
(a) NO COMPETING EMPLOYMENT. The Executive acknowledges that the
agreements and covenants contained in this Section 7 are essential to protect
the value of the Company's business and assets and that by virtue of his
employment with the Company, the Executive will obtain Confidential
Information and there is a substantial probability that such Confidential
Information could be used to the substantial advantage of a competitor of the
Company or its subsidiaries and to the Company's or its subsidiaries'
substantial detriment. Therefore, the Executive agrees that except in
connection with his employment hereunder or as required by legal process, he
shall not disclose to any person or entity or use, during the Employment Term
or at any time thereafter, any information not in the public domain or
generally known in the industry, in any form acquired by the Executive while
employed by the Company or, if acquired following the Employment Term, such
information which, to the Executive's knowledge, has been acquired, directly,
or indirectly, from any person or entity owing, to the Executive's knowledge,
a duty of confidentiality to the Company or any of its subsidiaries or
affiliates, relating to the Company, its subsidiaries or affiliates,
including but not limited to information regarding customers, vendors,
suppliers, trade secrets, training programs, manuals or materials, technical
information, contracts, systems, procedures, mailing lists, know-how, trade
names, improvements, price lists, financial or other data (including the
revenues, costs or profits associated with any of the Company's products or
services), business plans, code books, invoices and other financial
statements, computer programs, software systems, databases, discs and
printouts, plans (business, technical or otherwise), customer and industry
lists, correspondence, internal reports, personnel files, sales and
advertising material, telephone numbers, names, addresses or any other
compilation of information, written or unwritten, which is or was used in the
business of the Company or any of its subsidiaries or affiliates
(collectively, "CONFIDENTIAL
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INFORMATION"). The Executive agrees and acknowledges that all Confidential
Information, in any form, and copies and extracts thereof, are and shall
remain the sole and exclusive property of the Company and upon termination of
his employment with the Company, the Executive shall return to the Company
the originals and all copies of any Confidential Information provided to or
acquired by the Executive in connection with the performance of his duties
for the Company, and shall return to the Company all files, correspondence
and/or other communications received, maintained and/or originated by the
Executive during the course of his employment.
(b) NO INTERFERENCE. During the term of this Agreement and for a
period of two (2) years following the date of the termination of the
Executive's employment with the Company (the "Restricted Period"), the
Executive shall not, whether for his own account or for the account of any
other individual, partnership, firm, corporation or other business
organization (other than the Company), directly or indirectly, solicit,
endeavor to entice away from the Company, its affiliates or subsidiaries, or
otherwise directly interfere with the relationship of the Company, its
affiliates or subsidiaries with any person who, to the knowledge of the
Executive, is employed by or otherwise engaged to perform services for the
Company, its affiliates or subsidiaries during the term of the Executive's
employment with the Company (including, but not limited to, any independent
distributor or sales representative or organization).
(c) INVENTIONS. The Executive hereby sells, transfers and
assigns to the Company, or to any person or entity designated in writing by
the Company, all of the right, title and interest of the Executive in and to
all inventions, sales materials, software, training materials, disclosures
and improvements, whether patented or unpatented, and copyrightable material,
made or conceived by the Executive, solely or jointly, in whole or in part,
during his employment with the Company which are not generally known to the
public or the industry or recognized as standard practice and which (i)
relate to services, trade names, methods, ideas, apparatus, designs,
products, processes or devices which may be sold, leased, used or under
construction or development by the Company, or any franchise affiliated with
the Company and (ii) arise (wholly or partly) from the efforts of the
Executive during and in the course of his employment with the Company (an
"INVENTION"). The Executive shall communicate promptly and disclose to the
Company, in such form as the Company reasonably requests, all information,
details and data pertaining to any such Invention. With respect to all
Inventions which are to be assigned pursuant to this Section 7, the Executive
will assist the Company in any reasonable manner to obtain for the Company's
benefit patents thereon, including, but not limited to, executing patent
applications, transfers or assignments thereof to the Company and any and all
other documents reasonably deemed necessary by the Company. The Company
shall pay all costs
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incident to the preparation, execution and delivery of such patent
applications, transfers, assignments and other documents. Any Invention by
the Executive within six (6) months following the termination of his
employment hereunder shall be presumed to fall within the provisions of this
Section 7(c) unless the Executive bears the burden of proof of showing that
the Invention was first conceived and made following such termination.
SECTION 8. INJUNCTIVE RELIEF. Without intending to limit the
remedies available to the Company, the Executive acknowledges that a breach
of any of the covenants contained in Section 7 hereof may result in material
irreparable injury to the Company or it subsidiaries or affiliates for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of such a breach
or threat thereof, the Company shall be entitled to seek a temporary
restraining order and/or a preliminary or permanent injunction, restraining
the Executive from engaging in activities prohibited by Section 7 hereof or
such other relief as may be required specifically to enforce any of the
covenants in Section hereof.
SECTION 9. EXTENSION OF RESTRICTED PERIOD. In addition to the
remedies the Company may seek and obtain pursuant to Section 8 of this
Agreement, the Restricted Period shall be extended by any and all periods
during which the Executive shall be found by a court to have been in
violation of the covenants contained in Section 7 hereof.
SECTION 10. SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES.
This Agreement shall inure to the benefit of, and be binding upon, the
parties hereto and their respective successors and assigns, including, but
not limited to, the Executive's heirs and personal representatives of the
Executive's estate; PROVIDED, HOWEVER, that neither party shall assign or
delegate any of the obligations created under this Agreement without the
prior written consent of the other party. Notwithstanding the foregoing, the
Company shall have the unrestricted right to assign this Agreement and to
delegate all or any part of its obligations hereunder to any of its
subsidiaries, so long as such assignment does not diminish the duties,
function, responsibility or authority of the Executive or result in any
assignment of duties or responsibilities materially inconsistent with those
set forth in this Agreement (unless consented to by the Executive) but in
such event such assignee shall expressly assume all obligations of the
Company hereunder and the Company shall remain fully liable for the
performance of all such obligations in the manner prescribed in this
Agreement. Nothing in this Agreement shall confer upon any person or entity
not a party to this Agreement, or (unless otherwise expressly provided
herein) the legal representatives of such person or entity, any rights or
remedies of any nature or kind whatsoever under or by reason of Agreement.
In the event the Executive commences an action to enforce his rights under
this Agreement,
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the Company shall pay all of the Executive's reasonable fees and expenses
(including, without limitation, reasonable attorneys' fees) should the
Executive prevail in such action.
SECTION 11. WAIVER AND AMENDMENTS. Any waiver, alteration,
amendment or modification of any of the terms of this Agreement shall be
valid only if made in writing and signed by the parties hereto. No waiver by
either of the parties hereto of their rights hereunder shall be deemed to
constitute a waiver with respect to any subsequent occurrences or
transactions hereunder unless such waiver specifically states that it is to
be construed as a continuing waiver.
SECTION 12. SEVERABILITY AND GOVERNING LAW. The Executive
acknowledges and agrees that the covenants set forth in Section 7 hereof are
reasonable and valid in all respects. Each party hereto acknowledges and
agrees that if any of such covenants or other provisions of this Agreement
are found to be invalid or unenforceable by a final determination of a court
of competent jurisdiction (a) the remaining terms and provisions hereof shall
be unimpaired and (b) the invalid and unenforceable term or provision shall
be deemed replaced by a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or
unenforceable term or provision. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
PENNSYLVANIA WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PROVISIONS THEREOF.
SECTION 13. NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made if delivered personally or sent by registered or certified
mail (postage prepaid, return receipt requested), or sent by facsimile
transmission or overnight courier service, addressed in the case of the
Company, Strategic Distribution, Inc., 0000 Xxxxxxxxx Xxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000, Attention: President, fax (000) 000-0000, with a copy to
Interlaken Capital, Inc., 000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000,
Attention: Chairman of the Board, fax: (000) 000-0000 and, in the case of the
Executive, the Executive's address set forth on the signature page hereof or,
in each case, to such other address as may be designated to the other party
from time to time as provided above. All notices so given shall be effective
when received at the designated address.
SECTION 14. CAPTIONS AND SECTION HEADINGS. Captions and section
headings herein are solely for convenience of reference and shall not affect
the meaning or interpretation of this Agreement or of any term or provision
hereof.
SECTION 15. ENTIRE AGREEMENT. This Agreement, together with the
letter agreement, dated the date hereof, between the Executive and the
Company, constitute the entire
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understanding and agreement of the parties hereto regarding the employment of
the Executive. This Agreement supersedes all prior negotiations,
discussions, correspondence, communications, understandings and agreements
between the parties relating to the subject matter of this Agreement, all of
which are merged into this Agreement.
SECTION 16. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
STRATEGIC DISTRIBUTION, INC.
By: /s/ XXXXXX X. XXXXXX
--------------------------------
Name:
Title:
EXECUTIVE
/s/ XXXX X. XXXXXX
-----------------------------------
Xxxx X. Xxxxxx
000 Xxxxx Xxxx Xxxx
Xxxxxxxx Xxxxx, XX 00000
fax: (000) 000-0000
