EMPLOYMENT AND NON-COMPETITION AGREEMENT
THIS AGREEMENT (this "AGREEMENT") is dated July 1, 1997, and is between
ELTRAX SYSTEMS, INC., a Minnesota corporation having its principal place of
business in Southfield, Michigan ("Eltrax"), together with its subsidiaries
(Eltrax and its subsidiaries collectively being the "Company") and XXXXXX X.
XXXXXX, an individual residing in the State of Arizona ("Employee"). The
parties agree as follows:
ARTICLE
1.
EMPLOYMENT, DUTIES AND TERM
1.1 EMPLOYMENT; POSITION. Upon the terms and conditions set forth in this
Agreement, the Company hereby employs Employee, and Employee accepts such
employment.
1.2 DUTIES.
(a) Employee shall devote his full-time and give his best efforts to the
Company and to fulfilling the duties of his position which shall
include such duties with respect to the Company as may from time to
time be assigned to him by the Company, commensurate with Employee's
position, experience and/or skills or expertise.
(b) Employee shall perform his duties in the best interests of the Company
and its shareholders.
(c) Employee shall comply with the Company's policies and procedures to
the extent they are not inconsistent with this Agreement in which case
the provisions of this Agreement prevail. In addition, Employee shall
comply with the Company's lawful policies on employee conduct and
business ethics.
1.3 TERM. The term of this Agreement shall commence July 1, 1997 and shall
terminate on July 1, 2000 (the "Base Term"), unless earlier terminated
pursuant to Article 4 of this Agreement. Commencing July 1, 2000 and on
each July 1 thereafter, the term of Employee's employment hereunder shall
be automatically extended for one (1) additional year unless at least
thirty (30) days before the end of the Base Term or any extension, either
party gives written notice to the other of the cessation of further
extensions.
ARTICLE
2.
BASE COMPENSATION, EXPENSES, AND BENEFITS
2.1 BASE SALARY. For all services rendered under this Agreement during the term
of Employee's employment, the Company shall pay Employee, in accordance with
Eltrax's usual pay practices, a base salary, exclusive of benefits and
bonuses, at an annual rate of One Hundred Twenty Thousand Dollars
($120,000) (the "Base Salary"). The Base Salary may be increased annually
in an amount determined by the Compensation Committee of the Eltrax Board
of Directors, in its sole discretion.
2.2 BONUS. At any time during the term of this Agreement, the Company may pay
Employee a discretionary bonus as additional compensation, which shall be
determined by the Compensation Committee of the Eltrax Board of Directors,
in its sole discretion.
2.3 BENEFITS. In addition to other compensation, Employee shall be entitled to
participate in all benefit plans currently maintained or hereafter
established by the Company generally, in accordance with the terms and
conditions of such plans (each a "Benefit Plan").
2.4 INCENTIVE STOCK OPTIONS. On July 1, 1997, Employee will receive incentive
stock options to acquire 25,000 shares of Eltrax common stock at the market
price of such shares as of July 1, 1997 (the "Options") pursuant to the
terms and conditions of the Eltrax 1997 Stock Incentive Plan. One-half of
the Options shall vest immediately, and the remaining one-half of the
Options shall vest on January 1, 1998.
2.5 EXPENSES. The Company shall reimburse Employee for all expenses reasonably
and necessarily incurred by Employee during the course and in furtherance of
his employment, subject to and made in accordance with such policies and
procedures as may be established by the Company.
2.6 LOCATION. During Employee's employment, Employee's principal place of
employment shall be at 0000 X. Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxx (the
"Office"), or at such other address located within a reasonable distance of
the Office, as the Company may determine.
ARTICLE
3.
EARLY TERMINATION
3.1 TERMINATION FOR CAUSE. The Company may terminate this Agreement and
Employee's employment immediately for cause. For the purpose hereof,
"cause" means (a) fraud, (b) theft or embezzlement of the Company's
assets, (c) willful violation of law constituting a felony, (d) the
continued failure by Employee to perform his duties as reasonably
assigned to Employee for a period of sixty (60) days after written notice
describing such failure. In the event of termination for cause pursuant
to this section, Employee shall be paid at the usual rate of Employee's
annual Base Salary through the date of termination specified in any
notice of termination (the "Termination Date") and any amounts to which
the Employee is entitled under any Benefit Plan.
3.2 TERMINATION WITHOUT CAUSE. Either Employee or the Company may terminate
this Agreement and Employee's employment without cause on sixty (60)
days' written notice. In the event of termination of this Agreement and
of Employee's employment pursuant to this section, compensation shall be
paid as follows:
(a) If the termination is by Employee, Employee shall be paid at the
usual rate of his annual Base Salary through the date of termination
specified in such notice (but not to exceed sixty (60) days from the
date of such notice);
(b) If the termination is by the Company, Employee shall be paid at the
usual rate of his annual Base Salary through the Base Term or any
applicable renewal term.
3.3 TERMINATION IN THE EVENT OF DEATH OR DISABILITY. This Agreement and
Employee's employment shall terminate in the event of death or Disability
of Employee. "Disability" shall mean Employee's inability, as reasonably
determined by the Company, to perform the essential functions of his
duties under this Agreement because of illness or incapacity for a
continuous period of six (6) months. In the event of Employee's death,
Base Salary shall be terminated as of the end of the month in which
Employee's death occurs. In the event of Disability, Base Salary shall
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be terminated as of the end of the month in which the last day of the
six-month period of Employee's Disability occurs.
3.4 ENTIRE TERMINATION PAYMENT. The compensation provided in this Agreement
for early termination shall constitute Employee's sole remedy for such
termination. Employee shall not be entitled to any other termination or
severance payment which may be payable to Employee under any other
agreement between Employee and the Company or any policy of the Company.
This section shall not have any effect on distributions to which Employee
may be entitled at termination from any tax-qualified Benefit Plan or any
other Benefit Plan (other than a severance payment or similar plan).
ARTICLE
4.
CONFIDENTIALITY, DISCLOSURE AND ASSIGNMENT
4.1 CONFIDENTIALITY. Employee will not, during the term or after the
termination or expiration of this Agreement, publish, disclose, or
utilize in any manner any Confidential Information (as hereinafter
defined) obtained while employed by the Company. If Employee leaves the
employ of the Company, Employee will not, without its prior written
consent, retain or take away any drawing, writing or other record in any
form containing any Confidential Information. "Confidential Information"
means information or material which is not generally available to or used
by others, or the utility or value of which is not generally known or
recognized as standard practice, whether or not the underlying details
are in the public domain, including: (a) information or material relating
to the Company, and its businesses as conducted or anticipated to be
conducted, business plans, operations, past, current or anticipated
software, products or services, customers or prospective customers, or
research, engineering, development, manufacturing, purchasing,
accounting, or marketing activities; (b) information or material relating
to the Company's inventions, improvements, discoveries, "know-how,"
technological developments, or unpublished works, or to the materials,
apparatus, processes, formulae, plans or methods used in the development,
manufacture or marketing of the Company's software, products or services;
(c) any information marked "proprietary," "private," or "confidential";
(d) trade secrets; (e) software in any stage of development, including
source code and binary code, software designs, specifications,
programming aids (including subroutines and productivity tools),
programming languages, interfaces, visual displays, technical
documentation, user manuals, data files and databases; and (f) any
similar information of the type described above which the Company
obtained from another party and which the Company treats as or designates
as being proprietary, private or confidential, whether or not owned or
developed by the Company.
4.2 BUSINESS CONDUCT AND ETHICS. During the term of employment with the
Company, Employee will engage in no activity or employment which may
conflict with the interest of the Company, and will comply with the
Company's lawful policies and guidelines pertaining to business conduct
and ethics.
4.3 DISCLOSURE. Employee will disclose promptly in writing to an officer of the
Company all inventions, discoveries, software, writings and other works of
authorship which are conceived, made, discovered, or written jointly or
singly on business time or on Employee's own time during the term of the
Agreement, provided the invention, improvement, discovery, software,
writing or other work of authorship is capable of being used by the Company
in the normal course of business, and all such inventions, improvements,
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discoveries, software, writings and other works of authorship shall belong
solely to the Company.
4.4 INSTRUMENTS OF ASSIGNMENT. Employee will sign and execute all instruments
of assignment and other papers to evidence the granting of all entire right,
title and interest in such inventions, improvements, discoveries, software,
writings or other works of authorship to the Company, and Employee will do
all acts, give any needed testimony and sign all instruments of assignment
and other papers Eltrax may reasonably request relating to applications for
patents, patents, copyrights, and the enforcement and protection thereof,
at the request and the expense of Company.
4.5 SURVIVAL. The obligations of this Article 4 shall survive the expiration or
termination of this Agreement.
ARTICLE
5.
NON-COMPETITION
5.1 NON-COMPETITION. Employee agrees that beginning with the date hereof
through one (1) year following the end of the Base Term and any extension
thereof, Employee will not, directly or indirectly, alone or as a
partner, member, officer, director, shareholder or employee of any other
firm or entity, engage in any commercial activity in competition with any
part of the Company's business which was under Employee's management or
supervision at any time during the term of this Agreement or any part of
the Company's business with respect to which Employee has Confidential
Information. For purposes of this section, "shareholder" shall not
include beneficial ownership of less than five percent (5%) of the
combined voting power of all issued and outstanding voting securities of
a publicly held corporation whose voting stock is traded in a public
market. Also for purposes of this section, "the Company's business"
shall include businesses conducted by the Company, any subsidiary of the
Company and any affiliate of the Company and any partnership or joint
venture.
5.2 EFFECT OF TERMINATION. Upon the termination of Employee's employment, no
additional compensation shall be paid for the non-competition obligation.
5.3 SURVIVAL. The obligations of this Article 5 shall survive the expiration or
termination of this Agreement.
ARTICLE
6.
CHANGE OF OWNERSHIP OF THE BUSINESS
6.1 EFFECT. In the event: (i) of the merger or other combination of the Company
with or into any other corporation (other than a merger or other
combination in which Eltrax is the surviving corporation) or (ii) that all
or substantially all of the assets or capital stock of the Company are sold
(other than to a person or entity which is an "affiliate," as defined in
the Securities Act of 1933, as amended, of Eltrax):
(a) If Employee gives his written consent to the assignment of this
Agreement to the successor (and such assignment is accepted), this
Agreement shall remain in full force and effect between Employee and
the assignee;
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(b) If such assignment is not accepted by the successor or purchaser, then
this Agreement shall be deemed to have been terminated by the Company
without cause; and
(c) If a proposed assignment is accepted by the successor or purchaser,
but Employee does not provide his written consent to such assignment,
this Agreement shall be deemed terminated voluntarily by Employee.
ARTICLE
7.
GENERAL PROVISIONS
7.1 NO ADEQUATE REMEDY. The parties acknowledge it is impossible to measure in
money the damages which will accrue to either party by reason of a failure
to perform any of the obligations under this Agreement. Therefore, in the
event of a claim for equitable relief, each party hereby waives the claim
or defense that the other has an adequate remedy at law.
7.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the successors and
assigns of the Company.
7.3 NOTICES. All notices, requests and demands given to or made pursuant hereto
shall, except as otherwise specified herein, be in writing and be delivered
or mailed to any such party at its address which:
(a) In the case of the Company shall be:
Eltrax Systems, Inc.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Clunet X. Xxxxx
With a copy to:
Xxxxxxx X. Xxxxx, Esq.
Jaffe, Raitt, Heuer & Xxxxx, P.C.
Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
(b) In the case of Employee shall be:
Xxxxxx X. Xxxxxx
0000 X. Xxxx Xx.
Xxxxxxxxxx, Xxxxxxx 00000
Any notice, if mailed properly addressed, postage prepaid, registered or
certified mail, shall be deemed sent on the registered date or that stamped
on the certified mail receipt, and shall be deemed received on the second
business day thereafter.
7.4 CAPTIONS. The various headings or captions in this Agreement are for
convenience only and shall not affect the meaning or interpretation of this
Agreement.
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7.5 GOVERNING LAW. The validity, construction and performance of this
Agreement shall be governed by the laws of the State of Michigan without
giving effect to the conflict of laws principles thereof.
7.6 CONSTRUCTION. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable
law. If any provision of this Agreement shall be prohibited or invalid,
all remaining clauses shall remain fully enforceable.
7.7 WAIVERS. No failure on the part of either party to exercise, and no delay
in exercising, any right or remedy hereunder shall operate as a waiver
thereof; nor shall any partial exercise of any right or remedy hereunder
preclude any exercise of that or any other right or remedy granted hereby
by law.
7.8 MODIFICATION. This Agreement may not be and shall not be modified or
amended except by written instrument signed by all parties.
7.9 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding between the parties hereto in reference to all the matters
herein agreed upon and supersedes all prior or contemporaneous agreements,
understandings and negotiations with respect to the subject matter hereof.
7.10 ARBITRATION. With the sole exception of injunctive relief as
contemplated by Section 7.1 of this Agreement, any controversy or claim
arising out of any aspect of the relationship of the parties hereto,
will be settled by binding arbitration in Southfield, Michigan by a
panel of three arbitrators in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. Judgment upon any
arbitration award may be entered in any court having jurisdiction
thereof and the parties consent to the jurisdiction of the courts of the
State of Michigan for this purpose.
7.11 ATTORNEYS' FEES. In the event there is litigation between the parties
hereto with respect to their rights and obligations under this
Agreement, the prevailing party in any such litigation shall be entitled
to recover from the opposing party all reasonable attorneys' fees and
expenses (including fees of accountants) incurred by the prevailing
party in connection with such proceeding.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
EMPLOYEE ELTRAX SYSTEMS, INC., together with
its subsidiaries
________________________ By:________________________________
Xxxxxx X. Xxxxxx Clunet X. Xxxxx, Secretary
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