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EXHIBIT 10.16
SERVICES AGREEMENT
THIS AGREEMENT is made this 29th day of February, 1996, by and between
MCINNES STEEL COMPANY, a Pennsylvania corporation (hereinafter called
"Corporation"), and STEPHEN J. MAHONEY (hereinafter called "Mahoney").
W I T N E S S E T H:
WHEREAS, Mahoney has extensive managerial experience and abilities and
has been in the continuous full-time employ of the Corporation for thirty (30)
years, most recently serving in the capacity as President.
WHEREAS, Corporation is now a wholly owned subsidiary of Centrum
Industries, Inc., a Delaware corporation ("Centrum"). Corporation wishes to
retain the services of Mahoney and Mahoney wishes to provide services to the
Corporation on the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, and as a condition
to Centrum's obligation to consummate the transactions contemplated in the
Agreement and Plan of Reorganization ("Acquisition Agreement"), the parties,
each intending to be legally bound, agree as follows:
1. SERVICE. Corporation hereby agrees to retain Mahoney and
Mahoney hereby agrees to serve Corporation for the period and upon the terms
and conditions contained in this Agreement.
2. TERM. This Agreement shall be for a term of four (4) years,
commencing as of February 29, 1996 and ending on February 28, 2000, unless
sooner terminated as hereinafter provided.
3. OFFICE AND DUTIES.
(a) Throughout the term of this Agreement, Mahoney agrees to
serve the Corporation as a general consultant and advisor to the management of
the Corporation on matters pertaining to the business of the Corporation.
Subject to the limitations provided in paragraph 3(b) of this Agreement,
Mahoney shall be available to render consultive and advisory services to the
Corporation when requested by the Chairman of the Board of the Corporation (the
"Chairman") or such other officer of the Corporation as may be designated from
time to time by the Chairman, on an as needed basis. Mahoney shall report only
to the Chairman, and, subject to the limitations provided in paragraph 3(b) of
this Agreement, shall devote his best efforts and such time as shall be
necessary to perform his duties and to advance the interests of the
Corporation.
(b) Commencing on the date hereof, Mahoney shall be available
at such times and places as shall be deemed necessary by the Chairman during
the Corporation's regular business hours for a maximum of: forty-five (45) days
in year one and up to thirty (30)
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days in each year thereafter during the term of this Agreement. The parties
hereto recognize that the nature of the services to be rendered by Mahoney
during the second, third and fourth years of the term of this Agreement will
not require his presence at the premises where the Corporation's business is
being conducted or elsewhere for any particular or minimum amount of time. His
services may be rendered to the Corporation at such times as are convenient to
him and at and from such places to which he may travel or at which he may be
permanently or temporarily residing. Mahoney's death or disability prior to
the expiration of the term of this Agreement shall not result in any diminution
or forfeiture of the compensation which he is to be paid pursuant to paragraph
4 and, in the event of his death, it shall be paid to his widow or, if none, to
his estate.
(c) Throughout the term of this Agreement and subject to the
limitation in subparagraph 3(b) of this Agreement, Mahoney shall devote such
working time, energy, skill and best efforts to the performance of his duties
hereunder in a manner which will faithfully and diligently further the business
and interests of Corporation.
4. COMPENSATION. For all of the services rendered by Mahoney to
the Corporation, Mahoney shall receive an annual consulting fee of: One Hundred
Thousand Dollars ($100,000) for year one; Seventy Five Thousand Dollars
($75,000) for year two; Seventy Five Thousand Dollars ($75,000) for year three;
and Fifty Thousand Dollars ($50,000) year four, payable in periodic
installments in accordance with the Corporation's regular payroll practices in
effect from time to time.
5. FRINGE BENEFITS. During the term of this Agreement, the
Corporation will reimburse Mahoney for up to Seven Hundred Fifty and 00/100
Dollars ($750.00) per year for tax preparation services. Until such time that
Mahoney reaches age 65, Mahoney shall be entitled to participate in and receive
the benefits of Corporation's group medical and dental plans or programs made
available to other executive officers of Corporation which shall be and remain
comparable to those offered by the Corporation immediately prior to the date
hereof. After Mahoney reaches age 65, the Corporation will provide a Medicare
Supplementing Policy (like 65+) of the kind heretofore provided to retiring
executive officers of the Corporation. For the term of this Agreement and
thereafter to the extent consistent with the past practices of the Corporation,
the Corporation shall reimburse Mahoney under the prescription/medical
reimbursement plan, up to a maximum of Three Thousand Five Hundred Dollars
($3,500.00) per year, and provide to Mahoney while he lives in Corry,
Pennsylvania, landscape and snow removal services generally made available to
other executive officers of the Corporation.
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6. AUTOMOBILE AND EXPENSES.
(a) The Corporation will purchase or lease and make available
to Mahoney a new Lincoln Continental automobile for his exclusive use during
the term of this Agreement with an option in his favor to purchase the
automobile at the price specified in the lease at the expiration of the term of
this Agreement. Mahoney shall be reimbursed for all reasonable expenses
incurred in the operation and maintenance of such car consistent with the
Corporation reimbursement procedures and practices in effect from time to time.
(b) During the term of this Agreement, the Corporation will
reimburse Mahoney for all reasonable expenses incurred by Mahoney at the
request of the Chairman in connection with the performance of Mahoney's duties
hereunder upon receipt of vouchers therefor and in accordance with
Corporation's regular reimbursement procedures and practices in effect from
time to time.
7. Intentionally deleted.
8. CORPORATION PROPERTY. All materials or data of any kind
furnished to Mahoney by Corporation or Centrum, or developed by Mahoney on
behalf of Corporation or Centrum, or at the request of Corporation or Centrum,
or otherwise in connection with Mahoney's services hereunder, are and shall
remain the sole property of Corporation or Centrum, whichever applicable; if
Corporation or Centrum requests the return of such materials at any time
during, at or after the termination of Mahoney's employment, Mahoney shall
immediately deliver the same to Corporation or Centrum, whichever applicable.
9. NONCOMPETITION, TRADE SECRETS, ETC.
(a) Mahoney agrees that, except as set forth herein, for
a period of five (5) years from the date hereof, within the area of the North
American Free Trade Agreement, he shall not directly or indirectly:
(i) solicit, induce or encourage any employee of
Centrum, any of its affiliates of Centrum (the "Centrum Affiliates") or the
Corporation or any of its subsidiaries to terminate his or her relationship
with Centrum, the Centrum Affiliates or the Corporation or any of its
subsidiaries; or
(ii) employ or establish a business relationship
with any individual who was employed by Centrum, the Centrum Affiliates or the
Corporation or any of its subsidiaries during the preceding twelve (12) month
period; or
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(iii) encourage or assist any individual or entity in a
business which is competitive with Centrum, the Centrum Affiliates or the
Corporation or any of its subsidiaries to employ or establish a business
relationship with any individual who was employed by Centrum, the Centrum
Affiliates, the Corporation or any of its subsidiaries during the preceding
twelve (12) month period; or
(iv) solicit, induce or encourage any suppliers, customers
or prospective customers to terminate or reduce in scope their relationship
with Centrum, the Centrum Affiliates or the Corporation or any of its
subsidiaries; or
(v) solicit or assist any individual or entity in the
solicitation of business from, or performance of work for, any customers or
prospective customers of Centrum, the Centrum Affiliates or the Corporation or
any of its subsidiaries; or
(vi) engage in (as a principal, agent, consultant,
partner, director, officer, employee, stockholder, investor or otherwise),
alone or in association with any person or entity, or be financially interested
in, any business which is competitive with Centrum, the Centrum Affiliates or
the Corporation or any of its subsidiaries. Notwithstanding the foregoing,
Mahoney shall be entitled to hold shares of a publicly-traded company so long
as such shares do not represent more than one percent (1%) of the outstanding
capital of such company.
(b) For purposes of paragraph 9, "customers" shall mean
those customers to or for whom Centrum, the Centrum Affiliates or the
Corporation supplied products or performed services during the twelve (12)
months preceding the date in question, and "prospective customers" shall mean
persons or entities whose business was solicited by Centrum, the Centrum
Affiliates or the Corporation or any of its subsidiaries during the twelve (12)
months preceding the date in question.
(c) Mahoney shall not use for his personal benefit, or
disclose, communicate or divulge to, or use for the direct or indirect benefit
of any person, firm, association or company, (i) any confidential information
regarding the business methods, business policies, business strategies,
marketing plans, survey procedures, statistical techniques, research or
development projects or results, trade secrets or other processes of, or
developed by, the Corporation, or (ii) any confidential data on or relating to
past, present or prospective customers of the Corporation, or (iii) budgets,
forecasts, pricing information or unpublished financial information or any
other confidential information relating to or dealing with the business
operations or activities of the Corporation.
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(d) Mahoney acknowledges and agrees that (i) the
covenants set forth in this paragraph 9 are essential elements of the
transactions contemplated by the Acquisition Agreement, that Mahoney is
receiving adequate consideration hereunder, and that such covenants are
reasonable and necessary in order to protect the legitimate interests of
Centrum, the Centrum Affiliates, and the Corporation; (ii) Centrum, the Centrum
Affiliates, and the Corporation will not have any adequate remedy at law if
Mahoney violates the terms hereof or fails to perform any of his obligations
hereunder; and (iii) Centrum, the Centrum Affiliates, and the Corporation shall
have the right, in addition to any other rights any of them may have under
applicable law, to obtain from any court of competent jurisdiction preliminary
and permanent injunctive relief to restrain any breach or threatened breach of,
or otherwise to specifically enforce any such covenant or any other obligations
of Mahoney under, this Agreement, as well as to obtain damages and an equitable
accounting of all earnings, profits and other benefits arising from such
violation, which rights shall be cumulative and in addition to any other rights
or remedies to which Centrum or the Corporation may be entitled.
(e) If the period of time or territorial scope of any
restriction set forth in paragraph 9(a) should be adjudged unreasonable in any
proceeding, then the period of time shall be reduced by such number of months
or the territory shall be reduced by the elimination of such unreasonable
portion thereof, or both, so that such restrictions may be enforceable for such
time and in the manner adjudged to be reasonable. If Mahoney violates any of
the restrictions contained in paragraph 9(a), then the restrictive period shall
not run in favor of Mahoney from the time of the commencement of any such
violation until such time as such violation shall be cured by Mahoney.
10. INDEPENDENT CONTRACTOR. Mahoney shall conduct any and all services
pursuant to this Agreement as an independent contractor. No relationship of
employer and employee, joint venture or partnership will be created by this
Agreement. Mahoney will act hereunder as an independent contractor, and except
as expressly provided herein, with no claim under this Agreement or otherwise
against the Corporation for vacation pay, sick leave, retirement benefits,
social security, workers compensation, disability or unemployment insurance
benefits. Except as otherwise specifically set forth in paragraph 6 of this
Agreement, Mahoney shall be solely responsible for, and shall not have any
claim against, the Corporation, for any business expenses incurred by Mahoney
as a result of or in performance of his obligation under this Agreement. As an
independent contractor, Mahoney will be responsible for the payment of any
applicable federal, state and local taxes that may arise as a result of monies
he shall receive from the Corporation. Mahoney shall promptly pay all said
applicable taxes and, upon request, furnish the Corporation with evidence of
said payment.
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Mahoney agrees to indemnify the Corporation for any monies paid by reason of
Mahoney's failure to pay any applicable federal, state or local taxes on any
amounts paid to Mahoney under the terms of this Agreement.
11. MISCELLANEOUS.
(a) INDULGENCES, ETC. Neither the failure nor any
delay on the part of Centrum, any Centrum Affiliate, or the Corporation to
exercise any right, remedy, power or privilege under this Agreement (a "Right")
shall operate as a waiver thereof, nor shall any single or partial exercise of
any Right preclude any other or further exercise of the same or of any other
Right, nor shall any waiver of any Right with respect to any occurrence be
construed as a waiver of such Right with respect to any other occurrence. No
waiver shall be effective against Centrum or the Corporation unless it is in
writing and is signed by Centrum or the Corporation, as the case may be.
(b) 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 as of the date delivered if delivered personally or by
recognized overnight courier service or by facsimile to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice, except that notices of changes of address shall be effective
upon receipt):
(i) If to Mahoney:
Stephen J. Mahoney
19019 Hillcrest Drive
Corry, Pennsylvania 16407-0901
with a COPY, given in the manner prescribed above, to:
Edward Walsh, Esq.
Vetter, Price
805 Third Avenue
22nd Floor
New York, NY 10022
Fax No.: (212) 407-7799
(ii) If to Corporation or Centrum, or an Centrum
Affiliate:
Centrum Industries, Inc.
6135 Trust Drive
Suite 104A
Holland, Ohio 43528
Attention: George Wells, President
Fax No.: (419) 868-3442
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with a COPY, given in the manner prescribed above, to:
John W. Hilbert II, Esq.
Fuller & Henry P.L.L.
One SeaGate, Suite 1700
P.O. Box 2088
Toledo, Ohio 43603-2088
Fax No.: (419) 247-2665
(c) HEADINGS. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(d) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Pennsylvania;
provided, however, that if any provision of this Agreement shall be deemed
invalid or unenforceable under the laws of the State of Pennsylvania, this
Agreement shall be governed by and construed in accordance with the laws of the
State of Ohio.
(e) BINDING NATURE OF AGREEMENT. This Agreement shall be
binding upon and inure to the benefit of Centrum, the Centrum Affiliates, and
the Corporation and their respective successors and assigns and shall be
binding upon Mahoney, his heirs and legal representatives.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
MCINNES STEEL COMPANY
By /s/ George H. Wells
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MAHONEY
/s/ Stephen J. Mahoney
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STEPHEN J. MAHONEY
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