EMPLOYMENT AND NON-COMPETITION AGREEMENT
THIS AGREEMENT (this "AGREEMENT") is dated August 15, 1997,
but effective on August 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. XXXXXXX, an individual residing in the
State of Virginia ("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 August
1, 1997 and shall terminate on July 31, 1998 (the "Base Term"),
unless earlier terminated pursuant to Article 3 of this
Agreement. Commencing August 1, 1998 and on each August 1st
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 Thousand Dollars ($100,000) (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 (the "Bonus").
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 or prior to August 31,
1997, Employee will receive incentive stock options to acquire
35,000 shares of Eltrax common stock at the market price of such
shares as of August 15, 1997 (the "Options") pursuant to the
terms and conditions of the Eltrax 1997 Stock Incentive Plan,
which shall vest during Employee's employment according to the
following schedule: 3,000 Options on the final day of each
remaining month during 1997, beginning August 31, 1997; and 1,250
Options on the final day of each month thereafter, up to an
aggregate total of 35,000 Options, subject to Article 3. If the
Company does not elect to renew this Agreement pursuant to
Section 1.3, then all unvested Options shall be accelerated as of
the date this Agreement terminates under Section 1.3. If the
Employee does not elect to renew this Agreement pursuant to
Section 1.3, than no Options shall vest beyond the date this
Agreement terminates under Section 1.3.
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.
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) a material breach of the terms and
conditions of this Agreement, or (e) 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. No Options shall vest following the Termination
Date.
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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 (the
"Termination 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
his Base Salary through the date specified in the Termination
Notice (but not to exceed sixty (60) days from the date of such
Termination Notice), as well as the Bonus, if any, declared prior
to the Termination Notice. Employee's Options shall vest only
through the date of termination specified in the Termination
Notice.
(b) If the termination is by the Company, Employee shall be paid
his Base Salary through the Base Term or any applicable renewal
term, as well as the Bonus, if any, declared prior to the
Termination Notice; provided, however, that if the Company
provides less than seventy-five (75) days' notice to Employee,
Employee shall continue to be paid his Base Salary for seventy-
five (75) days after the Termination Notice is given. Employee's
Options shall vest through the end of the Base 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 and the accrual of Options shall be terminated as of the
end of the month in which Employee's death occurs. Employee's
estate shall receive any Bonus declared prior to the end of such
month and unpaid as of the date of Employee's death. In the
event of Disability, Base Salary and the accrual of Options 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.
Notwithstanding anything to the contrary in the foregoing
paragraph, the Company shall make reasonable accommodation as
required by the Americans with Disabilities Act.
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
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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, will dutifully comply with all Company policies and
guidelines and will observe the highest standard of ethical
business conduct.
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.
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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 for a period of
one (1) year following the end of the Base Term and any extension
thereof:
(a) 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;
(b) divert, or by aid to others, do anything which
would tend to divert, or may divert from the Company, any
trade or business with any customer, supplier or vendor with
whom the Company has had any contact or association; or
(c) take any affirmative action to induce or attempt to
induce any person employed by the Company to leave the
employment of the Company.
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):
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(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
0000X XxxXxxxxx Xx.
Xxxxxxx, Xxxxxxxxxxxx 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
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and expenses (including fees of accountants) incurred by the
prevailing party in connection with such proceeding.
7.12. VENUE; JURISDICTION. The parties agree that all actions
or proceedings arising in connection with this Agreement and the
instruments, agreements and documents executed pursuant to the
terms of this Agreement shall be tried, litigated and arbitrated
only in the courts of the United States located in the Eastern
District of Michigan, the Michigan state courts or the offices
of the American Arbitration Association located nearest
Southfield, Michigan. The Employee irrevocably accepts for
himself and in respect of his property, generally and
unconditionally, the jurisdiction of such courts. The Employee
irrevocably consents to the service of process out of any such
courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to him,
at his address as set forth in the records of the Company, such
service to become effective ten (10) days after such mailing.
Nothing in this Section 7.12 shall affect the right of any party
to serve process in any other manner permitted by law. Employee
irrevocably waives any right he may have to assert the doctrine
of FORUM NON CONVENIENS or to object to venue to the extent any
proceeding is brought in accordance with this Section 7.12.
7.13. HEADINGS. The headings contained in this Agreement are
for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
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. Xxxxxxx Xxxxxx X. Xxxxx, Secretary
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