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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of June
24, 1997 by and between White Cap Industries, Inc., a California corporation
(the "Company"), and Albert Malatesta, an individual ("Executive").
RECITALS
WHEREAS, the Company desires to retain the services of Executive, and
Executive desires to be employed by the Company, on the terms and subject to
the conditions set forth in this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the date of this Agreement and
ending as provided in Section 5 hereof (the "Employment Period").
2. Position and Duties.
a. During the Employment Period, Executive shall serve as
a Regional Vice President, Branch Operations of the Company and shall have the
normal and reasonable duties, responsibilities and authority commensurate with
such position as determined by the Board of Directors of the Company and as
directed by the President of the Company. Executive's services are more fully
described on the attached Exhibit A. Executive's services pursuant to this
Agreement shall be performed primarily at such facilities of the Company
located in the greater San Francisco metropolitan area as are necessary for the
Executive to perform his duties hereunder.
b. Executive shall report to the President, Executive Vice
President, and National Sales Manager of the Company. Executive shall devote
Executive's reasonable best efforts and Executive's full business time and
attention (except for permitted vacation periods and reasonable periods of
illness or other incapacity) to the business and affairs of the Company during
the normal business hours of the executive offices of the Company. Executive
shall perform Executive's duties and responsibilities to the best of
Executive's abilities in a reasonably diligent, trustworthy, businesslike and
efficient manner. Executive shall also comply in all
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material respects with the lawful rules, policies and procedures of the
Company, copies of which will be provided to Executive by the Company.
3. Base Salary and Benefits.
a. During the Employment Period, Executive's base salary
shall be $180,000 per annum (the "Base Salary"), which salary shall be payable
in regular installments in accordance with the Company's general payroll
practices, including those related to withholding for taxes, insurance and
similar items. Executive's Base Salary shall be increased on January 1 of each
calendar year, commencing January 1, 1998, by the Adjustment Percentage (as
defined below) of the Base Salary applicable to the previous fiscal year. As
used herein, "Adjustment Percentage" means the sum of (x) the Consumer Price
Index for the State of California, published by the Bureau of Labor Statistics
of the United States Department of Labor for the immediately preceding fiscal
year, plus (y) three percent (3%). In addition, during the Employment Period,
Executive shall be entitled to participate in all of the Company's employee
benefit, profit sharing, stock option, incentive compensation, vacation and
other perquisite plans and programs ("Benefits") for which key employees of the
Company are generally eligible.
b. During the Employment Period, the Company shall
reimburse Executive for all reasonable expenses incurred by Executive in the
course of performing Executive's duties under this Agreement which are
consistent with the Company's policies in effect from time to time with respect
to travel, entertainment and other business expenses, subject to the Company's
requirements with respect to reporting and documentation of such expenses.
c. During the Employment Period, the Company shall pay for
or reimburse Executive for all fees and reasonable expenses of Executive's
participation in professional organizations, trade associations or other
organizations reasonably related to Executive's position and responsibilities
as an officer of the Company.
4. Bonus. Executive shall be entitled to receive an annual bonus
at the end of each full fiscal year of employment by the Company, payable
within 95 days following the end of such fiscal year, equal to $10,000 for each
1% point increase in "EBITDA" (as defined below) above 5% for the subject
fiscal year as compared to EBITDA for the immediately preceding fiscal year.
For purposes of the foregoing, any fractional percentage point of EBITDA growth
shall be multiplied by $10,000 to determine the bonus allocable to such
fractional percentage point. For purposes of the foregoing, "EBITDA" shall have
the meaning set forth in the Certificate of Designation, Preferences and Rights
for Series B Convertible Preferred Stock of White Cap Holdings, Inc., a
Delaware corporation, as in effect on the date of this Agreement.
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5. Term.
a. The Employment Period shall end on the third
anniversary hereof ("Original Term") unless extended as set forth below;
provided that (i) the Employment Period shall terminate prior to the Original
Term upon Executive's death or permanent disability or incapacity; (ii) the
Employment Period may be terminated by the Company at any time prior to such
date for Cause (as hereinafter defined) or without Cause; and (iii) the
employment Period may be terminated by Executive for Good Reason at any time or
by his Voluntary Resignation after the second anniversary hereof. For purposes
of the foregoing, Executive's permanent disability or incapacity shall be
determined in accordance with the Company's disability insurance policy, if
such a policy is then in effect, or if no such policy is then in effect, such
permanent disability or incapacity shall be determined by the Board in its good
faith judgment based upon inability to perform the essential functions of his
position, with reasonable accommodation by the Company, for a period in excess
of 90 days during any period of 180 calendar days. For purposes of the
foregoing, Executive's "Voluntary Resignation" shall mean resignation by
Employee other than for Good Reason. The Employment Period shall automatically
extend for successive one year periods (each, a "Supplemental Term") following
the third anniversary of this Agreement unless either party delivers written
notice to the other party no later than sixty (60) days prior to the end of the
third anniversary of this Agreement or any successive anniversary of this
Agreement, as the case may be, of intent not to renew.
b. If the Employment Period is terminated without Cause by
the Company or by Executive with Good Reason prior to the end of the Original
Term or a Supplemental Term, as the case may be, the Executive shall be
entitled to receive (i) his Base Salary (determined in accordance with Section
3(a)) during the period that is the lesser of (A) twelve months, or (B) the
remainder of the Original Term or a Supplemental Term, as the case may be, and
(ii) a prorated portion of any bonus payable pursuant to Section 4 earned
through the date of such termination for the calendar year in which the
termination occurs.
c. If the Employment Period is terminated by the Company
for Cause or is terminated as a result of Executive's Voluntary Resignation,
(i) Executive shall be entitled to receive Executive's Base Salary only through
the date of termination, and (ii) Executive shall not be entitled to any
Incentive Compensation payment not paid as of the date of termination.
d. If the Employment Period is terminated as a result of
permanent disability, incapacity or death, Executive or Executive's
representatives or beneficiaries shall be entitled to receive (i) Executive's
Base Salary through the date of termination, plus twelve months of Executive's
then Base Salary, and (ii) a prorated portion of any bonus payable pursuant to
Section 4 earned through the date
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of such termination for the calendar year in which the termination occurs. If
the Executive's employment is terminated by reason of Executive's death or
disability, the Company shall keep in force existing health insurance covering
the Executive and his dependents for a period of 18 months from the date of
termination on the basis in effect at the date of termination of the
Executive's employment. The Executive and his dependents shall also be
entitled to any continuation of coverage rights under any applicable law.
e. The amount of Base Salary payable pursuant to Sections
5(b) and (c) shall be payable in accordance with the company's normal payroll
procedures applied to Executive as if he remained and employee of the Company.
The amount of any bonus payable pursuant to Sections 5(b) and (c) shall be paid
in accordance with the terms of Section 4.
f. All of Executive's rights to any other employee benefit
hereunder (except as described above or pursuant to law) accruing after the
termination of the Employment Period shall cease upon such termination. Upon
termination of this Agreement for any reason whatsoever, Executive shall have
the right to receive any accrued but unused vacation time and any and all
benefits due Executive pursuant to Section 3(a) as of termination.
g. For purposes of the Agreement, "Cause" shall mean (1)
the conviction of any act constituting a felony under the laws of any state or
of the United States, or a crime involving moral turpitude that causes
material harm to Company, (2) willful misconduct by Executive causing material
harm to Company but only if Executive shall not have discontinued such
misconduct within 10 days after receiving written notice from the company
describing the misconduct and stating that the Company will consider the
continuation of such misconduct as cause for termination of this Agreement, or
(3) substantial failure to perform the duties required by Section 2(a) hereof
which is not cured within 30 days after receiving written notice from the
Company describing the failure to perform and stating that the Company will
consider the continuation of such failure to perform as cause for termination
of this Agreement. Resignation with "Good Reason" shall mean (x) the
assignment to Executive of duties substantially and materially inconsistent
with the position and nature of Executive's employment as set forth in Section
2(a) of this Agreement, (y) a reduction of compensation and benefits that would
substantially diminish the aggregate value of Executive's compensation and
benefits without Executive's consent, and (z) the failure by the Company to
obtain from any successor an agreement to assume and perform this Agreement.
6. Confidential Information. As used herein, the term
"Confidential Information" shall mean all information disclosed to Executive or
known by Executive as a consequence of or through Executive's employment by the
Company (including, without limitation, information belonging to third parties
or companies
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affiliated with or related to the Company in the Company's possession) not
generally known in the trade or industry in which such information is used,
about the Company's products, processes, services, customers, marketing
strategy and business plans. Executive agrees that Executive shall not disclose
to any unauthorized person or use for Executive's own account any Confidential
Information without the prior written consent of the Board, unless and to the
extent that the aforementioned matters become generally known to and available
for use by the public other than as a result of Executive's acts or omissions
to act. Executive shall deliver to the Company at the termination of the
Employment Period, or at any other time as the Company may request, all
memoranda, notes, plans, records, computer tapes and software and other
documents and data (and copies thereof) relating to the Confidential
Information or the business of the Company or any subsidiary which Executive
may then possess or have under Executive's control.
7. Non-Solicitation. During the five-year period commencing on the
date of this Agreement or during any Supplemental Term, Executive shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Company or any subsidiary to leave the employ of the
Company or such subsidiary, (ii) hire any person who was an employee of the
Company or any subsidiary of the Company at any time during the Employment
Period if such person was employed by the Company or a subsidiary of the
Company at any time during the one-year period prior to such hiring, or (iii)
induce or attempt to induce any customer, supplier, licensee or other business
relation of the Company or any subsidiary to withdraw, curtail or cease doing
business with the Company or such subsidiary.
8. Enforcement. If, at the time of enforcement of Sections 6 and 7 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period or scope reasonable under such circumstances shall be
substituted for the stated period or scope. Because Executive's services are
unique and because Executive has access to Confidential Information, the
parties hereto agree that money damages would be an inadequate remedy for any
breach of this Agreement. Therefore, in the event a breach or threatened breach
of this Agreement, the Company or its successors or assigns may, in addition to
other rights and remedies existing in their favor, apply to any court of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce, or prevent any violations of, the provisions hereof
(without posting a bond or other security).
9. Intellectual Property.
(a) Disclosure and Assignment. Executive shall promptly disclose
in writing to the Company complete information concerning each and every
invention, discovery, improvement, device, design, apparatus, practice, process,
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method or product, whether patentable or not, made, developed, perfected,
devised, conceived or first reduced to practice by Executive, either solely or
in collaboration with others, during the term of this Agreement, whether or not
during regular working hours, relating either directly or indirectly to the
business, products, practices or techniques of the Company (hereinafter
referred to as "Developments"). Executive, to the extent that he has the legal
right to do so, hereby acknowledges that any and all of such Developments are
the property of the Company and hereby assigns and agrees to assign to the
Company any and all of Executive's right, title and interest in and to any and
all of such Developments.
(b) Future Developments. As to any future Developments
made by Executive which relate to the business, products or practices of the
Company and which are first conceived or reduced to practice during the term
of this Agreement, but which are claimed for any reason to belong to an entity
or person other than the Company, Executive shall promptly disclose the same in
writing to the Company and shall not disclose the same to others if the
Company, within 20 days thereafter, shall claim ownership of such Developments
under the terms of this Agreement. If the Company makes such claim, Executive
agrees that, insofar as the rights (if any) of Executive are involved, it shall
be settled by arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association in Orange County, California. If the
Company makes no such claim, Executive hereby acknowledges that the company has
made no promise to receive and hold in confidence any such information
disclosed by Executive.
(c) Limitation on Sections 9(a) and 9(b). The provisions
of Sections 9(a) and 9(b) shall not apply to any Development meeting the
following conditions:
(i) such Development was developed entirely on
Executive's own time; and
(ii) such Development was made without the use of any
Company equipment, supplies, facility or trade secret information; and
(iii) such Development does not relate (A) directly to
the business of the company, or (B) to the Company's actual or
demonstrably anticipated research or development; and
(iv) such Development does not result from any work
performed by Executive for the Company.
(d) Assistance of Executive. Upon request and without
further compensation therefor, but at no expense to Executive, and whether
during the term of this Agreement or thereafter, Executive shall do all lawful
acts, including, but not limited to, the execution of papers and lawful oaths
and the giving of
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testimony, that in the opinion of the Company, its successors and assigns, may
be necessary or desirable in obtaining, sustaining, reissuing, extending and
enforcing United States and foreign Letters Patent, including, but not limited
to, design patents, on any and all of such Developments, and for perfecting,
affirming and recording the Company's complete ownership and title thereto, and
to cooperate otherwise in all proceedings and matters relating thereto.
10. Representations.
a. Executive hereby represents and warrants to the Company that
(i) the execution, delivery and performance of this Agreement by Executive does
not and will not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which Executive is
a party or by which Executive is bound, (ii) Executive is not a party to or
bound by any employment agreement, noncompete agreement or confidentiality
agreement with any other person or entity, and (iii) upon the execution and
delivery of this Agreement by the Company, this Agreement shall be the valid and
binding obligation of Executive, enforceable in accordance with its terms.
b. Company hereby represents and warrants to the Executive that
(i) the execution, delivery and performance of this Agreement by the Company
does not and will not conflict with, breach, violate or cause a default under
any contract, agreement, instrument, order, judgment or decree to which
Executive is a party or by which Executive is bound, and (ii) upon the execution
and delivery of this Agreement by the Executive, this Agreement shall be the
valid and binding obligation of the Company, enforceable in accordance with its
terms.
11. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
Executive's rights or delegate Executive's obligations hereunder without the
prior written consent of the Company. Without limiting the foregoing, the
Company may not, without Executive's prior written consent, assign rights or
delegate its obligations under this Agreement.
12. Survival. Sections 6, 7, 8, 9 and 10 shall survive and continue
in full force in accordance with their terms, notwithstanding any termination of
the Employment Period.
13. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered by nationally recognized
overnight courier service, or mailed by certified mail, return receipt
requested, to the recipient at the address indicated below.
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Notices to Executive:
Albert Malatesta
c/o Viking Distributing Co., Inc.
1225 6th Street
San Francisco, California 94107
Notices to the Company:
White Cap Industries, Inc.
3120 Airway Avenue
Costa Mesa, CA 92626
Attn: President
or such other address or to the attention of such person as the recipient party
shall leave specified by prior written notice to the sending party. Any notice
under this Agreement will be deemed to have been given when so delivered or
mailed. Any Notice of Termination of Executive's employment by the Company shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
14. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be elective and valid under
applicable law but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
15. Complete Agreement. This Agreement, together with the other
agreements referred to in the Recitals above, embodies the complete agreement
and understanding among the parties and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
16. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
17. Choice of Law. This Agreement will be governed by the internal
law, and not the laws of conflicts, of the State of California.
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18. Agreement to Arbitrate; Expenses. Except for the enforcement of
any covenant herein that would be the subject of specific performance
contemplated by Section 8, any controversy or claim arising out of or relating
to this Agreement or the formation, breach or interpretation hereof, will be
settled by arbitration before one arbitrator in accordance with the Commercial
Arbitration Rules of the American Arbitration Association in Orange County,
California. Judgment upon the award rendered by the arbitration may be entered
and enforced in the court with jurisdiction over the appropriate party. All
controversies not subject to arbitration or contesting any arbitration will be
litigated in the State of California, Orange County Superior Court or a federal
court in the Central District of California (and each of the parties hereto
hereby consent to the exclusive jurisdiction of such courts and waive any
objections thereto). The expenses (including reasonable attorneys' fees)
incurred by the prevailing party in any arbitration or litigation related to
this Agreement shall be borne by the non-prevailing party in such arbitration or
litigation.
19. Amendment and Waiver. The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
WHITE CAP INDUSTRIES, INC.
/s/ GREG GROSCH
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By: Greg Grosch
Its: President
/s/ ALBERT MALATESTA
--------------------
Albert Malatesta
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IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto.
WHITE CAP HOLDINGS, INC.
By /s/ GREGORY GROSCH
---------------------------------
Name: Gregory Grosch
Title: President
/s/ MICHAEL MONROE
------------------------------------
MICHAEL MONROE
/s/ ALBERT MALATESTA
------------------------------------
ALBERT MALATESTA
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EXHIBIT A
Job Title: Regional Vice President, Branch Operations
Department: Operations
Reports To: Chief Operations Officer
FLSA Status: Exempt
Prepared Date: 6/97
SUMMARY: Directs and coordinates activities involved in operating branches in
an assigned region by performing the following duties personally or through
subordinate supervisors. This region is comprised of Northern California (AY,
Stop Supply and Viking) and is based out of San Francisco, California.
SUPERVISORY RESPONSIBILITIES
1. Supervises the activities of all Branch Managers in the region.
2. Performs regularly scheduled performance evaluations for all direct
reports.
3. Assures that regularly scheduled performance evaluations are conducted
for all personnel in the region.
4. Implements and applies White Cap Human Resources Policies and Procedures
in a consistent manner designed to develop and maintain positive
employee relations in the region.
5. Ability to review all revisions to company policy and procedures that
will affect the Northern California Region.
ESSENTIAL DUTIES AND RESPONSIBILITIES:
1. Supervises implementation of employee training and monitors company
designed policies and procedures relating to safety, inventory
management, sales, customer service, merchandising, store maintenance,
and human resource management.
2. Supports and supervises Branch Managers and offers suggestions designed
to assist them in meeting or exceeding monthly sales objectives and
profit goals.
3. Educates Branch Managers on how to analyze and use various corporate
reports in managing their respective Branches in an effort to maximize
sales and profit.
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4. Supervises Branch Managers so that they can ensure that all company
owned equipment is maintained and in proper working order.
5. Manages activity in the region in a manner designed to ensure that
employees comply with established company policies, procedures and
standards in the areas of safekeeping of company funds and property.
6. In order to determine profitability at the respective branches in the
regions, reviews operational records and reports pertaining to sales to
determine store profitability. Supervises branch managers to develop
and adhere to operational budgets.
7. Coordinates merchandising activities in the Northern California
branches.
8. Analyzes marketing potential of new and existing store locations.
9. Responsible for initial approval on all hiring, firing, salary
adjustments, and disciplinary actions at the branch level.
10. Routinely visits all branches in assigned regions and produces monthly
activity reports for C.O.O. resulting from those visits.
11. Based on visitations, makes needed recommendations to improve branch
performance and profitability.
12. Responsibility for obtaining approval on any changes relating to
security (access codes, keys, etc.).
13. Periodically visits the corporate office for regularly scheduled
operations meetings.
14. Trains and develops staff to handle sales account servicing and
purchasing responsibilities that this position currently handles. This
is to ensure that when the Regional Vice President, Branch Operations is
in the field, those functions are handled satisfactorily.