January 1, 1996
Xx. Xxxxxxx X. Reason
0000 Xxxxx Xxxxx Xxxx., Xxx. X-0
Xxxxxxxx Xxxxx, XX 00000
EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT
Dear Mr. Reason:
This letter contains the terms and conditions upon which Monroe
Engineering Products, Inc. ("Corporation") will continue to employ you.
1. Title and Duties.
You shall render services in an executive capacity on behalf of the
Corporation. Your duties shall be consistent with the general duties of
supervision and management usually vested as an executive of a corporation. You
shall also assume such additional duties as may be reasonably assigned to you by
the Board of Directors of the Corporation.
Your office will be in the principal business office of the Corporation
in Bloomfield Hills, Michigan, but you agree to take such trips and temporary
assignments away from this office as may be required in the performance of your
responsibilities as an executive.
You shall devote your full business time and effort to the performance
of your duties for the Corporation, in a manner consistent with your efforts
prior to the sale of your shares. Your services to the Corporation shall be
rendered to the best of
Xx. Xxxxxxx X. Reason
January 1, 1996
Page 2
your ability and with loyalty to the Corporation.
2. Term.
The term of this Agreement shall be for twenty-eight (28) months
beginning on January 1, 1996, and terminating on April 30, 1998, except as to
certain provisions of this Agreement that shall continue to survive. Thereafter
this Agreement may be renewed by mutual agreement of Reason and the Corporation
upon such terms and conditions as they shall agree, except that the provisions
of Sections 3(b), 3(f) and 4 below shall continue as provided below.
3. Compensation and Benefits.
Your compensation for the services you render shall be as follows:
(a) Salary.
The Corporation shall pay you an annual salary of
$200,004.00, payable in monthly installments of $16,667.00 (less applicable
withholding and payroll taxes) on the 15th day of each month during the term of
this Agreement. Provided, however, your salary shall be $25,000.00 (less
applicable withholding and payroll taxes) per month until the later of May 1,
1996 or the date upon which a Chief Executive Officer shall be appointed by the
Corporation.
(b) Health Benefits. During the term of this Agreement and in
any case until April 30, 2001, you and your spouse will be
Xx. Xxxxxxx X. Reason
January 1, 1996
Page 3
entitled to participate in all health care benefit programs of the Corporation,
as each or all may be modified from time to time by the board of directors, upon
the same terms and at the same level as provided to management of the
Corporation, provided that in no event shall the level of benefits provided to
you under this Section 3(b) be reduced below that provided to you immediately
before the date of this Agreement. Notwithstanding anything to the contrary
contained herein, if this Agreement is terminated as a result of your death or
disability, your surviving spouse shall continue to receive the benefits under
this Section 3(b) until the earlier of your surviving spouse's death and April
30, 2001.
(c) Vacation.
As long as you are working on a full-time basis for the
Corporation, you shall be eligible to take sixty (60) business days of paid
vacation during each year of employment. No more than fifteen (15) consecutive
business days shall be taken as vacation time without the prior approval of the
Corporation's board of directors, which shall not be unreasonably withheld.
(d) Automobile.
The Corporation shall provide for your use the Cadillac
DeVille that was used by you immediately prior to the date of this Agreement and
shall pay the reasonable operating and maintenance expenses for such vehicle,
including insurance. Following the termination of this Agreement you shall have
the right to purchase
Xx. Xxxxxxx X. Reason
January 1, 1996
Page 4
the Cadillac DeVille for its then net book value, the purchase price to be paid
in cash.
(e) Bonus
The Corporation shall pay a bonus to you in the amount of
$960,000.00 ("Bonus"), which Bonus shall be paid to you in immediately available
funds on or before December 23, 1996. The obligation to pay the Bonus shall be
secured by a Letter of Credit from Comerica Bank.
(f) Deferred Compensation
Commencing on May 1, 1998, the Corporation shall pay to you
(whether employed by the Corporation or not) monthly deferred compensation
payments in the amount of $2,000.00, payable on the first day of each month
through and including the first day of April, 2001, and until you have received
thirty-six (36) payments. This Section 3(f) is subject, however, to the
following conditions:
(i) Death with Surviving Spouse. If you shall die
before April 1, 2001, the Corporation shall continue to make such monthly
deferred compensation payments to your surviving spouse, if she shall survive
you, until the total monthly deferred compensation payments made to you and your
surviving spouse equals thirty-six (36) payments. If your surviving spouse
survives you but dies before thirty-six (36) payments are paid by the
Corporation, the Corporation shall not be obligated to continue
Xx. Xxxxxxx X. Reason
January 1, 1996
Page 5
payments beyond the day of death of your surviving spouse.
(ii) Death without Surviving Spouse. If you die on or
before April 1, 2001, and your spouse does not survive you, the Corporation
shall not be obligated to continue payments beyond the day of your death.
(iii) Coordination with Terms of Employment. The
deferred compensation payments provided for in this Section 3(f) are in addition
to any compensation and/or benefits provided for herein and/or to which you
become entitled as a result of the renewal of this Agreement.
4. Consulting Services - WINCO Litigation.
(a) You agree to provide consulting services to the
Corporation relating to the lawsuit entitled Monroe Engineering Products, Inc. v
WINCO ("WINCO Litigation") upon reasonable notice and at reasonable times. In
exchange for your agreement to provide consulting services relating to the WINCO
Litigation, the Corporation will pay to you twenty-five percent (25%) of any
judgment and/or settlement to which the Corporation becomes entitled as a result
of the WINCO Litigation, whether such judgment and/or settlement is in the form
of a lump sum payment or stream of payments.
(b) In the event of a lump sum payment, the Corporation will
pay to you twenty-five percent (25%) of the lump sum payment
Xx. Xxxxxxx X. Reason
January 1, 1996
Page 6
so received within thirty (30) days of receipt of such payment by the
Corporation.
(c) In the event that the judgment award and/or settlement is
in the form of a stream of payments (i.e. royalty), the Corporation shall pay to
you twenty-five percent (25%) of the payments received by the Corporation at
least quarterly and will provide to you access to the Corporation's records as
necessary to verify the amount of such payments. The obligation of the
Corporation to make such payments shall continue for the life of United States
Patent No. 4,598,614 which is the subject of the WINCO Litigation.
5. Business Expenses
The Corporation shall pay or reimburse you promptly upon
presentation of appropriate vouchers for all travel, business, and entertainment
expenses reasonably incurred by you in connection with the Corporation's
business provided that such expenses are of a type normally deductible by the
Corporation for federal income tax purposes and shall have been sufficiently
documented to support such deduction. For such purpose, you shall submit to the
Corporation periodic reports of such expenses and other disbursements. The
Corporation shall reimburse you for your airline tickets consistent with prior
Corporate practice. In addition, the Corporation shall pay on your behalf the
monthly membership dues for the Birmingham Country Club during the term of
Xx. Xxxxxxx X. Reason
January 1, 1996
Page 7
this Agreement.
6. Termination.
This Agreement shall terminate upon your death or disability,
except that (i) in the event of such termination prior to the payment to you of
the full Bonus as provided in Section 3(e) above, the unpaid portion of the
Bonus shall be paid to your heirs, executors and assigns, but otherwise as
provided above, and (ii) in the event of termination as a result of your death
or disability prior to the payment to you of all thirty-six (36) deferred
compensation payments pursuant to Section 3(f), the deferred compensation
payments shall be continued to be paid to you and/or your surviving spouse as
more fully described in Section 3(f). Disability shall mean physical or mental
illness which, in the reasonable opinion of the board of directors of the
Corporation, results in your inability to perform the duties required under this
Agreement for (a) a period of six (6) consecutive months, or (b) any twelve (12)
months within any twenty-four (24) month period. Except as specifically provided
herein, such disability shall constitute a termination of this Agreement.
7. Confidential Information, Inventions, Etc.
(a) You shall not during the term of this Agreement or after
termination, directly or indirectly,
(i) Attempt to induce any employee of the
Corporation to render services for any other employer; or
Xx. Xxxxxxx X. Reason
January 1, 1996
Page 8
(ii) Use or furnish to anyone (except as required in
the ordinary course of performing your employment duties for the Corporation)
any confidential information, invention, discoveries, technical data, product
data, financial data or trade secrets relating to the Corporation's business,
including information relating to processes, or contracts involved in such
business, or the design, production, sale, or distribution of any products of
the Corporation, or the personnel of the Corporation or their compensation or
employment arrangements, or the identity of, or products purchased, or prices
paid by, customers of the Corporation. Records prepared by you or that come into
your possession during your employment are and remain the property of the
Corporation, and when your employment terminates, such records and any copies or
summaries must be left with the Corporation. The Corporation shall be entitled
to injunctive relief if you violate this Paragraph, in addition to any other
remedy provided by law.
(b) You will treat as for the sole benefit of the Corporation,
and fully and promptly disclose and assign to the Corporation, without
additional compensation, all ideas, discoveries, inventions and improvements,
whether patentable or not, which relate to the business, activities or interests
of the Corporation or which result from or relate to the subject matter of any
work which you may do for, on the premises of, at the expense of, or on behalf
of the Corporation, and which are or have been
Xx. Xxxxxxx X. Reason
January 1, 1996
Page 9
made, conceived or reduced to practice by you, alone or jointly with others,
during or after usual working hours, either on or off your job, while you are
employed by the Corporation. All such ideas, discoveries, inventions and
improvements which you may claim to have been conceived by you, solely or
jointly, within six (6) months after the termination of such employment shall be
presumed to have been made during such employment unless you prove otherwise.
At the Corporation's expense, at any time during or after such
employment, you will sign all papers and do such other acts as the Corporation
deems necessary or desirable or may reasonably require of you to assign and
protect the Corporation's or its nominee's rights to such ideas, discoveries,
inventions and improvements, including applying for, obtaining and enforcing
patents, trademarks or copyrights on such ideas, discoveries, inventions and
improvements in any and all countries of the world.
8. Covenant Not to Compete and Confidentiality.
(a) For so long as you are employed in any capacity by the
Corporation and for a period of one (1) year following termination of your
employment, you will not, without the prior written consent of the Corporation,
directly or indirectly engage, participate or invest (as an owner, partner,
shareholder, director, officer, employee, joint venturer, agent, representative
or independent contractor, or in any other capacity calling for the
Xx. Xxxxxxx X. Reason
January 1, 1996
Page 10
making of any investment or the rendition of any personal services or any acts
of management, operation or control, other than as an owner of not more than
five percent (5%) of the securities of any company whose common stock is listed
on a national securities exchange or registered under the Securities Exchange
Act of 1934) in any business which is competitive with the Corporation's
business in any geographic area in which the Corporation is conducting its
business.
(b) Except as may be required in the ordinary course of your
employment or upon the written consent of the Corporation, you, shall not,
directly or indirectly, use or, except as may be required by law, disclose or
furnish to any person, company or other entity (other than with the consent of
the Corporation) at any time, both before or after expiration or termination of
this Agreement, any trade secret or other confidential information not known or
readily available to the public which is proprietary to the Corporation relating
to the business, customers, marketing strategies, pricing, financial statements,
conditions or operations of the Corporation or any of its affiliates.
(c) You acknowledge that your compliance with the provisions
of this Section 8 is necessary to protect the goodwill and other proprietary
rights of the Corporation; that you have been an officer and director of the
Corporation and are conversant with the affairs, operations, trade secrets,
customers and other
Xx. Xxxxxxx X. Reason
January 1, 1996
Page 11
proprietary information and data of the Corporation; and that your failure to
comply with the provisions of this Section 8 will result in immediate,
irreparable and continuing damage to the business of the Corporation for which
there would be no adequate remedy at law. In recognition of the foregoing, the
parties agree that if you shall fail to comply with the provisions of this
Section 8, the Corporation and its successors and assigns shall be entitled to
injunctive relief, damages, and to such other and further relief as may be
deemed proper and necessary by any court of competent jurisdiction (including
without limitation courts located within the jurisdiction in which you are then
employed or engaged in any such activity) in order to ensure your compliance
with the provisions of this Section 8.
9. Successors or Assigns.
This Agreement shall be binding upon the successors and
assigns of the Corporation, any assigns of all or substantially all of its
business, and any other corporation into which the Corporation may be merged or
with which it may be consolidated. This Agreement, and any rights you may have
to receive payments, may not be assigned or pledged by you, except as
specifically provided in Section 6 of this Agreement regarding the payment of
the Bonus and deferred compensation.
10. Other.
Any dispute or claim involving this Agreement shall be
Xx. Xxxxxxx X. Reason
January 1, 1996
Page 12
settled by an arbitration in Southfield, Michigan under the rules of the
American Arbitration Association. Any dispute or claim shall be deemed waived
unless arbitration is demanded within ninety (90) days of the occurrence giving
rise to the dispute or claim. The arbitrator shall have no authority to change
any provision of this Agreement; the arbitrator's sole authority shall be to
interpret or apply the provisions of this Agreement. The decision of the
arbitrator shall be final and binding and the exclusive remedy for any alleged
breach of the employment relationship. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction.
Any notice given pursuant to this Agreement shall be deemed
given when sent by registered or certified mail, postage prepaid and return
receipt requested, addressed to the appropriate party: if to the Corporation at
0000 Xxxxxxxx, Xxxxx 000, Xxxxxxxxxx Xxxxx, XX 00000 and if to you, at the
address indicated above, unless notice of a different address has been given.
This Agreement contains our entire agreement regarding its
subject matter and supersedes all prior oral or written understandings and
agreements regarding its subject matter. We can modify this Agreement only by a
writing signed by both you and the Corporation. This Agreement is governed by
Michigan law.
A default under this Agreement by Monroe shall also be
deemed a default under (i) a certain Promissory Note dated as of
Xx. Xxxxxxx X. Reason
January 1, 1996
Page 13
January 1, 1996 by Noble International, Ltd. payable to Xxxxxxx Reason, as
Trustee of his Revocable Trust dated Xxxxx 0, 0000, (xx) a certain Promissory
Note dated as of January 1, 1996 by Noble International, Ltd. payable to The
Xxxxxxx X. Reason Irrevocable Trust for the Benefit of Xxxxxxxx Xxxxxxx and
Xxxxx Xxxxxx dated October 12, 1992; and (iii) all other documents executed in
conjunction with a certain Stock Purchase Agreement dated as of January 1, 1996
by and among Xxxxxxx X. Reason, Trustee of the Xxxxxxx X. Reason Revocable
Living Trust dated April 9, 1979, the Xxxxxxx X. Reason Irrevocable Trust for
the Benefit of Xxxxxxxx Xxxxxxx and Xxxxx Xxxxxx dated October 12, 1992, Noble
International, Ltd., Monroe Engineering Products, Inc. and Xxxxxx X.
Xxxxxxxxxxx.
If you agree with the terms of this letter, please sign and
return the enclosed copy to make it our binding agreement. This letter has been
approved by the Corporation's board of directors.
MONROE ENGINEERING PRODUCTS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
-------------------------------
Its: Chairman
Accepted and Agreed:
/s/ Xxxxxxx X. Reason
-------------------------------
Xxxxxxx X. Reason
Xx. Xxxxxxx X. Reason
January 1, 1996
Page 14
Accepted and Agreed:
NOBLE INTERNATIONAL, LTD.
/s/ Xxxx X. Xxxxx
-------------------------------
By: Xxxx X. Xxxxx
Its: President
AMENDMENT OF
EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT
This Amendment of Employment and Deferred Compensation Agreement
(hereinafter "Amendment") is made and entered into this 30th day of December,
1996 by and between Monroe Engineering Products, Inc. ("Monroe") and Xxxxxxx X.
Reason ("Reason").
RECITALS:
WHEREAS, on or about January 1, 1996 Reason sold all of the
issued and outstanding shares of Monroe to Noble International, Ltd.
(the "Sale") and in connection with the Sale Monroe agreed to employ
Reason under certain terms and conditions, which were outlined in the
Employment and Deferred Compensation Agreement dated January 1, 1996
(the "Employment Agreement").
WHEREAS, in connection with the Sale Reason made certain
representations and warranties regarding the profitability and sales of
Monroe which were integral to the compensation and bonus outlined in
the Employment Agreement.
WHEREAS, Monroe has failed to achieve the sales and
profitability level anticipated in connection with the Sale.
WHEREAS, in consideration of Monroe's performance Reason has
agreed to amend the Employment Agreement to eliminate certain
provisions of the Employment Agreement and to modify certain provisions
regarding bonuses to be provided by Monroe.
NOW THEREFORE, for and in consideration of the promises and mutual
agreements herewith set forth, the parties hereto agree as follows:
Section 1. Bonus. The parties hereby agree that paragraph 3(e) of the
Employment Agreement is amended to provide for a bonus of $25,000.00.
Section 2. Security. The parties hereby agree that there shall be no
security for the payment of the bonus, and that any previously existing security
in the way of a Letter of Credit from Comerica Bank shall, to the extent of the
security provided for payment of the bonus, be terminated.
Section 3. Continuation. Except as provided above, the Employment
Agreement shall continue in full force and effect.
1
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the day first above written.
WITNESSES "REASON"
/s/ Xxxxxxx X. Reason
__________________________ _________________________________
Xxxxxxx X. Reason
__________________________
"MONROE"
MONROE ENGINEERING PRODUCTS, INC.
/s/ Xxxxxx X. Xxxxxxxxxxx
__________________________ _______________________________
By: Xxxxxx X. Xxxxxxxxxxx
Its: Chairman
_________________________
2
