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EXHIBIT 10.2
STEEL CITY PRODUCTS, INC.
BERNARD H. FRANK EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of this 1st day of April
1998 by and between BERNARD H. FRANK (hereinafter referred to as "Mr. Frank")
and STEEL CITY PRODUCTS, INC. (hereinafter referred to as the "Company").
1. BACKGROUND. Mr. Frank is currently an employee of the Company pursuant to
an agreement dated as of September 1, 1993 (the "Prior Agreement"), which
has been extended beyond its stated expiration. The parties now wish to
enter into this Agreement, which is intended to replace and supersede in
all respects the Prior Agreement.
2. CONSIDERATION. The parties are entering into this Agreement for and in
consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
3. TERM OF EMPLOYMENT.
a. Mr. Frank's employment hereunder shall commence on April 1, 1998 (the
"Commencement Date.")
b. This Agreement shall expire (subject to the provisions of Section 16,
below) on the earlier to occur of (i) a termination of Mr. Frank's
employment pursuant in Section 11, Section 12 or Section 13, below; or
(ii) the close of business on February 29, 2000 (the "Expiration
Date").
4. TITLE, REPORTING RELATIONSHIP & RESPONSIBILITIES.
a. So long as this Agreement is in effect, Mr. Frank shall be elected
Chairman of the Company's Board of Directors, and shall report to the
Board of Directors of the Company.
b. Mr. Frank shall perform all of the customary duties and fulfill all of
the customary responsibilities of a chairman of the board of a
publicly traded corporation. Mr. Frank shall determine in his own
discretion the amount of time that is required for him to fulfill
these duties and responsibilities and he shall carry them out to the
best of his abilities. Nothing herein shall be construed to prevent
Mr. Frank from serving as an officer or director or participating in
the activities of any family, religious, charitable, community service
or political activity so long as such participation does not interfere
with his carrying out his duties and responsibilities hereunder.
5. COMPENSATION. Mr. Frank's compensation shall be as follows:
a. Base Salary. The Company shall pay Mr. Frank a base salary of no less
than $4,167 per month plus such merit increases as the Board of
Directors of the Company shall determine from time to time in its sole
discretion ("Base Salary"). Base Salary shall be
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paid in installments no less frequently than twice monthly at the same
time as other employees of the Company are paid.
b. Deferred Compensation. In recognition of the salary voluntarily
foregone by Mr. Frank since October 1995, the Company shall pay him
deferred compensation of $5,000 per month for 23 months (the "Deferred
Compensation"), commencing with the month of April 1998.
c. Special Bonus. The Board of Directors of the Company's parent in its
sole discretion may grant to Mr. Frank on a quarterly basis a special
bonus (the "Special Bonus") not to exceed, however, $25,000 in any
fiscal year of the Company.
d. Annual Bonus.
i. Subject to the terms hereof, the Company shall pay to Mr. Frank
an annual cash bonus (the "Annual Bonus"), for each calendar year
on the March 15 following the conclusion of each calendar year,
from a bonus pool equal to 8% of the Company's consolidated net
income before interest, taxes, depreciation, LIFO adjustments,
corporate overhead, and inter-company exchanges or charges, and
amortization, prepared in accordance with generally accepted
accounting principles consistently applied and in a manner
consistent with bonus calculations for the calendar year 1997.
The bonus pool shall be divided amongst the Company's executives
by the Compensation Committee of the Company's Board of Directors
based upon the recommendations of the Chairman of the Board of
Directors of the Company.
ii. Unless the Company shall have no earnings for a given calendar
year, Mr. Frank's Annual Bonus shall be not less than 15% of his
Base Salary, unless his employment terminates before the end of a
calendar year, in which event the provisions relating to
termination of employment shall govern the payment of his Annual
Bonus for such year.
6. BENEFITS.
a. Health, Insurance etc. Mr. Frank shall be entitled to the same health
and other benefits as are made available to the Company's senior
officers generally, and on the same terms and conditions.
b. The Company shall furnish Mr. Frank with the use of a Company-leased
automobile with a monthly rental rate not to exceed $500 per month or
a Company-owned automobile that, if leased, would have a monthly lease
rate of no more than $500; or in lieu of either of the foregoing, the
Company shall pay him a monthly automobile allowance of $500. The cost
of all insurance, maintenance and repairs for, and gasoline consumed
by, such automobile shall be paid or reimbursed (as the case may be)
to Mr. Frank other than the cost of gasoline for his personal use of
such automobile.
c. All of the benefits described in this Section 6 are hereinafter
referred to collectively as the "Benefits."
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Bernard H. Frank Employment Agreement
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7. BUSINESS EXPENSE REIMBURSEMENT. Mr. Frank shall be reimbursed in accordance
with Company policy from time to time in effect for all reasonable business
expenses incurred by him in the performance of his duties hereunder.
8. INDEMNIFICATION. Mr. Frank shall be indemnified by the Company with respect
to claims made against him as a director, officer and/or employee of the
Company, of its parent, or of any of their subsidiaries (as the case may
be) to the fullest extent permitted by the Company's charter, by-laws and
the law of its state of incorporation.
9. CONFIDENTIAL INFORMATION.
a. During his employment by the Company and after his employment
terminates for whatever reason, Mr. Frank shall not disclose to any
person or entity Confidential Information (as defined below) except in
the proper performance of his duties and responsibilities under this
Agreement or except as may be expressly authorized by the Board of
Directors of the Company and shall not use Confidential Information
for the benefit of any person or entity other than the Company. For
purposes of this Agreement, "Confidential Information" is defined as
including trade secrets, customer names and lists, vendor names and
lists, product costs and selling prices, business plans, marketing
plans, non-public financial data, product specifications and designs,
the existence, nature, substance, progress and results of research and
development projects, concepts, inventions, discoveries, formulae,
processes, drawings, documents, records, software, or any other
information of the Company, its parent or of any of their subsidiaries
that is not generally available, or any such information of any third
party that is held by the Company, its parent or any of their
subsidiaries under an obligation of confidentiality.
b. Mr. Frank's obligation of confidentiality shall not, however, relate
to any information --
i. that is or becomes publicly known through no act or fault of Mr.
Frank;
ii. that is received by Mr. Frank (without a breach of this or any
other agreement) from a third party with no restrictions as to
its disclosure; or
iii. that is required to be disclosed pursuant to applicable law, a
court order or a judicial proceeding, including a proceeding to
enforce this Agreement.
10. NON-COMPETE OBLIGATIONS.
a. Mr. Frank's obligations with respect to competing with the Company and
soliciting its employees shall be as follows:
i. Within the Market Area (as defined below) Mr. Frank shall not
render services or advice, whether for compensation or without
compensation and whether as an employee, officer, director,
principal or otherwise, to any person or organization with
respect to any product, service or process in existence or under
development that is competitive with (1) the business of the
Company on the date hereof; (2) the
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business of the Company in which Mr. Frank was actively engaged
during his employment by the Company or of which he has detailed
knowledge; or with (3) any planned business of the Company in
which Mr. Frank had an active part in the planning or of which he
has detailed knowledge.
ii. Mr. Frank shall not either directly or indirectly as agent or
otherwise in any manner solicit influence or encourage any
customer of the Company to take away or to divert or direct its
business to Mr. Frank or to any person or entity by or with which
Mr. Frank is employed, associated, affiliated or otherwise
related, other than the Company.
iii. Mr. Frank shall not recruit or otherwise solicit or induce any
employee of the Company to terminate his or her employment or
otherwise cease his or her relationship with his or her employer.
b. Mr. Frank's obligations under this Section 10 shall continue (i) so
long as he is an employee of the Company and (ii) after his employment
terminates, (whether by reason of the expiration of this Agreement or
pursuant to Section 11, Section 12 or Section 13, below, or otherwise)
for (x) a period of six months, or (y) for the period, if any, during
which the Company is obligated to continue to pay, or as to which it
has in a lump sum paid, Mr. Frank's Base Salary, whichever period is
longer.
c. Definitions.
i. "Market Area" is defined as an area within a 200 mile radius of
any facility of the Company.
ii. For purposes of this Section 10, the word "Company" shall include
the Company's parent and any subsidiary of the Company or such
parent.
11. TERMINATION BY THE COMPANY: Prior to the Expiration Date, the Company may
terminate Mr. Frank's employment only pursuant to the terms and conditions
contained in this Section 11.
a. Without Cause; Death; Disability. The Company may terminate Mr.
Frank's employment without Cause (as the word "Cause" is defined
below) or by reason of his death or permanent disability by giving Mr.
Frank written notice of such termination. In the event the Company
gives such notice, Company shall do the following:
i. continue to pay to Mr. Frank for each full calendar month in the
period between the date of such termination and the Expiration
Date; or for a period of 12 months, whichever period is longer,
one-twelfth of his Base Salary;
ii. pay to Mr. Frank any Deferred Compensation to which he is
entitled through the Expiration Date, but which has not been paid
to him;
iii. pay to Mr. Frank any Special Bonus awarded to him, but not paid;
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iv. after the end of the calendar year of the Company in which such
termination of employment occurs, pay to Mr. Frank any Annual
Bonus that, but for the termination of his employment, would have
been paid to him for such year, pro-rated, however, for the
number of days during such year that Mr. Frank was an employee of
the Company;
v. provide to Mr. Frank the Benefits for the period during which it
is required to continue to pay him his Base Salary under Section
11(a)(i), above; and
vi. cause all stock options held by Mr. Frank to become exercisable
in full and to remain exercisable until their stated expiration
date (without regard, for such purpose, to the termination of his
employment).
b. Insurance Payments. Any payments made to Mr. Frank under any
disability plans, the premiums for which were not paid by Mr. Frank,
shall serve to reduce the amounts payable under Section 11(a)(i),
above.
c. For Cause. The Company may terminate Mr. Frank's employment for Cause
by giving written notice thereof to Mr. Frank, in which event the
Company shall pay him any Base Salary accrued, but not paid through
the date of such termination; shall continue to pay him the monthly
installments of Deferred Compensation as provided in Section 5(b),
above; and shall pay him any Special Bonus awarded prior to the date
of such termination, but not paid.
d. Definition of Cause. "Cause" shall mean gross or wilful misconduct by
Mr. Frank in connection with his employment; the breach by Mr. Frank
of any material obligation under this Agreement, including, but not
limited to the obligations set forth in Section 9 and Section 10,
above; a material breach in connection with the performance by Mr.
Frank of his employment responsibilities; any act of dishonesty or
fraud; or the commission by Mr. Frank of a felony.
e. Withholdings. All amounts payable to Mr. Frank under this Agreement
shall be subject to such withholdings therefrom as the Company is
legally required to make.
12. RESIGNATION BY MR. FRANK.
a. Mr. Frank may resign his employment with the Company on 30 days' prior
written notice to the Company.
b. The Company may deem any such notice given by Mr. Frank as a
resignation by him, effective upon the giving of such notice, of any
or all directorships and offices then held by him in the Company, its
parent and any of their subsidiaries, but the Company shall
nevertheless continue to pay to Mr. Frank (i) his Base Salary during
the thirty-day notice period; and (ii) the Deferred Compensation until
all twenty-three payments thereof have been made.
c. No Annual Bonus shall be payable to Mr. Frank with respect to the
fiscal year in which he resigns his employment with the Company.
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d. In the event of Mr. Frank's resignation, all stock options then held
by him shall remain in effect until their stated expiration date
(without regard, for such purpose, to the termination of his
employment).
13. CHANGE IN CONTROL.
a. Anything herein to the contrary notwithstanding, if after a Change in
Control (as defined below) either (i) Mr. Frank's employment is
terminated without Cause and other than by reason of his death or
permanent disability; or (ii) Mr. Frank resigns his employment
pursuant to Section 12, above, by written notice given within his 180
days of the effective date of the Change in Control, the Company shall
pay and provide to Mr. Frank the amounts and benefits that it is
required to pay and provide in the case of a termination without Cause
under Section 11(a), above, except that --
i. All payments shall be made in a lump sum within 15 days of the
date of the termination of his employment, and the payment of
Base Salary shall be increased by 25%.
b. A "Change in Control" shall mean any transaction that results in a
sale of substantially all of the assets, business or common stock of
the Company to a third party or entity that is not controlled by the
senior managers of the Company or by a majority of the Board of
Directors of the parent of the Company on the date hereof.
14. NOTICES. All notices required or permitted under this Agreement shall be in
writing and shall be deemed given by a party when hand delivered to the
other party or when deposited with a delivery service that provides
next-business-day delivery and proof of delivery, addressed to the other
party as follows:
If to the Company: If to Mr. Frank:
At its headquarters address At his most recent residence
attention of the President. address on the books of the
Company.
With a copy to: With a copy to:
Roger M. Barzun Mark Frank, Esq.
General Counsel Aderson, Frank & Steiner
60 Hubbard Street 2320 Grant Building
P.O. Box 767 Pittsburgh, PA 15219
Concord, Massachusetts 01742
or to such other address of a party as such party may by notice hereunder
designate to the other party.
15. SEVERABILITY. If any provision or part of a provision of this Agreement is
finally declared to be invalid by any tribunal of competent jurisdiction,
such part shall be deemed automatically adjusted, if possible, to conform
to the requirements for validity, but, if such adjustment is
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not possible, it shall be deemed deleted from this Agreement as though it
had never been included herein. In either case, the balance of any such
provision and of this Agreement shall remain in full force and effect.
Notwithstanding the foregoing, however, no provision shall be deleted if it
is clearly apparent under the circumstances that either or both of the
parties would not have entered into this Agreement without such provision.
16. SURVIVAL. Notwithstanding the expiration or earlier termination of this
Agreement or of Mr. Frank's employment for any reason, the terms and
conditions of Section 9 and Section 10 and any other obligations of the
parties that by their terms are to be performed or are to have continued
effect after such termination shall survive such expiration or termination.
17. PRORATION. All amounts payable to Mr. Frank hereunder for a period shorter
than the period for which they are described herein shall be pro-rated on a
daily basis using a 365-day year.
18. INJUNCTIVE RELIEF. It is acknowledged and agreed that the Company shall
have the right to bring an action to enjoin any violation by Mr. Frank of
his obligations under Section 9 and Section 10, above, because a suit for
monetary damages alone would be an inadequate remedy.
19. ARBITRATION.
a. Except as otherwise provided below, this Agreement and any
controversy, claim or dispute between the parties directly or
indirectly concerning this Agreement or the breach hereof or the
subject matter hereof, including questions concerning the scope and
applicability of this Section 18 shall be finally settled by
arbitration held in Pittsburgh, Pennsylvania in accordance with the
provisions of this Section and the rules of commercial arbitration
then followed by the American Arbitration Association or any successor
to the functions thereof.
b. The arbitrator or arbitrators (the "arbitrators") shall be chosen in
accordance with such rules. A majority of the arbitrators shall have
the right and authority to determine how their decision or
determination as to each issue or matter in dispute may be implemented
or enforced. Any decision or award of a majority of the arbitrators
shall be final and conclusive on the parties to this Agreement, and
there shall be no appeal therefrom other than for fraud or willful
misconduct. Notwithstanding anything in this Section 18 to the
contrary, no arbitrator in any such proceeding shall have authority or
power to (i) modify or alter any express condition or provision hereof
by an award or otherwise; or (ii) award punitive or exemplary damages
for or against any party to any such proceeding.
c. The parties hereto agree that an action to compel arbitration pursuant
to this Agreement may be brought in the appropriate court of the
Commonwealth of Pennsylvania sitting in Pittsburgh, Pennsylvania.
Application may also be made to such court for confirmation of any
decision or award of a majority of the arbitrators, for an order of
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enforcement and for any other remedies that may be necessary to
effectuate such decision or award. Each of the parties hereto hereby
consents to the jurisdiction of the arbitrators and of such court and
waives any objection to the jurisdiction of such arbitrators and
court.
d. Notwithstanding anything contained in this Section 18 to the contrary,
the parties hereby agree that this Section 18 shall not apply to any
action brought by a party seeking an injunction or other equitable
relief.
e. In any controversy, claim or dispute subject to arbitration under the
terms of this Section 18, the parties shall pay the fees and expenses
of the arbitrators in accordance with any decision or award of a
majority of the arbitrators.
20. MISCELLANEOUS.
a. This Agreement --
i. Supercedes and replaces in its entirety the Prior Agreement;
ii. contains the entire understanding of the parties on the subject
matter hereof;
iii. shall not be amended, and no term hereof shall be waived, except
by written agreement of the parties signed by each of them;
iv. shall be binding upon and inure to the benefit of the parties and
their successors, personal representatives and permitted assigns;
v. may be executed in one or more counterparts, each of which shall
be deemed an original hereof, but all of which shall constitute
but one and the same agreement; and
vi. shall not be assignable by either party without the prior written
consent of the other party, except that the Company may assign
this Agreement to any entity acquiring substantially all of the
stock, business or assets of the Company, provided that the
acquiror assumes all of the Company's obligations hereunder.
b. The words "herein," "hereof," "hereunder," "hereby," "herewith" and
words of similar import when used in this Agreement shall be construed
to refer to this Agreement as a whole. The word "including" shall mean
including, but not limited to any one or more enumerated items.
c. Each provision of this Agreement shall be interpreted and enforced
without the aid of any canon, custom or rule of law requiring or
suggestion construction against the party drafting or causing the
drafting of such provision.
d. No representation, affirmation of fact, course of prior dealings,
promise or condition in connection herewith or usage of the trade not
expressly incorporated herein shall be binding on the parties.
e. The failure to insist upon strict compliance with any term, covenant
or condition contained herein shall not be deemed a waiver of such
term, nor shall any waiver or
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relinquishment of any right at any one or more times be deemed a
waiver or relinquishment of such right at any other time or times.
f. The captions of the paragraphs herein are for convenience only and
shall not be used to construe or interpret this Agreement.
21. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the domestic laws of the Commonwealth of Pennsylvania
without giving effect to any choice of law or conflict of law provision or
rule (whether of the Commonwealth of Pennsylvania or of any other
jurisdiction) that would cause the application hereto of the laws of any
jurisdiction other than the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
STEEL CITY PRODUCTS, INC.
By: /s/ Joel S. Lever /s/ Bernard H. Frank
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Joel S. Lever BERNARD H. FRANK
Director
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