EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of January 8, 1998
by and between Xxxx X. Xxxxxxxxx, residing at 0000 Xxxxxxxx Xxxxx, Xxxxxxxxx
Xxxxx, Xxxxxxxx 00000 (the "Executive") and Sequoia Diversified Products, Inc.
(f/k/a ITP No. 10, Inc., a Delaware corporation, having its principal office
at 000 Xxxxx Xxxxxxxx Xxxx, Xxxxxx Xxxxx, Xxxxxxxx 00000 (the "Company").
RECITALS:
A. Pursuant to an Agreement and Plan of Organization (the "Merger
Agreement") made as of January 8, 1998, by and among (i) the Company, (ii) IT
Partners, Inc., a Delaware corporation and sole stockholder of the Company
("ITP"), (iii) Sequoia Diversified Products, Inc., a Michigan corporation
("Target"), and (iv) the stockholders of Target named therein;
B. ITP and the Company are utilizing the assets acquired by
operation of the Merger (as defined in the "Merger Agreement") to conduct a
business (the "Business") which is engaged in the design, manufacture and sale
of products and services to the information technology industry and such
Business will continue hereafter to be operated and conducted by the Company;
and
C. ITP and the Company desire to assure themselves of the
Executive's services with respect to the operation of the Business.
NOW, THEREFORE, in exchange for good and valuable consideration, both the
receipt and legal sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. Employment, Duties and Acceptance
1.1 The Company hereby employs the Executive during the Term (as
hereinafter defined) of this Agreement as the Vice Chairman, Chief Executive
Officer and Treasurer of Target. The Executive shall report directly to the
President of ITP and shall be subject to the reasonable direction, policies,
plans, oversight and review of the Board of Directors of ITP.
1.2 The Company may assign to the Executive such other executive and
administrative duties for the Company or ITP as may be determined by the Board
of Directors of the Company consistent with the Executive's expertise,
experience and prior duties with Target. The Executive shall perform such
additional duties and functions without separate compensation, unless
otherwise authorized by the Board of Directors.
1.3 The Executive accepts such employment and agrees to devote his
full and exclusive business time, energies, attention and best efforts to the
performance of his duties hereunder, which may include such travel as may
reasonably be required of him.
1.4 The Executive shall not, without the prior written consent of
the Company, during the Term of this Agreement be engaged in any other
business activity involving a Competitive Business (as defined in Section 6),
whether or not pursued for gain, profit or other pecuniary advantage; but this
shall not be construed as preventing the Executive from making and supervising
personal investments, provided they:
(a) will not cause a breach of Section 4.4, below; and
(b) will not materially interfere with the performance of the
Executive's duties hereunder.
1.5 All of the Executive's work product and work in process created
during the Term of this Agreement shall be considered "work made for hire"
under the U.S. Copyright Act, 17 U.S.C. section 101 et seq. and all
intellectual property rights therein shall be the sole and exclusive property
of the Company. In addition, in the event that any work product or work in
process created during the Term of the Agreement is not considered to be a
work made for hire, the Executive hereby agrees, at the Company's expense, to
assign all proprietary rights in such work product or work in process to the
Company.
2. Compensation; Benefits; Relocation
2.1 Base Salary. As partial compensation during the Term of this
Agreement for all of the Executive's services to be rendered hereunder,
Company agrees to pay, or cause to be paid, to the Executive, in the manner
hereinafter provided, an amount comprised of base compensation equal to Two
Hundred Thousand Dollars ($200,000.00) per annum (the "Base Salary"), to be
paid in biweekly installments, less all such sums as may be required by law to
be withheld or deducted. Such Base Salary shall be subject to normal periodic
review based on the policies and practices of the Company, provided that in no
event shall the Base Salary be less than the dollar amount set forth in the
preceding sentence, unless mutually agreed upon by the parties.
2.2 Business Expenses. The Executive will be reimbursed for
automobile, travel, entertainment, lodging and other related reasonable
business expenses actually incurred in connection with his work upon terms and
conditions established by ITP from time to time and consistently applied for
all of the senior executive officers of its operating subsidiaries.
2.3 Vacation; Sick Leave. The Executive shall be entitled to
periods of vacation not less than three (3) weeks annually and sick leave
during the Term of this Agreement upon terms and conditions established by ITP
from time to time and consistently applied for all of the senior executive
officers of its operating subsidiaries.
2.4 Other Benefits. The Executive shall receive hospitalization,
major medical, disability and pension plan benefits upon terms and conditions
established by ITP from time to time and consistently applied for all of the
senior executive officers of its operating subsidiaries; it being understood
that there is no assurance with respect to the establishment of such plans or,
if established, the continuation of such plans during the term of this
Agreement.
2.5 Insurance. The Company may, in the exercise of its sole and
absolute discretion, obtain a policy or policies of insurance covering the
life of the Executive. The Executive covenants that he will cooperate fully
by performing all requirements of the insurer which are reasonably necessary
to the issuance and maintenance of any such policies, including but not
limited to submitting to a physical examination and providing historical
medical records. The Company further agrees that it will pay all premiums of
any such policy or policies.
2.6. Relocation. The Executive shall not be required to relocate
without his consent.
3. Term and Termination.
3.1 Term and Renewal. The initial term of this Agreement shall be
four (4) years, commencing as of January 8, 1998 and continuing through
January 7, 2002 (the "Initial Expiration Date"), unless sooner terminated as
herein provided (the "Initial Term"). The Initial Term shall renew
automatically for subsequent terms of one (1) year each (each a "Renewal
Term"), unless at least sixty (60) days before the Initial Expiration Date, or
at least sixty (60) days in advance of the expiration of any subsequent
Renewal Term (as the case may be), either party gives the other party notice
in writing of its intent not to renew this Agreement. As used in this
Agreement, the term "Term" shall mean either the Initial Term or any Renewal
Term, as the case may be.
3.2 Termination Upon Death. If the Executive dies during the Term
of this Agreement, this Agreement shall immediately terminate, except that the
Company shall for a period of one hundred eighty (180) days following the date
of his death pay to the legal representatives of the Executive's estate the
Base Salary, as then in effect. Such payment will be made within thirty (30)
days of the date of death.
3.3 Termination for Proper Cause.
(a) The Company, by written notice to the Executive, may
terminate this Agreement for proper cause and the
continuance thereof for ten (10) business days' after
written notice. As used herein, "proper cause" shall
exclusively mean that the Executive has:
(i) refused or willfully failed to carry out specific
directions of the Board of Directors of the Company
which are not in conflict with the terms of this
Agreement, or willfully refused or willfully failed
to perform a material part of his duties hereunder;
(ii) committed a material breach of any of the
provisions of Article 4 of this Agreement;
(iii) acted in a fraudulent or dishonest manner in his
relations with the Company that has served to
adversely and materially harm the Company;
(iv) committed larceny, embezzlement, conversion or any
act involving the misappropriation of funds in the
course of his employment; or
(v) been convicted of any crime involving an act of
moral turpitude.
The determination as to whether proper cause (as defined
above) exists shall be made in the good faith opinion of
ITP's Board of Directors by the affirmative vote of two-
thirds (2/3) of all of the directors (but not including the
Executive if the Executive is a director). In the event of
a termination under subparagraph (a) above, all Base Salary
and other benefits under the terms of this Agreement to be
paid or provided to the Executive shall immediately cease,
provided that the Executive shall be entitled to receive all
such compensation and benefits through the effective date of
such termination.
(b) In the event the Company terminates this Agreement by
dismissing the Executive without proper cause, the Company
shall pay the Executive his Base Salary (equal to the amount
paid for the full fiscal year immediately preceding such
termination or, if such termination occurs during the first
full fiscal year, his first year's Base Salary) and continue
to provide to him the benefits as set forth herein for the
balance of the entire applicable Initial Term or Renewal
Term, as the case may be.
3.4 Termination by Executive for Good Reason. In the event the
Executive terminates this Agreement for "good reason," the Company shall pay
the Executive his Base Salary and provide to him the benefits as set forth
herein for the balance of the entire applicable Initial Term or Renewal Term,
as the case may be. For purposes of this section, the Executive shall have
"good reason" to voluntarily terminate his employment if (i) the Company shall
have materially and substantially reduced the job description of such
Executive or assigned to the Executive significant duties which are materially
inconsistent with the Executive expertise, experience and prior duties with
the Target, as the case may be or (ii) ITP has not completed an initial public
offering of its capital stock under the Securities Act of 1933, as amended,
pursuant to a registration statement filed with, and declared effective by,
the Securities and Exchange Commission by June 30, 2000.
3.5 Termination Due to Disability
(a) The Company, by notice to the Executive, may upon thirty
(30) days prior written notice, terminate this Agreement if
the Executive shall become disabled. Notwithstanding such
termination, the Company shall for a period of one hundred
eight days (180) days following the date of such termination
both pay to the Executive all monies due hereunder up to the
date of such notice, including Base Salary and additionally
provide the benefits as set forth herein.
(b) For purposes of this Agreement, the terms "disabled" or
"disability" (i) shall mean the Executive's inability, for a
period of one hundred eighty (180) consecutive days, to
devote his full time to those duties as an employee of the
Company which he was performing prior to his disability, and
(ii) shall be deemed to have occurred on the one hundred
eighty-first (181st) day of his inability to devote his full
time to his duties as an employee of the Company. If by the
one hundred eightieth (180th) consecutive day of absence the
Executive can provide evidence, in the form of a doctor's
certificate, of the likelihood of his return to work within
the next one hundred eighty (180) days, "disability" shall
be deemed to have occurred on the three hundred sixty-first
(361st) day of absence. The definition of "disabled" or
"disability" may be altered by the affirmative vote of two-
thirds (2/3) of the Board of Directors of ITP on a case-by-
case basis, for example, to exclude disability which lasts
for longer than one hundred eighty (180) consecutive days
but is not permanent, or to include disability where each
absence does not total one hundred eighty (180) consecutive
days but involves absences frequent enough to be considered
permanent by the Board of Directors.
4. Protection of Confidential Information; Non-Competition.
4.1 The Executive acknowledges that:
(a) The established nature of the Business was material to the
decision of ITP to acquire and conduct the Business and for
the Company to employ the Executive hereunder.
(b) As a result of his employment by the Company and his
operation of the Business, the Executive has obtained and
will obtain certain proprietary, secret and confidential
information concerning the business of the Company and ITP,
including, without limitation, financial and organizational
information, the identity of customers and sources of
supply, their needs and requirements, the nature and extent
of contracts with them, and related cost price and sales
information.
(c) The Company and ITP will suffer immediate, irreparable and
substantial damage which will be difficult to compute if,
during the period of his employment with the Company or
thereafter, the Executive should enter a competitive
business with any material segment of the Company's and
ITP's business (whether as an employee, shareholder,
director, officer or otherwise) or should divulge secret
and confidential information relating to the business of
the Company and ITP heretofore or hereafter acquired by him
in the course of his management of the Business and his
employment by the Company.
(d) The provisions of this Agreement are reasonable and
necessary for the protection of the business of the Company
and ITP.
4.2 The Executive agrees that he will not at any time, either during
the Term of this Agreement or thereafter, divulge to any person, firm or
corporation any confidential information obtained or learned by him during the
course of his employment with the Company, or prior to the commencement
thereof in the course of his employment by and management of the Business,
with regard to the operational, financial, organizational, business or other
affairs of the Business of ITP, the Company, any of their subsidiaries, or any
of their officers and directors, including, without limitation, trade "know
how," secrets, customer lists, sources of supply, pricing policies,
operational methods or technical processes, except: (i) in the course of
faithfully performing his duties hereunder, (ii) with the Company's express
written consent, (iii) to the extent that any such information is in the
public domain other than as a result of the Executive's breach of any of his
obligations hereunder, or (iv) where required to be disclosed by court order,
subpoena or other governmental process. In the event that the Executive shall
be required to make disclosure pursuant to the provisions of clause (iv) of
the preceding sentence, the Executive promptly but in no event more than
forty-eight (48) hours after learning of such subpoena, court order, or other
governmental process, shall notify, by personal delivery or by facsimile,
confirmed by mail or by certified mail, return receipt requested, the Company
and, at the Company's expense, the Executive shall:
(a) take all reasonably necessary steps requested by the
Company to defend against the enforcement of such subpoena,
court order or other governmental process, and
(b) permit the Company to intervene and participate with counsel
of its choice in any proceeding or actions relating to the
enforcement thereof.
4.3 Upon termination of his employment with the Company, or at any
time the Company's Board of Directors may reasonably request, the Executive
will promptly deliver to the Company all memoranda, notes, records, reports,
manuals, drawings, blueprints and other documents (and all copies thereof)
relating to the business of the Company and ITP and all property associated
therewith, which he may then possess or have under his control.
4.4 During the Term of his employment with the Company and for a
period of one (1) year thereafter, except in the event of a termination
without proper cause prior to the end of the Initial Expiration Date, the
Executive shall not, without the express prior written permission of the
Company, in the State of Michigan, or any adjacent state, directly or
indirectly: (i) enter into the employ of or render any significant and
material services to any person, firm or corporation engaged in any
Competitive Business (as defined in Section 6); (ii) engage in any Competitive
Business for his own account; (iii) become associated with or interested in
any Competitive Business as an individual, partner, shareholder, creditor,
director, officer, principal, agent, employee, trustee, consultant, advisor or
in any other relationship or capacity; or (iv) solicit, interfere with, or
endeavor to entice away from the Company any of its employees, customers or
sources of supply. Nothing in this Agreement, however, shall preclude the
Executive from investing his personal assets in the securities of any
corporation or other business entity which is engaged in a Competitive
Business if such securities are traded on a national stock exchange or in
over-the-counter market and if such investment does not result in his actually
and/or beneficially owning, at any time, more than five percent (5%) of the
publicly traded equity securities of such competitor. Notwithstanding any
other provision of this Agreement, in the event of a termination occurring
prior to the end of the Initial Term either by the Company without proper
cause or a voluntary termination by the Executive for good reason or in the
event the Notes (as defined in the Merger Agreement) are not paid in
accordance with the terms thereof, the Executive shall be free from the
restrictions set forth in this Section 4.4.
4.5 If the Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Article 4, the Company shall have the
right and remedy:
(a) to have the provisions of this Agreement specifically
enforced by any court having equity jurisdiction, it being
acknowledged and agreed by the Executive that the services
being rendered hereunder to the Company are of a special,
unique and extraordinary character and that any such breach
or threatened breach will cause irreparable injury to the
Company and that money damages alone will not provide an
adequate remedy to the Company; and
(b) to require the Executive to account for and pay over to the
Company all compensation, profits, monies, accruals,
increments or other benefits (collectively "Benefits")
derived or received by the Executive as the result of any
transactions constituting a breach of any of the provisions
of Article 4, and the Executive hereby agrees to account for
and pay over such Benefits to the Company. Each of the
rights and remedies enumerated in this Section 4.5 shall be
independent of the other, and shall be severally
enforceable, and such rights and remedies shall be in
addition to, and not in lieu of, any other rights and
remedies available to the Company under law or equity.
4.6 If the Executive shall violate any covenant contained in Article
4, the duration of such covenant so violated shall be automatically extended
for a period of two (2) years from the date on which the Executive permanently
ceases such violation or for a period of two (2) years from the date of the
entry by a court of competent jurisdiction of a final order or judgment
enforcing such covenant, whichever period is later.
4.7 If any provision of Article 4 is held to be unenforceable
because of the scope, duration or area of its applicability, the tribunal
making such determination shall have the power to modify such scope, duration,
or area, or all of them to the minimum extent necessary so that these
provisions would be enforceable, and such provision or provisions shall then
be applicable in such modified form.
4.8 The Executive acknowledges that he will be directly and
materially involved as a senior executive in many important policy and
operational decisions of the Company and ITP. The Executive further
acknowledges that the scope of the foregoing restrictions has been
specifically bargained between the Company and the Executive, each being fully
informed of all relevant facts. Accordingly, the Executive acknowledges that
the foregoing restrictions of this Section 4 are fair and reasonable, are
minimally necessary to protect the Company and ITP, its stockholders and the
public from the unfair competition of the Executive who, as a result of his
employment with the Company, will have had access to the confidential and
important information of the Company and ITP, its business and future plans.
The Executive furthermore acknowledges that no unreasonable harm or injury
will be suffered by him from enforcement of the covenants contained herein and
that he will be able to earn a reasonable livelihood following termination of
his employment notwithstanding enforcement of the covenants contained herein.
4.9 Both the Company and the Executive do hereby further acknowledge
and agree that none of the time span, scope or area covered by the restrictive
covenants above is or are unreasonable, and that it is the specific intent of
both the Company and the Executive that each and all of the provisions set
forth in this section shall be valid and enforceable as specifically set forth
hereinabove to the fullest extent possible. If it shall be judicially
determined that any of the provisions set forth in this section shall not be
valid or enforceable as specifically set forth hereinabove, such provision
shall not be declared invalid but rather shall be modified in such manner so
as to result in the same being valid and enforceable to the maximum extent
permitted by law. It is further agreed and understood that, because of the
highly confidential and sensitive nature of the Company's and ITP's business,
in the event of any violation by the Executive of any of the preceding
provisions of this section, the Company may, in addition to any other remedies
which it may have, obtain injunctive relief in any court of appropriate
jurisdiction to enforce the terms hereof.
5. Laws of the State of Maryland to Govern.
(a) This Agreement shall be governed by and construed and interpreted
exclusively in accordance with the applicable laws of the State of Maryland,
without regard to its conflicts of law provisions that might refer the
construction or interpretation of this Agreement to the laws of another state.
(b) If any legal action is necessary to enforce the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys'
fees in addition to any other relief to which that party may be entitled.
(c) Each of the parties hereto hereby submit to the jurisdiction of
the courts of the State of Michigan in any proceeding for the enforcement of
this Agreement.
6. Definitions. As used in this Agreement, the term "Competitive
Business" shall mean either: (A) any of the development, production,
marketing or distribution of products and services of the information
technology industry engaged in, or to the knowledge of the Executive,
contemplated by, the Company or ITP during the Term of the Executive's
employment; or (B) any other product or service (including software-related
products or services) of every nature, kind and description whatsoever which
was under active development, production, marketing or distribution by the
Company, ITP, or any of their subsidiaries at any time prior to or during the
Term of the Executive's employment.
7. Miscellaneous Provisions.
7.1 Notices. Any notice, request, instruction or other document or
communication required or permitted to be given under this Agreement shall be
in writing and shall be deemed to be given upon (i) delivery in person, (ii)
five (5) days after being deposited in the mail, postage prepaid, for mailing
by certified or registered mail, (iii) one (1) day after being deposited with
an overnight courier service, charges prepaid, or (iv) when transmitted by
facsimile, with a copy simultaneously sent as provided in clauses (ii) and
(iii), in every case as follows:
If to the Company, delivered or mailed to:
c/o Sequoia Diversified Products, Inc.
0000 Xxxxxx Xxxx Xxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, Chairman of the Board
with a copy delivered or mailed by the same method to:
Xxxx X. Xxxxxxxxxxxx, Esquire
Piper & Marbury, L.L.P.
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
If to the Executive, delivered or mailed to:
Xxxx X. Xxxxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxx 00000
with a copy delivered or mailed by the same method to:
J. Xxxxxxx Xxxxxxx, Esquire
Xxxxxx Xxxxxxx PLLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
7.2 Entire Agreement. This Agreement sets forth the entire agreement
of the parties with regard to the specific subject matter hereof and is
intended to supersede all prior negotiations, understandings and agreements.
No provisions of this Agreement may be waived or changed except by a writing
signed by the party against whom such waiver or change is sought to be
enforced. The failure of any party to require performance of any provision
hereof shall in no manner affect his or its right at a later time to enforce
such provision.
7.3 Article Headings. The article headings are inserted only as a
matter of convenience and for reference and in no way define, limit or
describe the scope or intent of any provision of this Agreement.
7.4 Confidential Nature. The parties acknowledge that all of the
terms and conditions of this Agreement are of a confidential and sensitive
nature and shall be disclosed or divulged to any third party whatsoever only
to the extent required by any applicable requirement of law.
7.5 Further Assurances. The parties hereto hereby agree to do such
further acts and things, and to execute and deliver such additional
conveyances, assignments, agreements and instruments from time to time, as
either may at any time reasonably request in order to better assure and
confirm unto each party their respective rights, powers and remedies conferred
hereunder.
7.6 Arbitration. Except with respect to Article 4 hereof for which
specific performance shall be available, any and all claims, demands,
disputes, controversies, differences or misunderstandings arising out of or
relating to this Agreement, or the failure or refusal to perform the whole or
any part hereof, shall be settled by arbitration conducted in Detroit,
Michigan by the American Arbitration Association (the "AAA") in accordance
with the rules thereof then pertaining. With respect to the determination of
"proper cause" by the Board of Directors of ITP under Section 3.3 hereof, the
sole role of the arbitrators will be to determine whether the Board of
Directors of ITP acted in good faith. Each of the parties hereto hereby
submit to the jurisdiction of the courts of the State of Michigan in any
proceeding for the enforcement of this Agreement to arbitrate and for the
enforcement of the award rendered by the arbitrators, and agree that judgment
upon such award may be entered in any court, in or out of the State of
Michigan, having jurisdiction thereof. The fees of the AAA shall be borne by
the parties equally.
7.7 Specific Performance. Subject to Section 7.6 above, the parties
hereto hereby expressly recognize and acknowledge that extensive and
irreparable damage would result in the event that this Agreement is not
specifically enforced. Therefore, their respective rights and obligations
hereunder shall be enforceable in a court of equity by a decree of specific
performance and appropriate injunctive relief may be applied for and granted
in connection therewith. Such remedies and any and all other remedies
provided for in this Agreement shall, however, be cumulative and not exclusive
and shall be in addition to any other remedies which any party may have under
this Agreement or otherwise.
7.8 Severability. If any term or condition of this Agreement should
be held invalid by a court, arbitrator or tribunal of competent jurisdiction
in any respect, such invalidity shall not affect the validity of any other
term or condition hereof. If any term or condition of this Agreement should
be held to be unreasonable as to time, scope or otherwise by such a court,
arbitrator or tribunal, it shall be construed by limiting or reducing it to
the minimum extent so as to be enforceable under then applicable law. The
parties hereto acknowledge that they would have executed this Agreement with
any such invalid term or condition excluded or with any such unreasonable term
or condition so limited or reduced.
7.9 Binding Effect. This Agreement shall be binding upon, and inure
to the benefit of, the heirs, personal representatives, legal successors and
assigns of the respective parties hereto; provided that, neither party shall
assign this Agreement (by merger, consolidation, operation of law or
otherwise) without the written consent of the others and any attempted
assignment without said consent shall be null, void and without any effect
whatsoever ab initio. Nothing in this Agreement shall be construed as
granting to any person or entity whatsoever other than the parties hereto, and
their respective successors and permitted assigns, and any remedy, claim or
other privilege or right under or in respect of this Agreement or any
provision hereof.
7.10 Construction. The parties acknowledge that each party and its
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement
or any amendments or exhibits hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first above written.
WITNESS: EXECUTIVE:
/s/ Xxxx X. Xxxxxxxxx (SEAL)
----------------------------
Xxxx X. Xxxxxxxxx
ATTEST: COMPANY:
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx (SEAL)
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Name:
Title:
