Exhibit 10(e)
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of the 23rd day of
February, 2004 (the "Agreement Date"), by and between LESCO, INC., an Ohio
corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Executive").
WHEREAS, the Company desires to provide for the employment of the
Executive on the terms and conditions set forth herein, in the best interest of
the Company and its constituencies; and
WHEREAS, the Executive desires to be employed by the Company, as
provided herein;
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, the parties agree as
follows:
1. Employment. The Company agrees to employ the Executive and the
Executive agrees to be employed on a full-time basis by the
Company for the period and upon the terms and conditions
hereinafter set forth.
2. Term: Employment Period. The term of this Agreement shall
commence on the date hereof (the "Effective Date") and shall
continue hereunder until terminated under the provisions of
Section 6 of this Agreement. The period during which the
Executive is employed by the Company pursuant to this
Agreement is referred to herein as the "Employment Period."
The date on which the termination of the Executive's
employment hereunder shall become effective is referred to
herein as the "Termination Date." For purposes of this
Agreement, an "Employment Year" shall be the calendar year.
3. Position and Duties. During the Employment Period, the
Executive shall serve as President and Chief Executive Officer
of the Company and shall have such responsibilities, duties
and authority as are customarily and ordinarily exercised by
executives in similar positions in similar businesses in the
United States and shall exercise such responsibilities, duties
and authority consistent with the foregoing as the Chairman of
the Company's Board of Directors (the "Board") shall determine
from time to time. During the Employment Period, the Executive
shall report to the Board as a whole. The Executive shall
devote substantially all his working time and efforts to the
business and affairs of the Company and shall use his best
efforts to carry out his responsibilities faithfully and
efficiently in a professional manner. Notwithstanding the
foregoing, it is understood that during the Employment Period,
subject to any conflict of interest policies of the Company
and Section 8, the Executive may (i) serve in any capacity
with any civic, charitable, or industry organizations,
provided that such service does not materially interfere with
his duties and responsibilities hereunder or the interests of
LESCO; (ii) make and manage personal investments of his
choice; and (iii) with approval of the Board, which approval
shall not be unreasonably withheld, serve on the board of
directors of up to two (2) noncompeting for-profit business
enterprises. During the Employment Period, the Company shall
take all actions required for the Executive to be elected to
the Board.
4. Place of Performance. During the Employment Period, the
Executive's place of performance of his services shall be at
the Company's corporate headquarters, except for required
travel by the Executive on the Company's behalf.
5. Compensation and Benefits.
(a) Salary. During the Employment Period, the Company
shall pay to the Executive an initial annual base
salary of Four Hundred Fifty Thousand Dollars
($450,000) (as the same may be increased from time to
time, the "Base Salary"), such salary to be paid in
periodic installments in accordance with the
Company's payroll practices as in effect from time to
time. The Base Salary shall be reviewed annually by
the Compensation, Governance and Nominating Committee
of the Board (the "Compensation Committee") and may
be increased from time to time in accordance with
normal business practices of the Company and, if so
increased, shall not thereafter be reduced.
(b) Annual Bonus. During the Employment Period, the
Executive shall be eligible to earn an annual bonus
under the Company's bonus plan, or a successor plan
thereto, as shall be in effect from time to time (the
"Bonus Plan"), subject to achievement of performance
goals determined in accordance with the terms of the
Bonus Plan (such annual bonus, the "Annual Bonus").
The Annual Bonus shall be payable as determined by
the Compensation Committee at such time as bonuses
are ordinarily paid to senior executives of the
Company.
(c) Performance Plan. The Executive shall be entitled to
immediate participation in the Company's Performance
Plan as and when such Performance Plan is approved by
the Compensation Committee for Management Committee
Members.
(d) Expenses. During the Employment Period, the Company
shall promptly reimburse the Executive for all
reasonable out-of-pocket expenses incurred by the
Executive in connection with the business of the
Company and the performance of his duties under this
Agreement in accordance with the terms of the
Company's expense reimbursement policies as in effect
from time to time.
(e) Benefit Plans. During the Employment Period, the
Executive shall be entitled to participate in all of
the employee benefit plans, programs, agreements and
arrangements provided to employees generally and to
senior executives of the Company, as such are in
effect from time to time, consistent with the terms
and conditions thereof and on a basis no less
favorable than that provided to such senior
executives.
-2-
(f) Perquisites. During the Employment Period, the
Executive shall be entitled to (i) payment by the
Company or reimbursement for an executive annual
physical examination and (ii) an automobile allowance
of Five Hundred Dollars ($500) per month plus payment
by the Company or reimbursement for operating
expenses.
(g) Vacations. During the Employment Period, the
Executive shall be entitled to vacation time, paid
holidays and personal days, determined in accordance
with the Company's policy with respect to its senior
executives as in effect from time to time, it being
understood that the Executive shall be entitled to
not less than four weeks' vacation in any Employment
Year.
6. Termination of Employment
(a) Accrued Benefits and Unvested Awards. In the event of
the termination of the Executive's employment
hereunder for any reason other than For Cause or a
Voluntary Resignation under Special Circumstances (as
defined herein) or death or disability, (i) the
Executive (or his estate or representative, as
applicable) shall be entitled to receive any Base
Salary (earned but unpaid), prior year's Annual Bonus
or other incentive award, if the Annual Bonus or
other incentive award would have been earned had the
Executive continued employment, vacation time and
expenses that have in each case accrued but are
unpaid as of the Termination Date, vested options,
vested benefits under the Company's benefit plans, as
well as any post-termination benefits to which he may
be entitled pursuant to the Company's retirement,
insurance and other benefit plans, programs and
arrangements as in effect immediately prior to the
Termination Date (the "Accrued Benefits") and (ii)
all long-term stock incentive awards held by the
Executive (whether in the form of options, phantom
units, performance shares, restricted shares or other
awards of whatever nature) which are otherwise
unvested on the Termination Date (the "Unvested
Awards") shall fully vest, and all restrictions and
conditions shall be removed, on the Date of
Termination; provided, however, that notwithstanding
anything contained in this Agreement or in any other
agreement to the contrary, in order to induce the
Company to vest such otherwise Unvested Awards, the
Executive hereby agrees to exercise all such
otherwise Unvested Awards within one year of the
Termination Date.
(b) Death. The Executive's employment hereunder shall
terminate as of the date of his death. Upon the
termination of the Executive's employment hereunder
because of his death, the Executive's estate or
representative, as the case may be, shall be entitled
to receive the Accrued Benefits, except that the
Annual Bonus payable, if any, will be on a pro rata
basis. Such pro rata Annual Bonus shall be determined
by multiplying the amount of the Annual Bonus by a
fraction, the numerator of which is the number of
-3-
days in the Employment Year elapsed prior to the date
of death and the denominator of which is three
hundred sixty-five (365).
(c) Disability. The Executive's employment hereunder may
be terminated during the Employment Period if the
Executive is incapable of performing his principal
duties hereunder because of physical or mental
incapacity for a period equal to the eligibility
waiting period under the Company's long term
disability insurance plan as then in effect. In such
event, the Executive (or his representatives, as
applicable) shall be entitled to receive the Accrued
Benefits, except that the Annual Bonus payable, if
any, will be on a pro rata basis. Such pro rata
Annual Bonus shall be determined by multiplying the
target amount of the Annual Bonus by a fraction, the
numerator of which is the number of days in the
Employment Year elapsed prior to the date of
termination by reason of disability and the
denominator of which is three hundred and sixty-five
(365).
(d) Voluntary Resignation. The Executive may voluntarily
terminate his employment hereunder during the
Employment Period by providing thirty (30) days'
written notice of termination to the Company (a
"Voluntary Resignation") unless circumstances exist
in which the Company could terminate For Cause. In
the event that the Executive's employment hereunder
is terminated pursuant to this Section 6(d), the
Executive shall be entitled to the Accrued Benefits.
(e) For Cause: Voluntary Resignation Under Special
Circumstances. The Executive's employment hereunder
may be terminated during the Employment Period (i) by
the Company For Cause (as defined below) or (ii) by
the Executive's Voluntary Resignation under
circumstances in which the Company could terminate
For Cause (a "Voluntary Resignation Under Special
Circumstances). In the event that the Company
terminates the Executive's employment hereunder For
Cause or the Executive terminates employment by
Voluntary Resignation Under Special Circumstances,
the Termination Date shall be the date specified in
the notice of termination For Cause delivered by the
Company to the Executive or the date the Executive
tenders his resignation, as the case may be. If the
Executive's employment is terminated For Cause or by
a Voluntary Resignation Under Special Circumstances,
the Executive shall not be entitled to receive any
further compensation or benefits under the Employment
Agreement, except as to any unpaid salary and other
benefits accrued and earned through the date of
termination.
(f) Without Cause: For Good Reason. The Executive's
employment hereunder may be terminated during the
Employment Period (i) by the Company Without Cause or
(ii) by the Executive For Good Reason. In the event
that the Executive's employment is terminated
pursuant to this Section 6(f) (whether by the Company
or by the Executive), the Termination Date shall be
no earlier than thirty (30) days following the
-4-
date on which a notice of termination is delivered by
one party to the other. In the event that the
Executive's employment is terminated pursuant to this
Section 6(f), the Executive (or his estate or
representative, as the case may be) shall be entitled
to receive (A) the Accrued Benefits; (B) one year's
Base Salary as in effect on the Termination Date and
an amount equal to the Executive's Annual Bonus at
target, both payable monthly in twelve (12) equal
installments commencing on the first day of the month
following the Termination Date; (C) the continuation
of health benefits for the Executive and his eligible
dependents at no additional cost to the Executive
than that which was in effect as of the Termination
Date for a period of one year, then full COBRA
continuation at the Executive's expense; (D)
executive level career outplacement services by an
outplacement firm selected by the Executive and paid
for as incurred by the Company and (E) the Unvested
Awards on the terms described in Section 6(a).
(g) Definition of "For Cause" and "For Good Reason". For
purposes of this Agreement, "For Cause" means: (i)
the Executive's conviction of, or plea of guilty or
no contest to, a felony, (ii) the Executive engages
in conduct that constitutes fraud, willful gross
neglect or willful gross misconduct; or (iii)
material breach of the Executive's duties of
employment under this Agreement which is not cured
within fifteen (15) days after receipt of written
notice of such material breach. For purposes of
clause (ii) of this definition, action or inaction by
the Executive shall not be considered "willful"
unless done or omitted by him (A) intentionally or
not in good faith and (B) without reasonable belief
that his action or inaction was in the best interest
of the Company, and shall not include failure to act
by reason of total or partial incapacity due to
physical or mental illness.
For purposes of this Agreement, "For Good Reason"
means (i) material breach of this Agreement by the
Company which is not cured within fifteen (15) days
after receipt of written notice of such material
breach; or (ii) without the Executive's consent: (A)
and material diminution in the Executive's duties or
authority, (B) any assignment of duties materially
inconsistent with Executive's duties as provided in
Section 3, (C) any change in the reporting structure
to someone other than the Chairman of the Board [the
Board as a whole], or (D) any requirement that the
Executive relocate his principal residence outside
the greater Cleveland, Ohio, area. For purposes of
this paragraph 6(g), the Executive shall be deemed to
have consented to any of the items listed in clause
(ii) unless he gives written notice of his objection
to the Chairman of the Board within thirty (30) days
of the event.
(h) Retention Agreement. The provisions set forth in the
Retention Agreement attached hereto as Exhibit A are
hereby incorporated into this Agreement. The
Executive hereby acknowledges that in the event he
becomes entitled to the payments set forth in the
Retention Agreement,
-5-
such payments will be in lieu of any other payments
to be made pursuant to the terms of this Agreement.
(i) No Mitigation. Upon termination of the Executive's
employment with the Company, subject to the
Executive's affirmative obligations pursuant to
Section 8, the Executive shall be under no obligation
to seek other employment or otherwise mitigate the
obligations of the Company under this Agreement.
7. Directors' and Officers' Insurance: Indemnification. In
addition to any rights to indemnification to which the
Executive is entitled under the Company's Articles of
Incorporation and Code of Regulations (and any directors and
officers liability insurance policy), the Company shall
indemnify the Executive at all times during and after the
Employment Period to the maximum extent permitted under the
Ohio Corporation Act or any successor provision thereof, and
any and all applicable state law and shall pay the Executive's
expenses (including reasonable attorneys' fees and expenses,
which shall be paid in advance by the Company as incurred,
subject to recoupment in accordance with applicable law) in
defending any civil action, suit or proceeding in advance of
the final disposition of such action, suit or proceeding to
the maximum extent permitted under such applicable state laws
for the Executive's action or inaction on behalf of the
Company under the terms of this Agreement, including but not
limited to any acts or alleged acts arising out of events
prior to the Executive's employment by the Company, which
obligation shall survive the termination of the Executive's
employment or the termination of the other provisions of this
Agreement.
8. Confidential Information. For purposes of this Section 8,
"Company" shall mean the Company and its subsidiaries and
affiliates.
(a) The Executive acknowledges the Company's reliance and
expectation of Executive's continued commitment to
performance of his duties and responsibilities during
the Employment Period. In light of such reliance and
expectation on the part of the Company, during the
Employment Period and for a period beginning with the
Termination Date and ending the later of (i) the date
the Executive no longer receives payment from the
Company or (ii) two (2) years from the Termination
Date (and, as to clauses (ii) of this subparagraph
(a), at any time during and after the Employment
Period), the Executive shall not, directly or
indirectly, do or suffer any of the following, except
as otherwise expressly provided in this Agreement:
(i) Own, manage, control or participate in the
ownership, management, or control of, or be
employed or engaged by or otherwise
affiliated or associated as a consultant,
independent contractor or otherwise with,
any other corporation, partnership,
proprietorship, firm, association or other
business entity, or otherwise engage in any
business which is in competition with the
-6-
Company (as described in subparagraph
(b) below); provided, however, that the
ownership of not more than one percent (1%)
of any class of publicly traded securities
of any entity shall not be deemed a
violation of this covenant;
(ii) Disclose, divulge, discuss, copy or
otherwise use or suffer to be used in any
manner, the customer lists, manufacturing
methods, product research or engineering
data or other trade secrets of the Company,
it being acknowledged by the Executive that
all such information regarding the business
of the Company compiled or obtained by, or
furnished to, the Executive while the
Executive shall have been employed by or
associated with the Company is confidential
information and the Company's exclusive
property; and
(iii) Directly, or indirectly contact, solicit or
entice away (or attempt or assist in any
such action) any customers, suppliers,
contractors or employees of the Company, or
in any way disparage any product or person
associated with the Company.
(b) For purposes of this Agreement, an entity shall be
deemed to be in competition with the Company if such
entity is engaged in the business of operating
service centers for, or manufacturing or
distributing, professional lawn or turf care
equipment, fertilizers or supplies in the United
States, or any other business in which the Company is
engaged during the Employment Period.
(c) The Executive expressly agrees and understands that
the remedy at law for any breach by him of this
Section 8 will be inadequate and that the damages
flowing from such breach are not readily susceptible
to being measured in monetary terms. Accordingly, it
is acknowledged that, upon adequate proof of the
Executive's violation of any legally enforceable
provision of this Section 8, the Company shall be
entitled to immediate injunctive relief and may
obtain a temporary order restraining any threatened
or further breach. Nothing in this Section 8 shall be
deemed to limit the Company's remedies at law or in
equity for any breach by the Executive of any of the
provisions of this Section 8 that may be pursued or
availed of by the Company.
(d) If the Executive violates any legally enforceable
provision of this Section 8 as to which there is a
specific time period during which he is prohibited
from taking certain actions or from engaging in
certain activities, as set forth in such provision,
then, in such event, such violation shall toll the
running of such time period from the date of such
violation until such violation shall cease.
-7-
(e) The Executive has carefully considered the nature and
extent of the restrictions upon him and the rights
and remedies conferred upon the Company under this
Section 8, and has had legal advice concerning the
same, and hereby acknowledges and agrees that the
same are reasonable in time and territory, are
designed to eliminate competition which otherwise
would be unfair to the Company, do not stifle the
inherent skill and experience of the Executive, would
not operate as a bar to the Executive's sole means of
support, are fully required to protect the legitimate
interests of the Company and do not confer a benefit
upon the Company disproportionate to the detriment to
the Executive.
9. Withholding Taxes. All payments to the Executive, including
the issuance of Common Stock required to be made to the
Executive under this Agreement, shall be subject to
withholding on account of federal, state and local taxes as
required by law. If any particular payment required hereunder
is insufficient to provide the amount of such taxes required
to be withheld, the Company may withhold such taxes from any
other payment due the Executive. If cash payments due the
Executive are insufficient to provide the required amount of
such withholding taxes, the Executive, within five (5) days of
written notice from the Company, shall pay to the Company the
amount of such withholding taxes in excess of all cash
payments due the Executive at the time such withholding is
required to be made by the Company.
10. No Conflicting Agreements. The Executive represents and
warrants that he is not a party to any agreement, contract or
understanding, whether employment or otherwise, which would
restrict or prohibit him from undertaking or performing
employment or services and advice in accordance with the terms
and conditions of this Agreement.
11. Severability. It is the desire and intent of the parties that
the provisions of this Agreement shall be enforced to the
fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision or portion of this
Agreement shall be adjudicated to be invalid or unenforceable,
this Agreement shall be deemed amended to delete therefrom the
portion thus adjudicated to be invalid or unenforceable, such
deletion to apply only with respect to the operation of such
provision in the particular jurisdiction in which such
adjudication is made.
12. Notices. Any notice to be given under this Agreement shall be
personally delivered in writing or shall have been deemed duly
given when received after it is posted in the United States
mail, postage prepaid, registered or certified, return receipt
requested, and if mailed to the Company, shall be addressed to
it at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: General Counsel, with a copy to ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
LLP, 3200 National City Center, ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and if mailed
to the Executive, shall be addressed to him at his home
address in accordance with Company records or at such other
address or addresses or to such other persons as
-8-
either the Company or the Executive may hereafter designate in
writing to the other.
13. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the
State of Ohio, without regard to its conflicts of laws
provisions.
14. Assignment. Neither this Agreement nor any rights or duties
hereunder may be assigned by the Executive without the prior
written consent of the Company. The Company shall have the
right at any time to assign this Agreement to its successors
and assigns; provided, however, that the assignee or
transferee is the successor to all or substantially all of the
business and assets of the Company and such assignee or
transferee expressly assumes all of the obligations, duties
and liabilities of the Company set forth in this Agreement.
15. Amendments. No provisions of this Agreement shall be altered,
amended, revoked or waived except by an instrument in writing,
signed by each party to this Agreement.
16. Binding Effect. Except as otherwise provided herein, this
Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective legal
representatives, heirs, successors and assigns.
17. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
18. Arbitration. Any dispute, controversy or question arising
under, out of, or relating to this Agreement (or the breach
thereof), or, the Executive's employment with the Company or
termination thereof, shall be referred for arbitration in
Cleveland, Ohio, to a neutral arbitrator selected by the
Executive and the Company and this shall be the exclusive and
sole means for resolving such dispute. Such arbitration shall
be conducted in accordance with the National Rules for
Resolution of Employment Disputes of the American Arbitration
Association. The arbitrator shall have the discretion to award
reasonable attorneys' fees, costs and expenses to the
prevailing party. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction
thereof. Nothing in this Section 18 shall be construed so as
to deny the Company the right and power to seek and obtain
injunctive relief in a court of equity for any breach or
threatened breach by the Executive of any of his covenants in
Section 8.
19. Entirement Agreement. This Agreement sets forth the entire
agreement and understanding of the parties and supersedes all
prior understandings, agreements or representations by or
between the parties, whether written or oral, which relate in
any way to the subject matter hereof.
-9-
20. Survivorship. The provisions of this Agreement necessary to
carry out the intention of the parties as expressed herein
shall survive the termination or expiration of this Agreement.
21. Waiver. Except as provided herein, the waiver by either party
of the other party's prompt and complete performance, or
breach or violation, of any provision of this Agreement shall
not operate nor be construed as a waiver of any subsequent
breach or violation, and the failure by any party hereto to
exercise any right or remedy which it may possess hereunder
shall not operate nor be construed as a bar to the exercise of
such right or remedy by such party upon the occurrence of any
subsequent breach or violation.
22. Captions. The captions of this Agreement are for convenience
and reference only and in no way define, describe, extend or
limit the scope or intent of this Agreement or the intent of
any provision hereof.
23. Construction. The parties acknowledge that this Agreement is
the result of arm's-length negotiations between sophisticated
parties, each afforded representation by legal counsel. Each
and every provision of this Agreement shall be construed as
though both parties participated equally in the drafting of
the same, and any rule of construction that a document shall
be construed against the drafting party shall not be
applicable to this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
LESCO, Inc.
By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
Chairman of the Board
-10-