Attached files
Exhibit
10.12
Employment
Agreement
of
Kip
L. Wadsworth
This Employment
Agreement is entered into by Kip L. Wadsworth (referred to
herein as "you") and
Ralph L. Wadsworth Construction
Company, LLC a Utah limited liability company into which Ralph L.
Wadsworth Construction Company, Inc. converted immediately prior to the date
hereof (the "Company")
and is effective on this 3rd day
of December, 2009 (the "Effective
Date.") This Employment Agreement is being entered into in
connection with the closing of the purchase by Sterling Construction Company,
Inc. ("SCC") of an 80%
membership interest in the Company (the "Acquisition") pursuant to a
purchase agreement of even date herewith (the "Purchase
Agreement.") It provides for your employment by the Company on
the following terms and conditions:
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1.
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Term. This Employment
Agreement will remain in effect unless terminated earlier as provided
below until 5:00 p.m. Mountain Time on December 31,
2012.
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2.
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Annualized Salary. The Company will
pay you an annualized salary of $244,000, which will be paid to you in
installments at the same time and for the same period as other employees
of the Company are paid.
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3.
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Bonus. You will receive a
bonus as follows:
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1.1
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A
cash bonus in an amount equal to 80% of your Annualized Salary in each
year in which the Company achieves 75% of its mutually agreed upon
forecasted EBITDA (as that term is defined in Appendix A of the Purchase
Agreement.)
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(a)
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The
cash bonus payable pursuant to Section 3.1,
above, shall be increased by an amount in cash equal to 10% of your
Annualized Salary in each year in which the Company achieves 100% of its
mutually agreed upon forecasted
EBITDA.
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1.2
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A
restricted stock bonus equal to 10% of your Annualized Salary in each year
in which the Company achieves 100% of its mutually agreed upon forecasted
EBITDA.
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1.3
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A
cash bonus to be divided among you and the other Sellers (as that term is
defined in the Purchase Agreement) pursuant to each of their percentage
ownership of the Company immediately prior to the Acquisition in an amount
equal to —
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(a)
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8%
of the amount by which Company's EBITDA in a given year exceeds the
Company's mutually agreed upon forecasted EBITDA for such year by up to
$5 million; plus
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(b)
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5%
of the amount by which Company's EBITDA in a given year exceeds the
Company's mutually agreed upon forecasted EBITDA for such year by more
than $5 million.
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1.4
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Although
a description of the bonus in Section 3.3, above, is included in the
employment agreement of each of the Sellers, only one such bonus shall be
paid in the aggregate, to be divided by the Sellers in the manner
indicated.
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4.
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Title, Responsibilities &
Reporting.
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1.5
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You
will be elected President of the Company and will carry out the customary
duties and responsibilities of that position and will perform services of
an executive nature that are generally consistent with the services that
you performed for the Company prior to the
Acquisition.
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1.6
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In
carrying out your responsibilities, you will report to the President of
SCC.
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1.7
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While
you are an employee of the Company, you shall have the right to control
the hiring and retention of RLW employees other than its executive
management employees.
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5.
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Benefits. The
Company will provide to you substantially the same benefits that you were
entitled to immediately prior to the Acquisition, except that with respect
to vacation, you will be eligible to take so many days vacation per year
as you believe is appropriate in light of the needs of the Company's
business. The Company will also provide you with a car
allowance of $1,100 per month.
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6.
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Business
Expenses. The Company will reimburse to you in
accordance with its expense reimbursement policy the reasonable business
expenses that you incur in the performance of your
responsibilities.
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7.
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Confidential
Information. You understand and agree that while you are
an employee of the Company and/or one of the Company's affiliates and for
a period of 4 years after your employment terminates for any reason
—
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1.8
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You
are required to hold the confidential and proprietary information of the
Company and its affiliates (the "Confidential
Information") in confidence and not to disclose it to anyone
outside of the Company and its affiliates except in the good faith
performance of your job
responsibilities;
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1.9
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You
may only use Confidential Information for the benefit of the Company and
its affiliates and not for the benefit of any other company or
person.
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1.10
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For
purposes of this Employment Agreement, Confidential Information does not
include, and the obligations herein do not apply to, information that is
now or subsequently becomes generally available to the public other than
through a breach by you of this Section 7, and,
after your employment terminates for any reason, the obligations herein
will also not apply to information that you rightfully obtain from a third
party that is not an affiliate of the Company and that has the right,
without obligation to the Company, to transfer or disclose such
information to you.
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1.11
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Notwithstanding
any provision in this Employment Agreement to the contrary, you may
disclose Confidential Information (a) if required to do so by any request
or order of any government authority, provided that you first notify the
Company of such requirement; (b) if otherwise required to do so by law; or
(c) if necessary to establish your rights under this Employment
Agreement.
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8.
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Termination of
Employment.
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1.12
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Termination Because of your
Death. If you should die during the term of this
Employment Agreement, the Company will pay to your estate in a single lump
sum within 74 days of the date of your
death —
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(a)
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Your
accrued but unpaid salary through the date of your
death;
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(b)
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Any
unpaid bonus for the calendar year immediately preceding the year in which
your death occurs; and
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(c)
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A
portion of any bonus for the year in which your death occurs to which you
are entitled, such portion to be based on (a) the number of days that have
elapsed between the first day of the calendar year in which your death
occurs and the date of your death; and (b) the extent to which, if at all,
any personal goals on which your bonus is based have been achieved in that
year.
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1.13
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Termination Because of your
Disability. If you become Permanently Disabled during
the term of this Employment Agreement, the Company may terminate your
employment effective upon giving you written notice of
termination. You will be deemed to be Permanently Disabled if
for physical or mental reasons you are unable to perform your duties and
responsibilities under this Employment Agreement for 60 consecutive days,
or for a total of 90 days during any twelve-month period, and such
physical or mental reasons are confirmed in writing by a licensed
physician reasonably acceptable to the Company. In that event,
the Company will pay you or your personal representative, as the case may
be, in a single lump sum within 74 days of the date of
termination —
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(a)
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Your
accrued but unpaid salary through the date of the termination of your
employment;
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(b)
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Any
unpaid bonus for the calendar year immediately preceding the year in which
you become permanently disabled;
and
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(c)
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A
portion of any bonus for the year in which you are determined to be
Permanently Disabled, such portion to be based on (a) the number of days
elapsed between the first day of the calendar year in which you become
permanently disabled and the date your employment terminates; and (b) the
extent to which, if at all, any personal goals on which your bonus is
based have been achieved in that
year.
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1.14
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Termination For
Cause. The Company may terminate your employment for
"Cause" (as defined below) effective upon giving you written notice of
termination. In that event, the Company will pay you your
accrued but unpaid salary through the date of the termination of your
employment in a single lump sum within 74 days of the date of
termination. The Company will not pay you any bonus for the
year in which your employment is terminated that you might otherwise have
earned had your employment not been terminated for
Cause.
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1.15
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Definition
of Cause. "Cause" means any one or more of the following
—
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(a)
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Your
gross neglect of your duties, gross negligence in the performance of your
duties, or your refusal to perform your
duties.
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(b)
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Your
unsatisfactory performance of your duties that is not cured within 30
working days after you receive written notice identifying the reasons why
your performance is considered unsatisfactory and what you can do to cure
the unsatisfactory performance.
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(c)
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Any
act of theft or other dishonesty by you, including, but not limited to any
intentional misapplication of the Company's or its affiliates' funds or
other property.
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(d)
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Your
conviction of any criminal activity not described above, or your
participation in an activity involving moral turpitude that is or could
reasonably be expected to be injurious to the business or reputation of
the Company.
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(e)
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Your
immoderate use of alcohol and/or the use of non-prescribed narcotics that
adversely and materially affects the performance of your duties and
responsibilities.
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1.16
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Termination Without
Cause. Your employment shall be deemed to have been
terminated by the Company Without Cause unless termination is (a) by
reason of your death or your becoming Permanently Disabled; (b) for Cause;
or (c) because of your Voluntary Resignation. The Company may
terminate your employment without Cause effective upon giving you written
notice of termination. In that event, the Company will pay you
in a single lump sum within 74 days of the date of termination
—
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(a)
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The
greater of your accrued but unpaid salary through the date of the
termination of your employment or any unpaid salary as if it had been
earned through 5:00 p.m. Mountain Time on the third anniversary of the
Effective Date;
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(b)
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Any
unpaid bonus for the calendar year immediately preceding the year in which
you are terminated;
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(c)
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Any
bonus to which you are entitled for the year in which you are terminated
regardless of the number of days elapsed between the first day of the
calendar year and the date your employment terminates. The
bonus will be the amount you would have earned had your employment not
been terminated.
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(d)
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During
the twelve-month period following the termination of your employment, the
Company will continue to cover you under the medical and dental plans
sponsored by the Company for its employees with the same coverage you had
immediately prior to the termination of your employment, provided that you
remit to the Company on a timely basis an amount equal to the applicable
monthly COBRA premium (less the COBRA administrative surcharge) for such
continued coverage; and the Company will reimburse you for any medical
premium expenses incurred by you hereunder within 30 days after the date
of your payment thereof. To the extent that any medical or
dental expense or in-kind benefits provided for under this Section 8.5 are
taxable to you in a given year, any such expense will be reimbursed to you
by the Company within 30 days of such expense being incurred by you, and
any expenses reimbursed or in-kind benefits provided hereunder will not
affect the expenses eligible for reimbursement or in-kind benefits
provided in any other year.
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(e)
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The
Company will permit you to purchase any insurance maintained by the
Company for its own benefit on your life at its then cash surrender
value.
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1.17
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Voluntary
Resignation by You.
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(a)
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You
may resign your employment (a "Voluntary Resignation")
by giving the Company and SCC 180 days' prior written notice of your
resignation. In that event, the Company will not pay you any
bonus that had not already been paid to you before the date of your notice
of resignation.
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(b)
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Notwithstanding
the foregoing, the Company may deem your notice of resignation as a
resignation by you effective upon the giving of the notice of your
employment and any and all directorships and offices then held by you in
the Company and its affiliates, in which case the Company shall pay you
your base salary then in effect for the one-hundred-eighty-day period in a
single lump sum within 74 days of the date of your notice of
resignation.
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1.18
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Termination
by You for Good Reason.
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(a)
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You
may terminate your employment for Good Reason if (a) the Company commits a
Breach (as defined below) of this Employment Agreement; (b) you give the
Company detailed written notice of the Breach within 30 days after the
occurrence of the Breach; and (c) the Company fails to cure the Breach
within 30 days after the receipt of the notice, or if the nature of the
Breach is such that it cannot practicably be cured in 30 days, if the
Company fails to diligently and in good faith commence a cure of the
Breach within the thirty-day period and completes the same within 60 days
after the occurrence of the Breach.
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(b)
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In
the event that you terminate your employment for Good Reason, the
termination shall be deemed for purposes of this Employment Agreement to
be a termination by the Company Without Cause. As a result, you
will be entitled to the payments and other benefits described in Section 8.5,
above. You will also be entitled to sell your membership
interest in the Company to SCC according to the terms and conditions set
forth in the Operating Agreement of the
Company.
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(c)
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A
"Breach" means a
material breach by the Company of any one or more of the material terms or
conditions of this Employment Agreement, and will include but not be
limited to the Company taking any one or more of the following
actions:
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(i)
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Moving
your place of employment (except for travel on Company or SCC business) to
a location outside the Salt Lake City, Utah
area.
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(ii)
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Materially
diminishing your duties and/or
responsibilities.
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(iii)
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Materially
diminishing the kind or level of the benefits you are entitled to under
this Employment Agreement.
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(iv)
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Failure
to timely pay the 20% annual distributions of net income and/or Put/Call
payments as set forth in the Operating Agreement of the Company, if such
failure is not cured within 30 days following written notice of such
failure.
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9.
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Non-Competition/Non-Solicitation.
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1.19
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During
the period specified, below, you shall not directly or
indirectly —
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(a)
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Render
services or advice (whether for compensation or without compensation) to
any person, entity or organization with respect to any business (whether
in existence or under development) that is engaged in the heavy
construction business or in any other business in which the Company or SCC
engages (the "Business") while you
are an employee of the Company or one of its affiliates (the "Non-Compete
Obligation"); or
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(b)
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Solicit
or induce or entice any employees of the Company or of any of its
affiliates to terminate their employment with, or otherwise cease their
relationships with, the Company or any of its
affiliates. Notwithstanding the foregoing, after your
employment terminates for any reason, the placement of general
advertisements which may be targeted to a particular geographic or
technical area, but which are not targeted directly or indirectly towards
the Company's, its affiliates' employees will not be deemed to be a
violation of this Section (b)
so long as you do not guide or direct the attention of any employee
or consultant of SCC, the Company or their affiliates to any such general
advertisement.
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9.1
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Exceptions and
Limitations.
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(a)
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The
ownership of less than five percent (5%) of the outstanding stock of any
publicly-traded corporation shall not by itself deem the owner thereof to
be engaged in such corporation's
business.
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(b)
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The
Non-Compete Obligation shall not be construed to prevent the Seller from
engaging in the commercial and/or residential real estate development
business or in aesthetic enhancement construction and provided, further,
that nothing in this Agreement shall prevent the Seller from performing
civil construction in connection with his own commercial and real estate
development.
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(c)
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The
Non-Compete Obligation shall not be construed to prevent the Seller from
providing bonding and other financial support for Cal Wadsworth
Construction or its affiliates, provided, however, that
in the states of Utah and Idaho, the Seller shall not provide bonding for
any Cal Wadsworth Construction civil construction project that competes
with RLW unless RLW chooses not to bid on such
project.
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1.20
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The
non-competition obligations specified above (a) shall be applicable while
you are an employee of the Company or of any of its affiliates and for a
period of one year after all such employment terminates for any reason,
but in any event for a period of 4 years after the Effective Date; and (b)
shall apply in any state in which the Business was carried on while you
were an employee of the Company or of any of its
affiliates.
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1.21
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The
restrictions set forth above are considered by you and the Company to be
reasonable for the purposes of protecting the
Business. However, if any of the restrictions is found by any
court of competent jurisdiction to be unenforceable because it extends for
too long a period of time, over too great a range of activities, or in too
broad a geographic area, it shall be interpreted to extend only over the
maximum period of time, range of activities and/or geographic area as to
which it may be enforceable.
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10.
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Indemnification. You
will be indemnified by the Company and/or SCC with respect to claims made
against you as a director, officer and/or employee of the Company and of
any affiliate of the Company to the fullest extent permitted by the
Company’s charter and operating agreement; by SCC's charter and bylaws and
by the laws of the states of Utah and Delaware,
respectively. SCC shall maintain insurance coverage for the
foregoing indemnification obligation in the same amount as SCC's directors
maintain for themselves, but in any event at least $5 million of
coverage.
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11.
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Other
Terms
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1.22
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Affiliates. The
affiliates of the Company are SCC and any entities controlled by the
Company or by SCC.
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1.23
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Construction. The
words "will" and "shall" mean "is obligated to." and the word "may" means
"is permitted to". The section headings contained in this
Employment Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this Employment
Agreement.
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1.24
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Amendments. No
amendment of any provision of this Employment Agreement shall be valid
unless it shall be in writing and signed by you and the
Company.
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1.25
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Authorship. You
and the Company agree that we have participated jointly in the negotiation
and drafting of this Employment Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Employment
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring you or
the Company by virtue of the authorship of any of the provisions of this
Employment Agreement.
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1.26
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Governing
Law. This Employment Agreement shall be governed by, and
construed in accordance with, the domestic laws of the State of Utah
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Utah or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Utah.
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12.
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Compliance with Section 409A of
the Code.
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1.27
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To
the extent that any payment to you under this Employment Agreement is
deemed to be deferred compensation subject to the requirements of Section
409A of the Internal Revenue Code of 1986 (the "Code") this Employment
Agreement will be operated in compliance with the applicable requirements
of Section 409A of the Code ("Section 409A") and its
corresponding regulations and related guidance with respect to the payment
in question. Notwithstanding anything in this Employment
Agreement to the contrary, any payment under this Employment Agreement
that is subject to the requirements of Section 409A may only be made in a
manner and upon an event permitted by Section 409A. To the
extent that any provision of this Employment Agreement would cause a
conflict with the requirements of Section 409A, or would cause the
administration of this Employment Agreement to fail to satisfy the
requirements of Section 409A, such provision shall be deemed null and void
to the extent permitted by applicable law, and the Company may modify this
Employment Agreement in such a manner as to comply with such requirements
without your consent.
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1.28
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If
you are a key employee (as defined in Section 416(i) of the Code (without
regard to paragraph 5 thereof)) except to the extent permitted under
Section 409A, no benefit or payment that is subject to Section 409A (after
taking into account all applicable exceptions to Section 409A, including
but not limited to the exceptions for short-term deferrals and for
separation pay only upon an involuntary separation from service) will be
made under this Employment Agreement on account of your separation from
service (as defined in Section 409A) with the Company until the later of
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(a)
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The
date prescribed for payment in this Employment Agreement;
and
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(b)
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The
first day of the seventh calendar month that begins after the date of your
separation from service (or, if earlier, the date of your
death.)
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1.29
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All
payments that were delayed by reason of the application of the date
prescribed by Section
12.2(b), above (the "Section 12.2(b) Date")
will be aggregated and paid to you on the Section 12.2(b) Date in a lump
sum together with interest computed from the date each such payment would
have first been paid to you absent the application of the Section 12.2(b)
Date until paid at the rate of the prime rate of SCC's lending bank plus
three percentage points. After the Section 12.2(b) Date, the
Company will pay any other amounts provided for herein to the extent and
in the manner provided in this Employment
Agreement.
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13.
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Notices: All
notices required or permitted under this Employment Agreement shall be in
writing and shall be deemed given by a party when hand delivered to the
other party against a receipt therefor or when deposited with a delivery
service that provides next-business-day delivery and proof of delivery, in
either case addressed to the other party as
follows:
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If to the Company
at:
Sterling
Construction Company, Inc.
20810
Fernbush Lane
Houston,
Texas 77073
Attention: Board
of Directors
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With
a copy to:
Roger
M. Barzun
60
Hubbard Street
Concord, Mass.
01742
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If to you, at your most
recent home address as shown in the Company's employment records, or to
such other persons or addresses as may be designated in writing by the
party to receive the notice.
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With
a copy to:
R.
Gary Winger, Esq.
Kirton
& McConkie
1800
Eagle Gate Tower
60
East South Temple
Salt
Lake City, Utah 84111
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14.
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Execution and
Delivery. This Employment Agreement and any amendment of
this Employment Agreement may be executed in any number of counterparts,
each of which counterparts shall be enforceable against the party
executing such counterpart, and all of which together shall constitute but
one and the same instrument. This Employment Agreement when
signed by a party may be delivered by telecopier or other facsimile
transmission or via e-mail in portable document format as if such party
had executed and delivered an original manually signed
counterpart.
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[The
following page is the signature page of this Employment Agreement]
You and
the Company have signed this Employment Agreement as of the Effective Date
intending to be legally bound by its terms and conditions.
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Ralph
L. Wadsworth Construction Company, LLC
By
Sterling Construction Company, Inc.
its sole Manager
By: /s/ Joseph P. Harper,
Sr.
Name: Joseph P. Harper,
Sr.
Title President
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/s/ Kip L.
Wadsworth
Kip
L. Wadsworth
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