EXHIBIT 10.32
EMPLOYMENT AGREEMENT
This Agreement is made as of the 7th day of October, 1996 between Kent
Electronics Corporation ("Kent"), a Texas corporation, Futronix Acquisition
Company, a Texas corporation (the "Company"), and Xxxxxxxx X. Xxxx (the
"Employee").
RECITALS
WHEREAS, the Employee has been an executive level employee of a company
that proposes to merge into the Company on the effective date hereof;
WHEREAS, the Company is a wholly-owned subsidiary of Kent;
WHEREAS, the Company desires to entrust Employee with access to certain
Confidential Information (as hereinafter defined) concerning the Company's
business and the relationships between the Company and its customers, but only
if the Employee agrees and covenants not to use or disclose such Confidential
Information in competition with the Company;
WHEREAS, Employee recognizes that the Company will not entrust such
Confidential Information to him unless he agrees to the terms of this Agreement;
WHEREAS, Employee and the Company recognize that the agreements and
covenants contained in this Agreement are essential to protect the business of
the Company; and
WHEREAS, the Company desires to retain the Employee to provide services to
the Company and the Employee desires to provide services to the Company upon the
terms and conditions hereinafter set forth.
WITNESSETH:
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto, each intending to be legally bound hereby,
agree as follows:
1. Employment.
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(a) The Company hereby employs the Employee as an executive level
employee, and the Employee hereby accepts such continued employment on the
terms and conditions set forth in this Agreement. During the term of the
Employee's employment under this Agreement (the "Employment Term"), the
Employee shall perform such services as shall be specified from time to
time by the Board of Directors of the Company (the "Board") and by any
senior executive officer of the Company in a senior position
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relative to the Employee, which services shall be rendered on behalf of the
Company, Kent and any other affiliated company, as designated from time to
time by the Board or any such senior executive officer.
(b) The Company has elected the Employee as of the date hereof to the
position of President. The Employee shall continue to hold such office or
offices and to have such responsibilities as are associated with such
office or assigned to him by the Board or a senior executive officer until
any change in such office or in such responsibilities as may be approved in
writing by a majority vote of the Board or a senior executive officer;
provided, however, that notwithstanding any such change, the Employee shall
at all times during the Employment Term remain an executive level employee
and shall have responsibilities commensurate with such status; and provided
further that the Employee shall not be required by the Company to relocate
to a metropolitan area different from that in which the Employee resides on
the date hereof.
2. Performance.
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The Employee shall devote his entire business efforts to the
performance of his duties hereunder; provided, however, that the Employee
may engage in personal investment and charitable activities so long as they
do not interfere with the performance of his duties hereunder.
3. Term.
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The Employment Term shall consist of an initial term beginning on the
date hereof and continuing until April 1, 2000.
4. Compensation for Employment.
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(a) The basic annual rate of compensation of the Employee for his
employment services to the Company during the Employment Term shall be
$150,000 (such amount, as adjusted in accordance with this Section 4, is
referred to herein as the "Salary"), which the Company shall pay (or cause
to be paid) to the Employee in equal installments in accordance with the
normal payroll policies of the Company. The Salary may be adjusted upward
on an annual basis as the Board may approve, in its sole discretion, but
the Salary shall not be decreased.
(b) The Employee shall be eligible to receive a bonus (the "Bonus")
upon such terms and conditions as may be determined from time to time by
the Board; provided, however, that (i) for the period from the date hereof
through the end of 1996 the Employee shall receive no Bonus, and (ii) for
the fourth quarter of the Company's 1997 fiscal year and the Company's 1998
fiscal year, and only in the event that the Company's income
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from operations for its 1998 fiscal year exceeds $7,025,000, the Company
shall pay the Employee a bonus in an amount equal to the product of 1.25
times 2.34% of the Company's income from operations for the 1998 fiscal
year without taking into account any bonuses paid to the Employee or other
management-level employees of the Company pursuant to the Employment
Agreements (as defined in the Reorganization Agreement ("Reorganization
Agreement") dated September 25, 1996) ("Adjusted Pre-Tax Income").
Thereafter, the Company shall permit the Employee to participate in bonus
plans comparable to those then provided to other officers of Kent and its
subsidiaries in comparable executive positions. Except as provided herein
with respect to a termination, the Company shall pay the Bonus with respect
to a particular fiscal year in the next fiscal year promptly after the
receipt of the Kent's consolidated audited financial statements from its
independent accountants.
(c) During the Employment Term, the Company shall provide (or cause to
be provided) the Employee with fringe benefits comparable to those provided
to other officers of Kent and its subsidiaries in comparable executive
positions (the "Fringe Benefits").
5. Termination Without Compensation.
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(a) Termination After Employment Term. After the expiration of the
Employment Term, the Employee or the Company may terminate Employee's
employment by the Company on 30 days' written notice. As of the
termination date, the Company shall have no further liability or obligation
to the Employee hereunder except that the Company shall provide the
Employee with any unpaid Salary and Fringe Benefits that may have accrued
through the date of termination, and the Company shall either pay the
Employee as severance compensation one year's salary, payable in accordance
with the Company's customary payroll practices, or, at the sole option of
the Company, release the Employee from his covenants not to compete with
the Company described in the Reorganization Agreement and this Agreement.
The Employee agrees that he shall not be entitled to any such severance
compensation unless and until he delivers the release contemplated by
Section 6(b) hereof, which severance compensation shall be treated as
Termination Compensation for the purposes of this Agreement.
(b) Total Disability. If the Employee becomes totally disabled (as
defined below), the Company may terminate the Employment Term by notice to
the Employee, and as of the termination date, the Company shall have no
further liability or obligation to the Employee hereunder except as
follows: the Company shall provide the Employee with (i) any unpaid Salary
and Fringe Benefits that have accrued through the date of termination; (ii)
whatever benefits that he may be entitled to receive under any then
existing disability benefit plans of the Company, including any such plans
included in the Fringe Benefits, and (iii) in the fiscal year immediately
following the fiscal year of termination, the Bonus to which the Employee
would have been entitled if he had been employed for the full
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period to which the Bonus relates but reduced proportionately to correspond
to the portion of the period for which the Employee was actually employed
(a"Proportionate Bonus"). For the purposes hereof, the Employee shall be
deemed to be "totally disabled" if the Employee is unable to perform his
services hereunder despite reasonable accommodation as a result of illness,
injury or incapacity for a continuous period of six months. In the event of
any dispute under this Section 5(b), the Employee shall submit to a
physical examination by a licensed physician mutually satisfactory to the
Company and the Employee, the cost of such examination to be paid by the
Company, and the determination of such physician shall be determinative.
(c) Death. If the Employee dies, this Employment Agreement shall
terminate on the date of death, and thereafter the Company shall not have
any further liability or obligation to the Employee, his executors,
administrators, heirs, assigns or any other person claiming under or
through him except that the Company shall provide the Employee's estate
with any unpaid Salary and Fringe Benefits that have accrued through the
date of termination and a Proportionate Bonus.
(d) Cause. The Company may terminate the Employment Term for "cause"
by giving the employee 30 days' notice of the termination date, and as of
the termination date, the Company shall not have any further liability or
obligation to the Employee, except that the Company shall provide the
Employee with any unpaid Salary and Fringe Benefits that have accrued
through the date of termination, net of any liabilities that the Employee
may have to the Company. For purposes of this Agreement, "cause" shall
mean (i) conviction of a felony, (ii) conduct amounting to a material act
of fraud or dishonesty involving the Company, (iii) a material act of fraud
or dishonesty not involving the Company that has a material adverse effect
upon the business or reputation of the Company, (iv) the failure or refusal
of the Employee in any material respect to observe or perform (other than
by reason of illness, injury or incapacity) any of the material terms or
provisions of this Agreement if such non-performance continues uncured for
a period of 30 days after notice thereof, which notice specifies the nature
of such failure or refusal and requests that it be cured or (v) chronic
alcoholism, drug addiction or any other form of addiction that materially
impairs the Employee's ability to perform the terms and provisions of this
Agreement, as determined by a physician retained by the Company.
(e) Resignation. The Employee shall have the right to terminate the
Employment Term at any time by giving the Company at least 30 days' notice
of the termination date. Under such circumstances, the Company shall
continue to pay the Salary and provide the Fringe Benefits to the Employee
through the termination date. As of such termination date, the Company
shall not have any further liability or obligation to the Employee, except
that the Company shall provide the Employee with any unpaid Salary and
Fringe Benefits that have been accrued through the date of termination.
The Employee shall not be entitled to receive any Bonus or Proportionate
Bonus.
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6. Termination With Compensation.
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(a) Without Cause. The Company shall have the right to terminate the
Employment Term without cause at any time by giving the Employee 30 days'
notice of the termination date. Under such circumstances, the Company
shall pay to the Employee in a single payment within 45 days after the
termination date, an amount (the "Lump Sum Payment") equal to (i) the
Salary for the remainder of the Employment Term plus (ii) an amount equal
to (x) the quotient resulting from dividing the Bonus paid to the Employee
for the fiscal year period immediately preceding the fiscal year of
termination (in the case of a termination prior to April 1, 1998, the Bonus
shall be deemed to be $150,000, and the Bonus for the 1998 fiscal year
shall equal 80% of the Bonus earned for the fifteen-month period ending on
the last day of the Company's 1998 fiscal year) by 12, multiplied by (y)
the number of months from the end of the last fiscal year for which a Bonus
was paid or, in the case of a termination prior to April 1, 1998, from
December 31, 1996 through the end of the Employment Term; provided,
however, that if the Lump Sum Payment is not equal to at least one year's
Salary then the Company shall, at its sole option, either increase the Lump
Sum Payment to an amount equal to the Salary or release the Employee from
his covenants not to compete with the Company described in the
Reorganization Agreement and this Agreement. In addition, the Company
shall continue to provide to the Employee the health benefits in effect for
the Employee at the time of termination until the earlier of the expiration
of 18 months after the termination date and the date on which the Employee
obtains health benefits from another source. As of such termination date,
the Company shall not have any further liability or obligation to the
Employee other than to continue paying the amounts and provide the health
benefits specified in this Section 6(a). Notwithstanding the foregoing,
the Company shall not be obligated to pay the Lump Sum Payment unless the
Employee delivers the release specified under Section 6(b).
(b) Consideration for Termination Compensation. The Lump Sum Payment
is referred to herein as the "Termination Compensation." The Employee
shall not be entitled to any Termination Compensation unless the Employee
executes and delivers to the Company after notice of termination a release
in a form satisfactory to the Company in its sole discretion by which the
Employee releases the Company from any obligations and liabilities of any
type whatsoever, except for the Company's obligations with respect to the
Termination Compensation. The parties hereto acknowledges that the
Termination Compensation to be provided under this Section 6 is to be
provided in consideration for the above-specified release.
7. Inventions, Designs and Product Developments.
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All inventions, innovations, designs, ideas and product developments,
developed or conceived by the Employee, solely or jointly with others,
whether or not patentable or copyrightable, at any time during the
Employment Term or during his employment by the Company prior to the
commencement of the Employment Term and that relate to the actual
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or planned business activities of the Company (collectively, the
"Developments") and all of the Employee's right, title and interest
therein, shall be the exclusive property of the Company. The Employee
hereby assigns, transfers and conveys to the Company all of his right,
title and interest in and to any and all such Developments. The Employee
shall disclose fully, as soon as practicable and in writing, all
Developments to the Board. At any time and from time to time, upon the
request of the Company, the Employee shall execute and deliver to the
Company any and all instruments, documents and papers, give evidence and do
any and all other acts that, in the opinion of counsel for the Company, are
or may be necessary or desirable to document such transfer or to enable the
Company to file and prosecute applications for and to acquire, maintain and
enforce any and all patents, trademark registrations or copyrights under
United States or foreign law with respect to any such Developments or to
obtain any extension, validation, reissue, continuance or renewal of any
such patent, trademark or copyright. The Company will be responsible for
the preparation of any such instruments, documents and papers and for the
prosecution of any such proceedings and will reimburse the Employee for all
reasonable expenses incurred by him in compliance with the provisions of
this Section 7.
8. Confidential Information; Noncompetition; Non-Solicitation.
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(a) The Employee has had and will have possession of or access to
confidential information relating to the business of the Company and Kent
and their affiliated companies, including writings, equipment, processes,
drawings, reports, manuals, invention records, financial information,
business plans, customer lists, the identity of or other facts relating to
prospective customers, inventory lists, arrangements with suppliers and
customers, computer programs, or other material embodying trade secrets,
customer or product information or technical or business information of the
Company. All such information, other than any information that is in the
public domain through no act or omission of the Employee or which he is
authorized to disclose, is referred to collectively as the "Confidential
Information". The Confidential Information is a valuable, special and
unique asset of the Company and Employee's access to and knowledge of the
Confidential Information is essential to the performance of his duties as
an Employee of the Company. In light of the competitive nature of the
business in which the Company is engaged, Employee agrees that during the
Employment Term and thereafter, the Employee shall not (i) disclose any
Confidential Information to any person or entity; (ii) use or exploit in
any manner the Confidential Information for himself or any person,
partnership, association, corporation or other entity other than the
Company; (iii) remove any Confidential Information, or any reproduction
thereof, from the possession or control of the Company or (iv) treat
Confidential Information otherwise than in a confidential manner.
(b) All Confidential Information developed, created or maintained by
the Employee, alone or with others while employed by the Company, and all
Confidential Information maintained by the Employee thereafter, shall
remain at all times the exclusive property of the Company. The Employee
shall return to the Company all Confidential
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Information, and reproductions thereof, whether prepared by him or others,
that are in his possession immediately upon request and in any event upon
the completion of his employment by the Company.
(c) In furtherance of the agreements contained in Section 8(a) hereof,
from the date hereof and for a period of three years after Employee's
employment with the Company is terminated, Employee, on behalf of himself
and his present and future affiliates and employers, agrees not to and
shall not directly or indirectly, for his own account or the account of
others, whether as owner, partner, joint venturer, lender, shareholder,
director, officer, employee, consultant or otherwise: (i) in any state
where the Company does business, engage, invest or otherwise take part in,
or render any service (whether for or without compensation) to any person
or company (other than the Company) who or which is directly or indirectly
engaged in any business that is competitive with any business conducted by
the Company in which Employee has been, is or shall be actively involved,
including but not limited to the purchase and sale, distribution,
marketing, brokering of or dealing in electrical and electronic wire and
cable; (ii) compete for or solicit any of the business conducted by the
Company from any customer of the Company other than for the benefit of the
Company; (iii) induce any customer of the Company, or request or advise any
such customer to withdraw, curtail, or cancel any such customer's business
with the Company; or (iv) solicit directly or indirectly for employment
outside of the Company any person currently employed by the Company or who
has been employed by the Company. However, the Employee may have a
financial interest in a competitor of the Surviving Corporation if that
interest is in the form of ownership of less than one percent (1%) of the
outstanding stock of a company whose securities are listed on a national
stock exchange or quoted on the NASDAQ National Market System.
(d) Employee recognizes, agrees and represents that the Company would
not permit Employee to access the Company's Confidential Information unless
Employee agrees to the restrictions contained herein, and that the Company
is relying on the agreements of Employee contained in this Agreement in
permitting Employee access to the Confidential Information. Employee
represents that being permitted to access the Confidential Information and
the compensation described in this Agreement constitutes significant and
valuable consideration for his agreements hereunder. Employee has read and
considered the provisions of this Section 8 and, having done so, agrees,
states, and covenants that the geographical area, and scope of activities
to be restrained, are reasonably required for the protection of the
goodwill and other business interests of the Company. In the event a court
of competent jurisdiction determines as a matter of law that any of the
terms of Section 8 are unreasonable or overbroad, the parties expressly
allow such court to reform this Agreement to the extent necessary to make
it reasonable as a matter of law and to enforce it as so reformed.
9. Remedies.
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The Employee expressly acknowledges that the remedy at law for any
breach of Sections 7 and 8 will be inadequate and that upon any such breach
or threatened breach, the Company shall be entitled as a matter of right to
injunctive relief in any court of competent jurisdiction, in equity or
otherwise, and to enforce the specific performance of the Employee's
obligations under these provisions without the necessity of providing the
actual damage to the Company or the inadequacy of a legal remedy. The
rights conferred upon the Company by the preceding sentence shall not be
exclusive of, but shall be in addition to, any other rights or remedies
which the Company may have at law, in equity or otherwise.
10. General.
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(a) Governing Law. The terms of this Agreement shall be governed by
the laws of the State of Texas.
(b) Company. For purposes of Sections 7, 8 and 9, the term "Company"
shall be deemed to include any incorporated or unincorporated entities that
are controlled, directly or indirectly, by the Company through ownership,
agreement or otherwise.
(c) Guaranty. Kent hereby guarantees the payment and performance of
the obligations of the Company hereunder.
(d) Effective Time; Binding Effect. This Agreement shall become
effective and binding on the parties hereto only upon the effectiveness of
the merger of Wire & Cable Specialties Corporation, a Georgia corporation,
and Futronix Corporation, a Texas corporation, with and into the Company
pursuant to the Reorganization Agreement. All of the terms and provisions
of this Agreement shall be binding upon and inure to the benefit and be
enforceable by the respective heirs, representatives, successors (including
any successor as a result of a merger or similar reorganization) and
assigns of the parties hereto, except that the duties and responsibilities
of the Employee hereunder are of a personal nature and shall not be
assignable in whole or in part by the Employee.
(e) Notices. All notices required to be given under this Agreement
shall be in writing and shall be deemed to have been given when personally
delivered or when mailed by registered or certified mail, postage pre-paid,
return receipt requested, or when sent by Federal Express or other
overnight delivery service addressed (i) in the case of the Company, to the
Company at its principal executive offices, to the attention of the
President, and (ii) in the case of the Employee, to the Employee at the
Employee's residential address on the records of the Company at that time.
(f) Entire Agreement; Modification. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter
hereof and may not be
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modified or amended in any way except in writing by the parties hereto.
(g) Duration. Notwithstanding the termination of the Employment Term
and of the Employee's employment by the Company, this Agreement shall
continue to bind the parties for so long as any obligations remain under
the terms of this Agreement.
(h) Waiver. No waiver of any breach of this Agreement shall be
construed to be a waiver as to succeeding breaches.
(i) Severability. If any provision of this Agreement or application
thereof to anyone under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect any other provisions or applications of this Agreement
which can be given effect without the invalid or unenforceable provision or
application and shall not invalidate or render unenforceable such provision
in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
hereunto duly executed this Agreement as of the day and year first written
above.
KENT ELECTRONICS CORPORATION
By: /s/ XXXXXX X. XXXXXXXX
______________________________________
FUTRONIX ACQUISITION COMPANY
By: /s/ XXXXXXX X. CHAPHO
______________________________________
/s/ XXXXXXXX X. XXXX
_________________________________________
Xxxxxxxx X. Xxxx
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