EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is entered into as of December 19, 1996 by
and between Xxxxxxxx Xxxx ("Xxxx") and Total Control Products, Inc., an Illinois
corporation (the "Company").
R E C I T A L S:
A. The Company desires to employ Gihl as an executive officer of the
Company and Gihl desires to be so employed by the Company, all on the terms and
subject to the conditions set forth herein.
B. The Company desires to bind Gihl to certain restrictive covenants and
Gihl agrees to be so bound, all on the terms and subject to the conditions set
forth herein.
A G R E E M E N T :
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. TERM. Subject to the terms and conditions set forth herein and unless
sooner terminated as hereinafter provided, the Company shall employ Gihl and
Gihl agrees to serve as an employee of the Company from the date hereof to and
including December 31, 1997 (the "Employment Term"). After the expiration of
the Employment Term, Gihl's employment hereunder shall automatically renew for
successive one year periods (each, a "Renewal Term") unless either party hereto
delivers written notice to the other party hereto, at least ninety (90) days
prior to the expiration of the Employment Term or any Renewal Term thereof, as
the case may be, of his or its desire to terminate Gihl's employment with the
Company. The Employment Term and any Renewal Term thereof are collectively
referred to herein as the "Term".
2. EMPLOYMENT DUTIES. During the Term, Gihl shall serve as the Chief
Executive Officer, President and Chairman of the Board of the Company. Gihl
shall report directly to the Board of Directors of the Company (the "Board") and
shall be responsible for the operations of the Company. Gihl shall faithfully,
diligently and competently perform such duties and responsibilities and shall
perform such other duties and responsibilities as may from time to time be
assigned to him by the Board.
3. COMPENSATION. As compensation for the services to be performed and
the duties and responsibilities to be assumed by Gihl during the Term, the
Company shall pay to Gihl the following compensation:
(a) A salary (the "Salary") in an amount equal to $200,000 per
annum. The Company shall review the Salary payable to Gihl on January 1 of
each year during the
Term beginning on January 1, 1997 and any increases in Salary shall be made
at the sole discretion of the Company. The Salary shall be payable to Gihl
in accordance with the Company's ordinary payment practices for salaried
employees.
(b) Gihl shall be entitled to participate in the Company's
executive bonus plan (the "Bonus") on the same terms as the
participation of other executives of TCP; provided, however, that,
during the Term, Gihl shall receive a Bonus of not less than $5,000 per
quarter. In no event shall any Bonus be paid to Gihl for any fiscal year
of the Company unless Gihl is employed throughout the entire fiscal year.
The Bonus shall be determined from the Company's internal accounting
records, which shall be finally approved by the Board or any compensation
committee thereof. The Bonus awarded to Gihl in respect of any particular
fiscal year shall be paid at the same time as bonuses are paid to other
executives of the Company.
4. VACATIONS. Gihl shall be entitled to reasonable vacations in
accordance with the Company's policies applicable to its senior executives
generally, which shall be taken at such time or times as shall be mutually
determined by the Company and Gihl. The minimum to which Gihl will be entitled
is four (4) weeks vacation for each twelve (12) month period Gihl is employed by
the Company.
5. STOCK OPTIONS. Effective upon the consummation of the Company's
initial public offering of any class of common stock (the "Initial Public
Offering"), Gihl shall receive a stock option grant under the Total Control
Products, Inc. 1996 Stock Option Plan of 50,000 option shares to be
exercisable at a price equal to the offering price per share in the Initial
Public Offering. Such options shall vest ratably over a three-year period,
subject to certain change-of-control provisions contained in the option
agreement. Gihl may receive any such additional stock option grants during the
Term as are determined by the Compensation Committee of the Board in accordance
with its policies regarding stock option grants to senior executives generally.
6. BENEFITS.
(a) During the Term, Gihl shall be entitled to participate in such
employee benefit plans and programs as are maintained by the Company, to
the extent that his position, tenure, compensation, age, health and other
qualifications make him eligible to participate. The Company does not
promise the adoption or continuance of any particular plan or program
during the Term, and Gihl's (and his dependents') participation in any such
plan or program shall be subject to the provisions, rules, regulations and
laws applicable thereto.
(b) During the Term, Gihl shall be entitled to such other fringe
benefits as are provided to employees of the Company with comparable
positions, tenure and compensation as Gihl.
7. REIMBURSEMENT OF EXPENSES. During the Term, Gihl shall be entitled to
prompt reimbursement for ordinary, necessary and reasonable out-of-pocket trade
or business expenses which Gihl incurs in connection with performing his duties
under this Agreement. The
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reimbursement of all such expenses shall be made upon presentation of
evidence reasonably satisfactory to the Company of the amounts and nature of
such expenses and shall be subject to the reasonable approval of the Board.
8. RESTRICTIVE COVENANTS. Gihl acknowledges and agrees that (a) through
his continuing services to the Company, he will learn valuable trade secrets and
other proprietary information relating to the Company's business; (b) Gihl's
services to the Company are unique in nature; (c) the Company's business is
national in scope; and (d) the Company would be irreparably damaged if Gihl was
to provide services to any person or entity in violation of the restrictions
contained in this Agreement. Accordingly, as an inducement to the Company to
enter into this Agreement, Gihl agrees that during the Term and for one year
thereafter (such period being referred to herein as the "Restricted Period"),
Gihl shall not, directly or indirectly, either for himself or for any other
person or entity, without the prior written consent of the Company:
(a) anywhere in the United States, engage or participate in, or
assist, advise or be connected with (including as an employee, owner,
partner, shareholder, officer, director, advisor, consultant, agent or
(without limitation by the specific enumeration of the foregoing)
otherwise), or permit his name to be used by or render services for, any
person or entity engaged in, or making plans to engage in, a business that
competes with the business conducted by, or proposed to be conducted by,
the Company (a "Competing Business");
(b) take any action which might divert from the Company or any of its
Affiliates (as defined herein) any opportunity (each, an "Opportunity")
which would be within the scope of the Company's or such Affiliate's then
business and shall offer each Opportunity to the Company, which the Company
may, in its sole discretion, decide to pursue or not;
(c) solicit, attempt to solicit, aid in the solicitation of or accept
any orders from any person or entity who is or has been a customer of the
Company or its Affiliates, at any time during the period beginning one year
prior to the date hereof through the Restrictive Period, to purchase
products or services from any person or entity which products or services
could have been supplied or performed, as the case may be, by the Company
or its Affiliates (other than from the Company or its Affiliates);
(d) solicit, attempt to solicit or aid in the solicitation of any
person or entity who is or has been a customer, supplier, licensor,
licensee or person or entity having any other business relationship with
the Company or any of its Affiliates, at any time during the period
beginning one year prior to the date hereof through the Restrictive Period,
to cease doing business with or alter its business relationship with the
Company or its Affiliates; or
(e) solicit or hire any person or entity who is a director, officer,
employee, independent contractor or agent of the Company or any of its
Affiliates to perform
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services for any person or entity other than the Company or its Affiliates
or to terminate his or her employment with the Company or its Affiliates.
As used herein, an "Affiliate" shall mean and include any person or entity
which controls a party, which such party controls or which is under common
control with such party. "Control" means the power, direct or indirect, to
direct or cause the direction of the management and policies of a person or
entity through voting securities, contract or otherwise.
9. DISCLOSURE OF CONFIDENTIAL INFORMATION. Gihl recognizes that he will
occupy a position of trust and confidence with the Company as to Confidential
Information (as herein defined) pertaining to the Company and its Affiliates.
As an inducement for the Company to enter into this Agreement, Gihl therefore
agrees that:
(a) for the longest period permitted by law from the date of this
Agreement, Gihl and each Affiliate of Gihl shall hold in the strictest
confidence and shall not, other than as required by law, without the prior
written consent of the Company, use for his own benefit or that of any
third party or disclose to any person, firm or corporation (except the
Company, an Affiliate of the Company or employees of the Company and its
Affiliates) any Confidential Information. For purposes of this Agreement,
intending that the term shall be broadly construed to include anything
protectible as a trade secret under applicable law, "Confidential
Information" shall mean all information, and all documents and other
tangible items which record information relating to or useful in connection
with the Company's business (including the business of any of the Company's
Affiliates), which at the time or times concerned is protectible as a trade
secret under applicable law, and which has been or is from time to time
disclosed to or known by Gihl.
(b) Gihl and each Affiliate of Gihl (and if deceased, their personal
representatives) shall promptly following a request therefor from the
Company return to the Company, without retaining copies, all tangible items
which are or which contain Confidential Information. Gihl shall also
surrender all computer print-outs, laboratory books, floppy disks and other
such media for storing software and information, work papers, files, client
lists, telephone and/or address books, rolodex cards, internal memoranda,
appointment books, calendars, keys and other tangible things entrusted to
Gihl by the Company or authored in whole or in part by Gihl within the
scope of his duties to the Company even if such things do not contain
Confidential Information; and
(c) at the request of the Company made at any time or from time to
time hereafter, Gihl and each Affiliate of Gihl (and if deceased, their
personal representatives) shall make, execute and deliver all applications,
papers, assignments, conveyances, instruments or other documents and shall
perform or cause to be performed such other lawful acts as the Company may
reasonably deem necessary or desirable to implement any of the provisions
of this Agreement, and shall give testimony and cooperate with the Company,
its Affiliates or their respective representatives in any controversy or
legal
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proceedings involving the Company, its Affiliates or their respective
representatives with respect to any Confidential Information.
10. INVENTIONS. Gihl acknowledges that in his capacity as an executive
officer of the Company, he will be involved in (i) the conception or making of
improvements, discoveries, inventions or the like (whether patentable or
unpatentable and whether or not reduced to practice), (ii) the authorship of
copyrightable works or (iii) the development of trade secrets relating to the
Company. Gihl acknowledges that all such intellectual property is the exclusive
property of the Company. Gihl hereby waives any rights he may have in or to
such intellectual property, and Gihl hereby assigns to the Company all right,
title and interest in and to such intellectual property. At the Company's
request and at no expense to Gihl, Gihl shall execute and deliver all such
papers, including, without limitation, any assignment documents, and shall
provide such cooperation as may be necessary or desirable, or as the Company may
reasonably request, in order to enable the Company to secure and exercise its
rights to such intellectual property.
11. SPECIFIC PERFORMANCE. Gihl agrees that any violation by him of
Sections 8, 9 or 10 of this Agreement would be highly injurious to the Company
and its Affiliates and would cause irreparable harm to the Company and its
Affiliates. By reason of the foregoing, Gihl consents and agrees that if he
violates any provision of Sections 8, 9 or 10 of this Agreement, the Company and
its Affiliates shall be entitled, in addition to any other rights and remedies
that it may have, to apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or prevent
any continuing violation of, the provisions of such section. In the event Gihl
breaches a covenant contained in this Agreement, the Restricted Period
applicable to Gihl with respect to such breached covenant shall be extended for
the period of such breach. Gihl also recognizes that the territorial, time and
scope limitations set forth in Sections 8 and 9 are reasonable and are properly
required for the protection of the Company and its Affiliates and in the event
that any such territorial, time or scope limitation is deemed to be unreasonable
by a court of competent jurisdiction, the Company and Gihl agree, and Gihl
submits, to the reduction of any or all of said territorial, time or scope
limitations to such an area, period or scope as said court shall deem reasonable
under the circumstances. Gihl represents, warrants and acknowledges that he has
available to him sufficient other means of support so that observance of the
covenants contained in Sections 8, 9 and 10 shall not deprive him of his ability
to earn a livelihood or support his dependents.
12. TERMINATION FOR CAUSE. During the Term, Gihl's employment with the
Company may be terminated by the Board "for cause", which shall include (a)
Gihl's conviction for, or plea of nolo contendere to, a felony or a crime
involving moral turpitude; (b) Gihl's commission of an act which the Board, in
its reasonable discretion, determines involved personal dishonesty or fraud
involving personal profit in connection with Gihl's employment with the Company;
(c) Gihl's commission of an act which the Board shall have found to have
involved willful misconduct or gross negligence on the part of Gihl in the
conduct of his duties hereunder; or (d) Gihl's breach of any material provision
of this Agreement where such breach continues for a period of ten (10) days
after Gihl's receipt of written notice of such breach from the Company. In the
event of termination under this Section 12, the Company's obligations under this
Agreement shall cease
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and Gihl shall forfeit all his rights to receive any compensation or benefits
under this Agreement, except that Gihl shall be entitled to his Salary and
benefits for services already performed as of the date of termination of
Gihl's employment hereunder.
13. GOOD REASON. Gihl shall be entitled to terminate his employment
hereunder at any time for Good Reason. For the purposes of this Agreement, Gihl
shall have "Good Reason" to terminate his employment hereunder (i) upon a
significant demotion or material adverse change in his duties and
responsibilities; (ii) upon a significant reduction in Salary, Bonus or in
fringe benefits provided to him; (iii) upon a requirement to relocate, except
for office relocations that would not increase Gihl's one-way commute distance
by more than fifty (50) miles from the most recent principal residence selected
by Gihl prior to notice of relocation; (iv) upon a material breach by the
Company of its agreements and covenants set forth herein; or (v) within one (1)
year of a Change of Control (as defined herein).
14. DEATH OR DISABILITY.
(a) This Agreement shall terminate upon Gihl's death.
(b) If Gihl becomes permanently disabled (determined as provided
below) during the Term, his employment with the Company shall terminate as
of the date such permanent disability is determined. Gihl shall be
considered to be permanently disabled for purposes of this Agreement if he
is unable by reason of accident or illness (including mental illness) to
perform the material duties of his regular position with the Company and is
(i) not expected to recover from his disability within a period of six (6)
months from the commencement of the disability; or (ii) not expected to be
able to perform his material duties of his regular position with the
Company for a period of six (6) months in any consecutive twelve (12) month
period as a result of the same disability. If at any time Gihl claims or
is claimed to be permanently disabled, a physician acceptable to both Gihl,
or his personal representative, and the Company (which acceptances shall
not be unreasonably withheld) shall be retained by the Company and shall
examine Gihl. Gihl shall cooperate fully with the physician. If the
physician determines that Gihl is permanently disabled, the physician shall
deliver to the Company a certificate certifying both that Gihl is
permanently disabled and the date upon which the condition of permanent
disability commenced. The determination of the physician shall be
conclusive.
(c) Gihl's right to his compensation and benefits under this
Agreement shall cease upon his death or disability, except that Gihl (or
his estate or heirs) shall be entitled to his Salary and a pro rata portion
of his Bonus and benefits for services already performed as of the date of
his death or disability.
15. EFFECT OF TERMINATION.
(a) If the Company terminates Gihl's employment hereunder for any
reason other than for cause, death or disability, but including upon the
decision of the Company not to
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renew the term of Gihl's employment hereunder pursuant to Section 1 of this
Agreement, or Gihl terminates this Agreement for Good Reason, (i) the Company
shall pay Gihl in one lump sum an amount equal to (A)twenty-four (24) times
the greater of (I) his monthly Salary as of the date of termination; or (II)
his highest monthly Salary during the prior twelve month period; plus (B) two
(2) times the Bonus paid to Gihl for the Company's fiscal year immediately
prior to the date of such termination; (ii) all unvested stock options
granted to Gihl shall vest and become immediately exercisable; and (iii) the
Company shall continue Gihl's medical insurance benefits for a period equal
to twenty-four (24) months.
(b) If Gihl terminates his employment with the Company for any reason
whatsoever other than for Good Reason, the Company's obligations under this
Agreement shall cease and Gihl shall forfeit all his rights to receive any
compensation or benefits under this Agreement, except that Gihl shall be
entitled to his Salary and benefits for services already performed as of the
date of termination of this Agreement.
(c) Any amounts payable to Gihl pursuant to this Section 15, shall be
paid in full in a lump sum not more than sixty (60) days following the date of
termination of Gihl's employment hereunder.
(d) Gihl shall not be required to mitigate the amount of any payment
contemplated by this Section 15 (whether by seeking new employment or in any
other manner), nor shall any such payment be reduced by any earnings that Gihl
may receive from any other source.
16. CHANGE IN CONTROL. For purposes of this Agreement, a "Change in
Control" shall mean the occurrence of any of the following events:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (collectively, a "person") of Beneficial
ownership (as such term is defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of twenty (20%) percent or more of the then
outstanding shares of common stock of the Company (collectively, the
"Outstanding Common Stock"); provided, however, that the following shall not
constitute a Change of Control: (i) any acquisition directly from the Company
(excluding an acquisition by virtue of the exercise of a conversion privilege);
(ii) any acquisition by an Underwriter (as such term is defined in Section 2(11)
of the Securities Act of 1933, as amended) for the purpose of making a public
offering; (iii) any acquisition by the Company; or (iv) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company;
(b) The liquidation of all or substantially all of the assets of the
Company; or
(c) If within two (2) years of: (i) the completion of a tender offer
or exchange offer for the voting stock of the Company (other than a tender offer
or exchange offer by the
7
Company) or a proxy contest in connection with the election of members of the
Board; (ii) a merger, consolidation, transfer or sale of twenty percent (20%)
or more of the book value of the gross assets of the Company measured at the
time of such merger, consolidation, transfer or sale in one (1) or more
transactions; (iii) the acquisition by any person, directly or indirectly, of
the Beneficial Ownership of securities of the Company representing twenty
percent (20%) or more of the Outstanding Common Stock; or (iv) any
combination of the foregoing, Gihl is not a member of the Board and a
majority of the Board shall not consist of: (A) persons who were directors of
the Company on the effective date of the Company's initial public offering of
any class of its capital stock or, prior to such initial public offering,
persons who were directors of the Company as of December 1, 1996; or (B)
persons who were elected or nominated for election as directors with the
approval of a majority of the persons referred to in paragraph 14(c)(iv)(A)
above.
17. MISCELLANEOUS.
(a) All notices required or permitted to be given hereunder shall be
in writing and shall be deemed given (i) when delivered in person at the
time of such delivery or by telecopy with receipt of transmission
indicating the date and time (provided, however, that notice delivered by
telecopy shall only be effective if such notice is also delivered by hand
or deposited in the United States mail, postage prepaid, registered or
certified mail, on or before two (2) business days after its delivery by
telecopy), (ii) when received if given by a nationally recognized overnight
courier service or (iii) two (2) business days after being deposited in the
United States mail, postage prepaid, registered or certified mail,
addressed as follows:
if to Gihl:
Xxxxxxxx Xxxx
000 Xxxxxxxx Xxx.
Xxxxxxxx, XX 00000
Fax: 000-000-0000
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If to the Company:
Total Control Products, Inc.
0000 X. Xxxxxx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxx 00000
Attn: Chief Executive Officer
Fax: (000) 000-0000
with a copy to:
X'Xxxxxx & Xxxxxx
00 Xxxxx XxXxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telecopier: (000) 000-0000
and/or to such other address or addressees as may be designated by notice
given in accordance with the provisions hereof.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, successors and permitted
assigns. As to Gihl, this Agreement is a personal service contract and
shall not be assignable by Gihl, but all obligations and agreements of Gihl
hereunder shall be binding upon and enforceable against Gihl and Gihl's
personal representatives, heirs, legatees and devices.
(c) The parties adopt the Recitals to this Agreement and agree and
affirm that construction of this Agreement shall be guided thereby; this
Agreement contains all of the agreements between the parties with respect
to the subject matter hereof; and this Agreement supersedes all other
agreements, oral or written, between the parties hereto with respect to the
subject matter hereof.
(d) No change or modification of this Agreement shall be valid unless
the same shall be in writing and signed by all of the parties hereto. No
waiver of any provisions of this Agreement shall be valid unless in writing
and signed by the waiving party. No waiver of any of the provisions of
this Agreement shall be deemed, or shall constitute, a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a
continuing waiver, unless so provided in the waiver.
(e) If any provisions of this Agreement (or portions thereof) shall,
for any reason, be invalid or unenforceable, such provisions (or portions
thereof) shall be ineffective only to the extent of such invalidity or
unenforceability, and the remaining provisions of this Agreement (or
portions thereof) shall nevertheless be valid, enforceable and of full
force and effect.
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(f) The section or paragraph headings or titles herein are for
convenience of reference only and shall not be deemed a part of this
Agreement.
(g) This Agreement may be executed in multiple counterparts, each of
which shall be deemed to be an original and all of which taken together
shall constitute a single instrument.
(h) Notwithstanding anything to the contrary contained herein, Gihl's
rights and obligations under Sections 8, 9, 10, 11 and 15 shall survive the
expiration or termination of this Agreement.
(i) This Agreement shall be governed and controlled as to validity,
enforcement, interpretation, construction, effect and in all other respects
by the laws of the State of Illinois applicable to contracts made in that
State (other than any conflict of laws rule which might result in the
application of the laws of any other jurisdiction).
(j) Gihl hereby expressly submits and consents in advance to the
jurisdiction of the federal and state courts of the State of Illinois for
all purposes in connection with any action or proceeding arising out of or
relating to this Agreement.
(k) The Company shall require any successor (whether direct or
indirect and either by purchase, lease, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company's business and/or
assets, by an agreement in substance and form satisfactory to Gihl, to
assume this Agreement and to agree expressly to perform this Agreement in
the same manner and to the same extent as the Company would be required to
perform it in the absence of a succession. Regardless of such assumption,
the Company shall remain liable for performance of this Agreement if the
successor corporation fails to perform this Agreement.
(l) All costs, including any legal fees and other expenses incurred
(including all such fees and expenses incurred by Gihl in contesting or
disputing any termination under this Agreement or in seeking to obtain or
enforce any of his rights or benefits under this Agreement), shall be paid
by the Company. All costs, including legal fees and other expenses
incurred in defending or asserting the validity and enforceability of this
Agreement against challenge by any person in any forum shall be paid by the
Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
/s/ Xxxxxxxx Xxxx
----------------------------------
Xxxxxxxx Xxxx
THE COMPANY:
TOTAL CONTROL PRODUCTS, INC.
By: /s/ Xxxxxxxx Xxxx
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Title:
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