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EMPLOYMENT AGREEMENT, effective as of January 1, 1994, by and between
MUELLER INDUSTRIES, INC., a Delaware corporation having its principal address
at 2959 North Rock Road, Wichita, Kansas 67226 (the "Employer"), and William
D. O'Hagan, an individual residing at 1104 North Linden Circle, Wichita,
Kansas 67206 (the "Executive").
WITNESSETH:
WHEREAS, the parties desire to provide for the employment of the
Executive by the Employer as set forth in this agreement (this agreement being
hereinafter called the "Agreement").
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto covenant and agree as follows:
1. Term of Employment.
The employer agrees to employ the Executive, and the Executive hereby
accepts such employment, as President and Chief Executive Officer of the
Employer, for a term commencing as of January 1, 1994, and ending on December
31, 1996 (the "Term"). The preceding sentence notwithstanding, the
Executive's employment hereunder may be terminated earlier in accordance with
Section 4 hereof. Subject to earlier termination as provided in Section 4
hereof, the Executive's term of employment hereunder, as extended by any
temporary leave of absence, is hereinafter referred to as the "Employment
Period."
2. Duties and Authority.
During the Employment Period the Executive shall serve as President and
Chief Executive Officer of the Employer. The Executive shall devote his best
efforts and full working time and attention to services for the Employer. The
Executive agrees to hold any other office or position with the Employer or any
of the Employer's subsidiaries without additional compensation if elected or
appointed to such office or position.
3. Compensation.
a. As compensation for the Executive' services in all
capacities during the Employment Period, the Employer shall pay the Executive
the following:
i. a base salary for the first calendar year at a rate of
$375,000.00 per annum to be paid in equal installments in accordance with
normal payroll practices of the Employer but not less frequently than monthly,
and for each subsequent calendar year or part thereof during which the
Executive is employed, a base salary to be determined by the Employer acting
in good faith, but not less than the base salary in the first calendar year
(the "Base Salary");
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ii. a discretionary cash incentive bonus (the "Bonus"),
for the period ending on December 25, 1993, based on a percentage of base
salary at least equal to the percentage bonus that will be payable to senior
management (level 10 and up) under the Employer's existing 1993 bonus program,
and for each subsequent calendar year or part thereof during which the
Executive is employed, the amount of such Bonus to be consistent with the
executive bonus program which Employer establishes for other key executives.
iii. an option (the "Option") to acquire fifty thousand
(50,000) shares of common stock of the Employer pursuant to the 1991 Incentive
Stock Option Plan, such option to be in the form and subject to the terms and
conditions expressed in Exhibit A attached hereto.
b. The Executive shall be entitled to reimbursement for
reasonable business and travel expenses incurred in the performance of his
duties in accordance with the Employer's normal reimbursement practices.
c. Subject to the terms of the applicable plan and/or program,
the Executive shall participate in all bonus, incentive, stock option,
pension, disability and health plans and programs and all fringe benefit plans
maintained by or on behalf of the Employer and in which senior executives of
the Employer are entitled to participate.
d. Employer agrees that, at Employer's cost, it will file a
Registration Statement on Form S-8 (or its equivalent) relating to Executive's
existing options to acquire 100,000 shares of common stock of the Employer.
Executive agrees to provide Employer with reasonable notice of Executive's
desire to have such a Registration Statement prepared and filed with the
Securities and Exchange Commission.
4. Termination of Employment.
a. The Executive's employment hereunder shall terminate upon
the Executive's death, and the Employer shall have the right to terminate the
Executive's employment upon his permanent disability. A permanent disability
is a physical or mental disability which results in the Executive's inability
to substantially perform his duties hereunder for a period of 90 consecutive
days or for a period of 120 days within any period of 12 consecutive months,
except that a permanent disability shall not include a physical or mental
disability which occurs in connection with the Executive's employment
hereunder. In the event of termination by reason of death or permanent
disability, the Employer's obligation to pay further compensation hereunder
shall cease on the date of termination, except that the Executive (or, in the
case of death, his beneficiaries, or his estate if no beneficiary has been
named) shall be entitled to receive his Base Salary and Bonus prorated on a
calendar day basis through the date of such termination.
b. The Employer may terminate the Executive's employment
hereunder for Cause (as defined below) upon not less than 30 days prior
written notice specifying such cause. If the Executive's employment hereunder
is terminated for Cause, the Executive shall forfeit the Option effective as
of the date of the termination of his employment, but the Option shall remain
exercisable for the 30 day period following the Executive's receipt of written
notice required under this Section 4(b). For purposes of this Agreement, the
term "Cause" shall mean (i) the Executive's willful and continued failure to
substantially perform his duties hereunder, (ii) the engaging by the
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Executive in willful misconduct which is demonstrably and materially injurious
to the Employer, or (iii) the Executive's conviction of a felony for a crime
of moral turpitude. For purposes of this Section 4(b), no act, or failure to
act, on the Executive's part shall be considered "willful" unless done, or
omitted to be done, by him not in good faith and without reasonable belief
that his action or omission was in the best interest of the Employer. The
Executive shall not be terminated for Cause in the case of actions or
omissions described in clauses (i) or (ii) of this Section 4(b) unless the
Employer shall have given the Executive an opportunity to cure any such
actions or omissions during the 30 day period after the Executive's receipt of
written notice required under this Section 4(b).
c. If the Executive's employment shall terminate by expiration
of the Employment Period in accordance with Section 1 hereof, or if his
employment is terminated for Cause pursuant to Section 4(b), or if the
Executive shall voluntarily resign for any reason, the Executive's right to
receive the Base Salary (except any accrued and unpaid salary), the Bonus, and
any other compensation and benefits to which he would otherwise be entitled
under this Agreement shall be forfeited as of the date of termination of
employment.
(i) If the Executive's employment hereunder shall terminate
by expiration of the Employment Period, in accordance with Section 1 hereof,
on December 31, 1996, and Employer and Executive have not entered into a new
employment agreement on mutually satisfactory terms, the Executive shall be
entitled to receive the Bonus for calendar year 1996 in accordance with
Section 3(a)(ii) hereof. Employer shall be entitled to make required
withholdings from any such payment.
d. If Executive and Employer shall not have entered into a new
employment agreement on mutually satisfactory terms on or prior to December
31, 1996, the Executive shall be placed on a temporary leave of absence for
six months. During said time period, Executive shall (i) remain as an
employee of the Company, and (ii) continue to receive Base Salary payments,
but Employer shall have the right, at its sole election, to replace Executive
as the Chief Executive Officer and President. During this leave of absence,
Executive shall not be precluded by this Agreement from seeking or obtaining
new full time employment. At the end of said six month temporary leave of
absence, if Executive and Employer shall not have entered into a new
employment arrangement, Executive's employment shall be automatically
terminated. In such event, Executive shall not be entitled to any severance
payments.
e. The Executive's death shall not affect his rights under the
Option.
5. Notices.
Any notice or other communication hereunder shall be made in
writing by hand-delivery and shall be deemed to have been delivered and
received when delivered by hand, if personally delivered, as follows: (a) if
to the Executive at the address shown at the beginning of this Agreement or to
such other person(s) or address(es) as the Executive shall have furnished to
the Employer in writing, and (b) if to the Employer at the address shown at
the beginning of this Agreement, attention of the Board of Directors, with a
copy to the Employer at the same address, Attention: General Counsel, or to
such other person(s) or address(es) as such persons or the Company shall have
furnished to the Executive in writing
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6. Assignability.
This Agreement shall not be assignable by the Employer except to a
majority-owned subsidiary or parent entity of the Employer and shall be
binding upon and inure to the benefit of the Employer and its successors and
assigns. This Agreement shall not be assignable by the Executive, but it
shall be binding upon, and to the extent provided in Section 4(a) shall inure
to the benefit of, the Executive's heirs, executors, administrators and legal
representatives.
7. Entire Agreement.
This Agreement supersedes all prior understandings between the
Executive and the Employer as to the subject matter hereof.
8. Waivers, Amendments and Further Agreements.
Neither this Agreement nor any term or condition hereof, including
without limitation the terms and conditions of this Section 8, may be waived,
modified or amended in whole or in part as against the Employer or the
Executive except by written instrument executed by each of the parties
expressly stating that it is intended to operate as a waiver, modification or
amendment of this Agreement or the applicable term or condition hereof. Each
of the parties hereto agrees to execute all such further instruments and
documents and to take all such further action as the other party may
reasonably require in order to effectuate the terms and purposes of this
Agreement.
9. Severability.
In case one or more of the provisions contained in this Agreement
shall be or become invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
10. No Conflicting Obligations.
The executive represents and warrants to the Employer that the
Executive is not now under any obligation to anyone other than the Employer
and other entities of which he is a non-executive director and has no interest
which is inconsistent or in conflict with this Agreement, or would prevent,
limit or impair, in any way, the Executive's performance of any of the
covenants or duties hereinabove set forth. However, subject to Section 2
hereof, nothing herein shall be deemed to limit the Executive's participation
in, or pursuit of, non-conflicting business interests.
11. Survival.
Except as otherwise provided herein, the covenants, agreements,
representations and warranties contained in or made pursuant to this Agreement
shall survive the Executive's termination of employment, irrespective of any
investigation made by or on behalf of any party.
12. Governing Law.
This agreement shall be governed by and construed and enforced in
accordance with the law of the State of Kansas.
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13. Arbitration.
Any dispute, controversy or claim arising out of or relating to
this Agreement or the breach thereof shall be finally settled by arbitration
by a single arbitrator in accordance with the rules then in effect of the
American Arbitration Association in an arbitration in Wichita, Kansas.
Judgment upon an award rendered by the arbitrator may be entered in any court
of competent jurisdiction.
14. Headings.
The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation
of this Agreement.
15. Counterparts.
This Agreement may be executed in counterparts each of which shall
be deemed an original but which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed or caused to be
executed this Agreement effective as of the date first above written.
MUELLER INDUSTRIES, INC.
By: /S/HARVEY L. KARP
Name:
Title:CEO & CHAIRMAN OF B/D
Date:11/9/93
/S/WILLIAM D. O'HAGAN
William D. O'Hagan
Date:11/8/93
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EXHIBIT A
1. Except as provided in the next sentence, vesting would occur ratably
over a five year term, with the first 20% vesting on January 1, 1995. If
Employer and Executive do not enter into a new employment agreement prior to
September 30, 1996, all remaining unvested options shall become immediately
exercisable on that date.
2. Executive may exercise his options from time to time by paying (i) cash
or, at Executive's option, (ii) executing a promissory note in favor of the
Employer, in the form attached hereto as Exhibit 1, and containing the
following terms: (i) the note would be secured by the stock, which could not
otherwise be sold, assigned, pledged, encumbered, transferred or otherwise
hypothecated by Executive so long as the note was outstanding, provided,
however, that Executive would be free to sell any or all such shares so long
as the Executive paid down the note in an amount equal to the option price
times the number of shares sold; (ii) the note would be due in three years
from the date of exercise of the option; (iii) interest would be payable
quarterly; (iv) the interest rate would be fixed at the higher of (x) the
three year treasury rate in effect when the options were exercised and (y) the
rate at which Employer is itself then able to borrow funds having a three year
term; and (v) the note would be prepayable, at any time, in whole or in part
without penalty.
3. If Executive elects to pay cash, shares acquired by Executive shall be
immediately able to be sold, assigned, pledged, encumbered, transferred or
otherwise hypothecated by Executive.
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EXHIBIT 1
[Form of Promissory Note(s)]
PROMISSORY NOTE
$____[1]________ ____[2]_____, 199_
William D. O'Hagan, an individual living at
___________[3]_______________ ("Borrower"), hereby promises to pay to Mueller
Industries, Inc., a Delaware corporation ("Mueller") the principal sum of
______________[1]_______________________ ($___[1]______), on
________[4]_______ and to pay interest (computed on the basis of a 360-day
year) on the unpaid principal balance thereof from the date of this Note at
the rate of ___________[5]_____ percent (___[5]%) per annum, quarterly on the
last day of each March, June, September and December in each year, until the
principal amount hereof shall be come due and payable.
Payments of principal and interest shall be made in such coin or
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts to the address designated
by Mueller.
This Note shall be secured by common stock of Mueller Industries, Inc.,
which stock is being acquired by Borrower through issuance of this Note in
favor of Mueller. Borrower shall deliver such stock to Mueller at the time
this Note is executed. Borrower agrees that he will not otherwise sell,
assign, pledge, encumber, transfer or otherwise hypothecate said stock so long
as this Note is outstanding, provided, however, that Borrower is free to sell
any or all such shares so long as the Borrower pays down this Note in an
amount equal to the option price times the number of shares sold. Borrower
and Mueller agree to cooperate, in the event of a partial sale, in order to
facilitate such a sale, while preserving Mueller's security interest in the
remaining shares.
This Note may be prepaid, at any time, in whole or in part, without
penalty.
THIS NOTE IS GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, INTERNAL KANSAS LAW.
----------------------------------
William D. O'Hagan
(1) Principal amount of Note is equal to the purchase price for shares
acquired by Borrower through exercise of options issued by Mueller to Borrower
on November 4, 1993 which are to be paid for through issuance of the Note.
(2) Date shall be date Borrower exercises options issued by Mueller to
Borrower on November 4, 1993 which are to be paid for through issuance of the
Note.
(3) Borrower's then current residential address shall be inserted.
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(4) The due date shall be the third anniversary of the date inserted in (2).
(5) The interest rate shall be the higher of (i) the three year treasury rate
in effect when said options are exercised, and (ii) the rate at which Mueller
is itself then able to borrow funds having a three year term.