EMPLOYMENT AND NON-COMPETITION AGREEMENT
THIS AGREEMENT (this "AGREEMENT") is dated May 14, 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.
XXXXXXX, XX., an individual residing in the State of California ("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 May 15, 1997 and shall
terminate on May 14, 2000 (the "Base Term"), unless earlier terminated pursuant
to Article 3 of this Agreement. Commencing May 15, 2000 and on each May 15
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 Thirty Thousand Dollars ($130,000)
(the "Base Salary"). The Base Salary shall not be decreased and may be
increased annually in an amount determined by the Compensation Committee of
the Eltrax Board of Directors, in its sole discretion.
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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. EXPENSES. The Company shall reimburse Employee for all expenses,
including automobile and cellular telephone 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.
2.5. AUTOMOBILE. During Employee's employment, Employee shall retain
and shall be entitled to use for all purposes of the business of the
Company, the automobile currently being used by the Employee and leased by
the Company as of the execution of this Agreement (the "Automobile"). The
Company shall retain the rights to use the Automobile pursuant to the
current lease. Upon the expiration of the current lease term for the
Automobile, the Company shall lease a new comparable automobile for
Employee's exclusive use during the course of Employee's employment.
2.6. LOCATION. During Employee's employment, Employee's principal place of
employment shall be at 0000 Xxxxx Xxx. in Augora, California (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. Any such written
notice shall specifically identify the manner in which it is alleged Employee
has failed to perform his duties, and at Employee's request, the Eltrax Chief
Executive Officer shall meet in person with Employee to discuss the alleged
performance deficiencies within ten days of the Employee's request. 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 seventy-five (75)
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:
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(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 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 of the Company
marked "proprietary," "private," or "confidential"; (d) trade secrets of the
Company; (e) software in any stage of development by the Company, 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
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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, 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,
at the request and the expense of 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.
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.
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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;
(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
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(b) In the case of Employee shall be:
Xxxxxx X. Xxxxxxx
0000 Xxxxx Xxx., Xxx. X
Xxxxxx, XX 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.
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.
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7.12. COUNTERPARTS. This Agreement may be executed simultaneously in one or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
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
/s/ Xxxxxx X. Xxxxxxx By: /s/ Clunet X. Xxxxx
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Xxxxxx X. Xxxxxxx Clunet X. Xxxxx, Secretary
