EMPLOYMENT AGREEMENT
This is an EMPLOYMENT AGREEMENT ("Agreement"), dated April 7, 1997,
between Utilase, Inc., a Michigan corporation (the "Company"), and Xxxx X.
Xxxxxxx (the "Employee").
BACKGROUND
On the date hereof, DCT, Inc., a Michigan corporation ("DCT"), the
Company, a wholly-owned subsidiary of DCT, and Noble International, Ltd., a
Michigan corporation ("Noble") have entered into a Stock Purchase Agreement
("Purchase Agreement") whereby Noble will acquire all of the outstanding common
stock of the Company. Employee is currently an employee of the Company. The
parties desire that this Employment Agreement be executed and delivered, in
order to secure the services of Employee for the benefit of the Company and,
indirectly for Noble, such services to be rendered by Employee on the terms and
conditions and for the period hereinafter set forth.
NOW, THEREFORE, intending to be legally bound, and in consideration of
the mutual promises and representations set forth in this Agreement, the Company
and Employee agree as follows:
ARTICLE I - EMPLOYMENT AND TERM
1.1 Employment and Employment Term. The Company agrees to employ
Employee, and Employee accepts employment with the Company, to serve as
President of the Company and as an officer or other capacity of any subsidiary
formed by the Company as determined by the Board of Directors of such
subsidiary, for a term commencing on the date hereof and continuing for a period
of three years from the date hereof, unless earlier terminated pursuant to
Article IV of this Agreement ("Employment Term"). During the Employment Term,
Employee will render such services to the Company and its subsidiaries as are
customary for the position (or positions) held by Employee. During the
Employment Term, Employee shall devote his full time, ability and attention, and
his best efforts, to the business of the Company and its subsidiaries. The
Employee shall not directly or indirectly render any services of a business,
commercial, or professional nature to any other person, organization or other
entity, whether for compensation or otherwise, directly or indirectly, without
the prior written consent of a majority of the members of the Board of Directors
of the Company.
ARTICLE II - COMPENSATION
2.1 Base Salary. Subject to Article IV of this Agreement, as
compensation for services hereunder during the Employment Term the Employee
shall be paid an annual base salary of $175,000. On the first anniversary of the
date of this Agreement and on each subsequent anniversary of the date of this
Agreement for the duration of the Employment Term, the base salary shall be
increased by a percentage that shall be determined by the Board of Directors of
the Company.
2.2 Non-Competition. In consideration for the protective covenants set
forth in Article III of this Agreement, if the transactions contemplated by the
Purchase Agreement are consummated in accordance with the terms of the Purchase
Agreement, on the Closing Date, as defined in the Purchase Agreement, Employee
shall be paid $200,000 by the Company, and if not by the Company, then by Noble.
2.3 Bonus Awards. Subject to Article IV of this Agreement, during the
Employment Term the Employee shall be eligible to receive annual bonus awards as
set forth on Exhibit 1 hereto.
2.4 Employee Benefits. Employee shall receive retirement and welfare
benefits that, in the aggregate, are comparable to those the Company provides to
its other senior executives. Employee shall also receive certain additional
benefits, such as an automobile allowance and country club dues, as listed in
Exhibit 2 hereto.
2.5 Reimbursement of Expenses. During the Employment Term, the Company
shall pay or reimburse Employee for all reasonable travel and other expenses
incurred or paid by him in connection with the performance of duties under this
Agreement, in accordance with the Company's reimbursement policies and upon
submission of satisfactory evidence thereof.
ARTICLE III - PROTECTIVE COVENANTS
3.1 Non-Competition. For the period commencing on the date that
Employee's employment with the Company terminates, either voluntarily or
involuntarily, and ending on the third anniversary thereof (unless the Employee
is terminated by the Company other than for Cause (as defined in Article IV), in
which case for the period commencing on the date the Company terminates the
Employee and ending on the first anniversary thereof). Employee shall not (i)
own, manage, operate, control, or participate in the ownership, management,
operation or control of, or be connected, directly or indirectly, as proprietor,
partner, shareholder (other than ownership of not more than 5% of any class of
securities of a publicly traded entity which engages in a Competing Activity, as
defined herein, provided that Employee does not participate in the management,
operation or control of such entity), director, officer, executive, employee,
agent, creditor, consultant, joint venturer, investor or in any other capacity
or manner whatsoever, with any entity which
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engages in any business which directly or indirectly competes with the business
of the Company, including without limitation, the business of selling, applying,
marketing, licensing or distributing any blank welding technology or system or
process anywhere in the world, ("Competing Activity"), (ii) directly or
indirectly as proprietor, partner, shareholder, director, officer, executive,
employee, agent, creditor, consultant, joint venturer, investor or in any other
capacity or manner whatsoever, solicit or hire (in connection with or to be
involved in any Competing Activity) any person employed in the Company's
business on or after the date hereof, or (iii) solicit, interfere with or
attempt to entice away from the Company any person or entity which was or is a
client or customer or an affiliate of a client or customer of the Company or
Utilase, or an entity or affiliate of an entity with which the Company or
Utilase was engaged in sales or promotional efforts during the term of
Employee's employment with the Company or Utilase.
3.2 Trade Secrets. Employee agrees not to divulge, communicate, use to
the detriment of the Company, for Employee's benefit or the benefit of any other
person, firm, corporation, association or other entity, or misuse in any way, in
whole or in part, any proprietary or confidential information or trade secrets
related to the Company as they may exist from time to time, including, without
limitation, the Company's trade secrets, trademarks or other intellectual
property rights, personnel information, secret processes, know-how, customer
lists, or other technical, confidential or proprietary data. Employee
acknowledges that the list of its customers as it may exist from time to time,
and the Company's proprietary or confidential information, and trade secrets,
are valuable, special and unique assets of the Company. Employee acknowledges
and agrees that any information or data he has acquired on any of these matters
or items was received in confidence. Employee agrees to hold, as the property of
the Company, all memoranda, books, papers, letters and other data and all copies
thereof or therefrom, made by it or him or otherwise coming into its or his
possession, and at any time to deliver the same to the Company upon its demand.
3.3 Reasonable Limitations. Employee acknowledges that given the nature
of the Company's business the covenants contained in this Article III contain
reasonable limitations as to time, geographical area and scope of activity to be
restrained, and do not impose a greater restraint than is necessary to protect
the legitimate business interests of the Company. If, however, this Article III
is determined by any court of competent jurisdiction to be unenforceable by
reason of its extending for too long a period of time or over too large a
geographic area or by reason of its being too extensive in any other respect or
for any other reason it will be interpreted to extend only over the longest
period of time for which it may be enforceable and/or over the largest
geographical area as to which it may be enforceable and/or to the maximum extent
in all other aspects as to which it may be enforceable, all as determined by
such court and in such action.
3.4 Breach of Covenants. Violation of any of the protective covenants
contained herein shall constitute a breach of trust and is grounds for immediate
dismissal with cause and for appropriate legal action by the Company for damages
including reasonable attorney fees and costs, enforcement and/or injunctive
relief.
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3.5 Extension of Limitation Period. The parties acknowledge that if
Employee violates any of the protective covenants in this Article III and the
Company brings legal action for injunctive, damages or other relief hereunder,
the Company shall, as a result of the time involved in obtaining the relief, be
deprived of the benefit of the full Limitation Period of these protective
covenants. Accordingly, the Limitation Period shall be deemed to have the full
duration of the period stated therein, computed from the date relief is granted,
but reduced by the time between the period when the restriction began to run and
the date of the first violation of the covenant by Employee.
3.6 Survival of Protective Covenants. Each covenant on the part of
Employee contained in this Article III shall be construed as an agreement
independent of any other provision of this Agreement, and shall survive the
termination of Employee's employment under 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 such covenant.
3.7 Remedies for Breach. Employee acknowledges that the legal remedies
for breach of the protective covenants hereunder are inadequate and therefore
agrees that, in addition to all of the remedies available to the Company in the
event of a breach or a threatened breach of any covenant contained in this
Article III, the Company may obtain temporary, preliminary, and permanent
injunctions and any other appropriate equitable relief against any and all such
actions, and may recover from Employee monetary damages to the Company arising
from such breach or threatened breach and all costs and expenses (including
reasonable attorneys' fees) incurred by the Company in the enforcement of such
protective covenants.
3.8 Affiliates of the Company. The protective covenants in this Article
III shall also benefit the business and trade secrets of the Company's
Affiliates (as hereinafter defined) and these covenants shall be enforceable
against Employee by each of such Affiliates as third party beneficiaries. An
"Affiliate" is any person or entity that, directly or indirectly, controls or is
controlled by, or is under common control with, the Company.
ARTICLE IV - TERMINATION OF EMPLOYMENT
4.1 Termination for Cause. The Company may terminate Employee's
employment hereunder for Cause or other than for Cause. The term "Cause" means
Employee, (i) after repeated notices and warnings, fails to perform his
reasonably assigned duties as reasonably determined by the Company, (ii)
materially breaches any of the terms or conditions of Articles I or III of this
Agreement, or (iii) commits or engages in a felony or any intentional dishonest,
unethical or fraudulent act which materially damages the Company's reputation.
If the Company terminates Employee for Cause, or the Employee terminates his
employment voluntarily, no payments or benefits under this Agreement shall
accrue after the date of Employee's termination.
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4.2 Termination Other Than for Cause. If the Company terminates
Employee for any reason other than for Cause, the Company shall owe Employee
severance in an amount equal to one (1) times Employee's annual base salary at
the time of termination (such amount, the "Severance Payment"). At the Company's
option, the Severance Payment shall be paid either (a) in equal monthly
installments over the twelve months following the termination date, or (b) in
one lump sum payable within 30 days following the termination date. The Company
shall withhold all applicable income and employment taxes from the Severance
Payment. It is agreed that the Severance Payment shall constitute all amounts
owed by the Company to Employee for the termination of his employment without
Cause, and that no other payments or benefits shall be owed by the Company to
Employee under any Company severance or benefit plan other than any benefits
under a retirement plan that is qualified under Section 401(a) of the Internal
Revenue Code in which Employee is fully vested. No Severance Payment shall be
made by the Company unless Employee executes a waiver in a form satisfactory to
the Company releasing the Company from any claims Employee may assert against
the Company relating to his employment with the Company.
ARTICLE V - MISCELLANEOUS
5.1 Modification Of This Agreement. Employee acknowledges and agrees
that no one employed by or representing the Company has any authority to make
oral statements which modify, waive or discharge, in any manner, any provision
of this Agreement. Employee further acknowledges and agrees that no provision of
this Agreement may be modified, waived or discharged unless agreed to in
writing, and signed and executed by Employee and a majority of the members of
the Board of Directors of the Company. Employee acknowledges and agrees that in
executing this Agreement he has not relied upon any representation or statement
made by the Company or its representatives, other than those stated in this
Agreement.
5.2 Notices. All notices required or permitted hereunder shall be made
in writing by hand-delivery, certified or registered first-class mail, facsimile
transmission or air courier guaranteeing overnight delivery to the other party
at the following addresses:
To Company:
Utilase, Inc.
00000 Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx Xxxxxxxxx III
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with a copy to:
Stone, Biber & X'Xxxxx, P.C.
0000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
To Employee:
Xxxx X. Xxxxxxx
000 Xxxxx
Xxxxxx Xxxxxx Xxxxx, Xxxxxxxx 00000
with a copy to:
Xxxxxxx & Xxxxxx, P.C.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X.X. XxXxxxxx, Esq.
or to such other address as either of such parties may designate in a written
notice served upon the other party in the manner provided herein. All notices
required or permitted hereunder shall be deemed duly given and received when
delivered by hand, if personally delivered; on the fifth (5th) day next
succeeding the date of mailing if sent by certified or registered first-class
mail, when received if sent by facsimile transmission, and on the next business
day, if timely delivered to an air courier guaranteeing overnight delivery.
5.3 Waiver of Breach. The waiver by the Company or Employee of a breach
of any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any other or subsequent breach by the other party of
such or any other provision. No delay or omission by the Company or Employee in
exercising any right, remedy or power hereunder or existing at law or in equity
shall be construed as a waiver thereof, and any such right, remedy or power may
be exercised by the Company or Employee from time to time and as often as may be
deemed expedient or necessary by the Company or Employee in its or his sole
discretion.
5.4 Severability. It is the intention of the parties that the
provisions contained herein shall be enforceable to the fullest extent
permissible under applicable law, but that the unenforceability (or modification
to conform to such law) of any provision or provisions hereof shall not render
unenforceable, or impair, the remainder hereof. If any term or provision of this
Agreement or the application thereof to any person or circumstance shall, either
in whole or in part, be held invalid or unenforceable by a court of competent
jurisdiction, this Agreement shall be deemed amended to delete or modify, as
necessary, the offending provision or provisions and to alter the bounds thereof
in order to render it valid and enforceable; but in such event the affected
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provisions of this Agreement shall be curtailed and restricted only to the
extent necessary to bring them within the applicable legal requirements, and the
remainder of this Agreement shall not be affected.
5.5 Applicable Law: Jurisdiction. Each party irrevocably submits to the
exclusive jurisdiction of the federal and state courts for the State of Michigan
for purposes of any action, suit or other proceeding arising out of this
Agreement or any transaction contemplated hereby. The parties have agreed that
this Agreement shall be governed by, construed and enforced in accordance with
the laws of the State of Michigan without giving effect to conflict of law
principles.
5.6 Settlement of Disputes. Any claims, controversies, demands,
disputes, or differences between the parties hereto arising out of, or by virtue
of, or in connection with, or relating to this Agreement, Employee's employment
relationship with the Company or termination of such employment relationship
shall be submitted to and settled by arbitration in Southfield, Michigan before
a single arbitrator who shall be knowledgeable in the field of business law and
employment relations and such arbitration shall be in accordance with the rules
of the American Arbitration Association then in force. The parties agree to bear
joint and equal responsibility for all fees of the arbitrator, abide by any
decision rendered as final and binding, and waive the right to submit the
dispute to a public tribunal for a jury or non-jury trial.
5.7 Headings. The headings used throughout this Agreement have been
used for convenience only and do not constitute matter to be considered in
interpreting this Agreement.
5.8 Acknowledgment. Employee acknowledges receipt of a copy of this
Agreement, and agrees that his obligations hereunder shall be binding upon his
heirs, assigns and legal representatives. Employee acknowledges and agrees that
this Agreement contains the entire agreement and understanding concerning the
subject matter covered by this Agreement, and that this Agreement supersedes and
replaces any other existing agreement, whether written or oral, entered into
between Employee, the Company, DCT and Utilase, or among any of them, relating
generally to the subject matter covered by this Agreement, including
specifically any agreement that provides for the payment of severance benefits
to Employee.
EMPLOYEE HAS READ THE ABOVE DOCUMENT, AND BEEN GIVEN ADEQUATE TIME TO
CONSULT WITH AN ATTORNEY OR OTHER ADVISOR OF HIS CHOICE. EMPLOYEE
UNDERSTANDS THE DOCUMENT FULLY, AND AGREES TO ALL OF ITS TERMS.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
day and year first above written.
UTILASE, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Assistant Secretary
/s/ Xxxx X. Xxxxxxx
---------------------------------
Xxxx X. Xxxxxxx
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