Exhibit 10.7
NONCOMPETE AND TERMINATION AGREEMENT
THIS AGREEMENT (the _Agreement_), dated as of September
_____, 1998, between XXXX X. XXXXXXX COMPANY (the _Company_)
and Xxxxxxx X. Xxxx (_Employee_).
In consideration of the mutual promises and agreements
contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
Section 1. Noncompetition Undertakings.
1.1 Acknowledgment of Access to Confidential Matters.
Employee and the Company recognize and acknowledge that as a
result of his employment with the Company:
(a) Employee will have access to technology
utilized by the Company and its subsidiaries
(collectively, the _Company_) in connection with their
operations, which, technology is unique to the Company,
including production operating systems, order entry
systems, quality control practices, decision support,
database marketing and other technology developed by the
Company for its various products and systems.
(b) Employee will have access to and knowledge
of all financial statements and related data for the
Company, including pricing, sales and training manuals,
and other confidential materials utilized by the Company;
complete and detailed knowledge of all the products of
the Company and their capacities and specifications; and
knowledge of all of the systems and procedures of the
Company with regard to selling, pricing, and financing
its products and services.
(c) Employee will have specific knowledge
regarding the Company's customers, including their
specific needs and current and anticipated requirements
for the Company's products and services.
1.2 Potential Injury to Company. Employee further
recognizes, acknowledges and agrees that the confidential
information and trade secrets specified herein constitute
valuable, special and unique assets of the Company and that
the improper use or disclosure thereof would cause substantial
loss of competitive advantage and other injury to the Company.
Employee further agrees that the training and experience
gained while employed by the Company and the knowledge
acquired during such employment regarding the aforesaid
information would enable him to injure and cause substantial
harm to the Company if he should compete with the Company in
its business before the expiration of a reasonable time after
termination of his employment with the Company.
1.3 Noncompetition. For the reasons recited in Sections
1.1 and 1.2 above and except as set forth below, Employee
covenants and agrees that so long as he is an employee of the
Company and for a period of two (2) years after termination of
such employment, whether by Employee or by the Company,
Employee will not serve as an officer, executive, employee in
a managerial capacity, partner, consultant or stockholder
(other than as a stockholder of the Company) of any entity
engaged in competition with the Company in the continental
United States. The agreements of Employee contained herein
shall not prevent him from purchasing or owning an investment
of not more than 1% of the outstanding capital stock of a
publicly held company engaged in competition
with the Company, so long as his only relationship with such
company is as an investor.
The covenant not to compete set forth in this Section 1.3
shall not apply to Employee in the event his employment with
the Company is terminated pursuant to either Section 3.1 or
Section 3.2 hereof.
The covenants on the part of Employee contained in this
Section 1.3, and in Sections 1.4 and Section 1.5 below, shall
be construed as agreements independent of any other provision
in this Agreement, and the existence of any claim or cause of
action of Employee against the Company, whether predicated on
this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company of said covenants.
1.4 Nondisclosure. Employee further covenants and
agrees that neither during his employment by the Company nor
after termination of such employment, whether by Employee or
by the Company, will he, for any reason or in any manner
whatsoever:
(a) disclose any trade secrets belonging to the
Company, or
(b) for a period of two years after such
termination, disclose any confidential information
belonging to the Company, including, but not limited to,
the confidential information described in Section 1.1
above, of which he acquired knowledge during and on
account of his employment with the Company.
1.5 Company Materials. Employee further covenants and
agrees that, neither during his employment by the Company nor
after termination of such employment for any reason
whatsoever, will he take from the Company or any of its
offices any customer lists, manuals or other records of the
Company, regardless of whether he has worked on such records,
or any account to which they pertain.
Section 2. Termination of Employment.
2.1 Termination. Nothing herein shall affect the rights
of the Company or Employee to terminate the Employee's
employment with the Company, with or without cause; provided,
however, that the covenants and agreements contained herein
shall survive any such termination of employment as provided
for herein.
Section 3. Effect of Certain Terminations of Employment.
3.1 After Change in Control.
(a) In the event that, at any time after a "Change
in Control_ of the Company (as defined in Section 3.3)
shall have occurred, Employee's employment with the
Company is terminated by the Company or its successor for
any reason other than Good Cause, then the Company or its
successor shall pay to Employee, in a lump sum at the
time of such termination, his "Severance Pay" (as defined
in Section 3.4).
(b) In addition, after a Change in Control of the
Company, if Employee remains with the Company, then any
reduction in Employee's base compensation or an adverse
change in his duties and responsibilities, or any change
in his work which involves a relocation of his principal
place of employment by more than 100 miles or which
requires a change in his residence shall be treated as a
termination of his employment by the Company under this
Section 3.1 entitling Employee to Severance Pay unless
either (i) Employee consents in writing to such reduction
or change, (ii) the Company can demonstrate by clear and
convincing evidence that such reduction or change was
based primarily on Employee's failure to reasonably
perform his duties and responsibilities under the
circumstances and, further, that such reduction or change
was made only after the Company had provided Employee
with written notice of such failure and a reasonable
period of time to correct such failure, or (iii) such
reduction or change comes more than two years after such
Change in Control.
(c) For the purposes of this Agreement, Good Cause
shall consist of (i) Employee's embezzlement of funds,
Employee's commission of fraud against the Company, or
Employee's gross negligence or willful misconduct in the
performance of his duties (ii) Employee's failure to
devote substantially all of his full working time to the
fulfillment of his duties with the Company
(iii) Employee's conviction of, guilty plea to, or
confession of a felony or any act of fraud or any other
act of moral turpitude (iv) Employee's engaging in
conduct or activities materially damaging to the
property, business, or reputation of the Company or
(v) Employee's failure or refusal to substantially follow
or comply with the directions of the Board of Directors.
3.2 By the Company. In the event of any involuntary
termination of employment of the Employee by the Company,
other than termination for Good Cause, in the absence of a
Change in Control, including any reduction in compensation or
adverse change of duties or responsibilities as referred to in
Section 3.1 (b), Employee shall be entitled to continue to
receive, as severance pay, his base salary for a period of
twelve months from the date of termination, as if his
employment had continued with the Company.
3.3 Change in Control of the Company. Change of Control
shall be deemed to occur (a) upon the sale by the Company of
all or substantially all of its assets, the consolidation of
the Company with another person, or the merger of the Company
with any person as a result of which merger the Company is not
the surviving entity, (b) if Beneficial Ownership of 30% or
more of the Common Stock of the Company is held by any person
or entity, or (c) in the event that a "Triggering Event" (as
defined therein) shall have occurred under the Company's Share
Purchase Rights Plan currently in effect or any successor
plan. "Beneficial Ownership" shall have the meaning provided
in Rule 13d-3 under the Securities Exchange Act of 1934.
3.4 Severance Pay. For the purpose of this Agreement,
the Employee's Severance Pay shall equal the lesser of
(a) three times Employee's highest annual
compensation as reported by the Company to the Internal
Revenue Service on its form W-2 (or any successor to such
form) for any calendar year during the term hereof (or
his annualized compensation in the event such calculation
is for a partial year), or
(b) the maximum payment which the Company can make
to Employee as a result of a Change in Control (i)
without the Company's federal income tax deduction for
any portion of such payment being denied as an "excess
parachute payment" under Section 280G of the Internal
Revenue Code of 1986, as amended ("Code") or any
successor to such section, and (ii) without Employee
being subject to a federal excise tax on all or any part
of such payment under Code Section 4999 or any successor
to such section, where a public accounting firm
reasonably acceptable to Employee shall (at the Company's
expense) calculate such payment, certify to Employee that
such payment satisfies the requirements of this Section
3.4(b) and prepare and sign Employee's federal income tax
return for the year for which such payment is reportable
on such return.
Section 4. Term of Agreement.
This Agreement shall commence on the date first set forth
above and shall continue for an initial term of five years
from such date. Thereafter, this Agreement shall
automatically be renewed for successive 12-month periods,
unless terminated by either party upon written notice at least
six months prior to the anniversary date hereof.
Section 5. Miscellaneous.
5.1 Binding Effect.
(a) This Agreement shall inure to the benefit of
and shall be binding upon Employee, his executor,
administrator and heirs but may not be assigned by him.
This Agreement shall be binding upon the Company and its
successors and assigns.
(b) (i) Prior to a Change in Control of the
Company this Agreement may not be transferred or assigned
by the Company, either by voluntary action or by
operation of law.
(ii) After a Change in Control of the Company,
this Agreement may be transferred or assigned by the
Company and shall be binding on the transferee or
assignee; provided, however, that Employee shall be given
written notice thereof at least twenty (20) days prior to
the proposed transfer or assignment.
5.2 Invalid Provisions. The invalidity or
unenforceability of any particular provision of this Agreement
shall not affect the other provisions hereof, and this
Agreement shall be construed in all respects as if such
invalid and unenforceable provision were omitted.
5.3 Headings. The section and paragraph headings
contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation
of this Agreement.
5.4. Entire Agreement. This Agreement is intended by the
parties hereto to be the final expression of their agreement
with respect to the subject matter hereof and is the complete
and exclusive statement thereof notwithstanding any prior
representation or statements to the contrary. This Agreement
may be modified only by written instrument signed by each of
the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
XXXX X. XXXXXXX COMPANY
[CORPORATE SEAL] BY:
President
Attest:
EMPLOYEE
Xxxxxxx X. Xxxx
Witness:
