EMPLOYMENT AGREEMENT
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THIS AGREEMENT ("Agreement") is entered into as of October 5, 1997 by and
between Xxxx Xxxxxxxx ("Xxxxxxxx") and SC Acquisition #1, Inc., an Illinois
corporation (the "Company").
R E C I T A L S:
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A. On the date hereof, the Company has acquired substantially all of the
operating assets of Computer Dynamics, Inc. ("CDI") and certain other related
entities (the "Selling Entities") pursuant to the terms of that certain Asset
Purchase Agreement (the "Purchase Agreement") dated as of October 5, 1997 among
the Company, Total Control Products, Inc., an Illinois corporation, Xxxxxxxx and
certain other entities.
B. In connection with such acquisition, (i) the Company desires to employ
Xxxxxxxx as the President of the Company and Xxxxxxxx desires to be so employed
by the Company, all on the terms and subject to the conditions set forth herein;
and (ii) the Company desires to bind Xxxxxxxx to certain restrictive covenants
and Xxxxxxxx agrees to be so bound, all on the terms and subject to the
conditions set forth herein.
A G R E E M E N T:
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NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. TERM. Subject to the terms and conditions set forth herein and unless
sooner terminated as hereinafter provided, the Company shall employ Xxxxxxxx and
Xxxxxxxx agrees to serve as an employee of the Company from the date hereof to
and including October 5, 2000 (the "Employment Term"). After the expiration of
the Employment Term, Priester's employment hereunder shall automatically renew
for successive one year periods (each, a "Renewal Term") unless either party
hereto delivers written notice to the other party hereto pursuant to Section
12(a) hereof of his or its desire to terminate Priester's employment with the
Company. The Employment Term and any Renewal Term thereof are collectively
referred to herein as the "Term".
2. EMPLOYMENT DUTIES. During the Term, Xxxxxxxx shall serve as the
President of the Company. Xxxxxxxx shall faithfully and competently perform
such duties and responsibilities as defined by Xxxxxxxx and such other duties as
may from time to time be reasonably assigned to him by the Board of Directors of
the Company (the "Board"), which duties shall not be inconsistent with his
position as President of the Company. Notwithstanding the foregoing, Xxxxxxxx
shall have the right to decide the number of hours per month that he shall
devote to the performance of his duties and responsibilities hereunder;
provided, however, that Xxxxxxxx shall not devote less then eighty (80) hours
per month during the Term to the performance of his duties and responsibilities
hereunder. Xxxxxxxx agrees that at all times during the Term and thereafter,
(a) if applicable, the Company shall have the right to advertise its business as
being carried on in the manner and tradition and according to the standards
established by Xxxxxxxx; and (b) Xxxxxxxx will
not knowingly or intentionally do any act or say any thing which will or may
impair, damage, or destroy the good will and esteem for the Company or its
Affiliates (as defined herein) of its suppliers, employees, patrons,
customers and others who may at any time have or have had business relations
with the Company or its Affiliates. The Company agrees that all business
travel and the location of the performance of Priester's employment hereunder
shall be mutually agreed upon by Xxxxxxxx and the Board.
3. COMPENSATION. As compensation for the services to be performed and
the duties and responsibilities to be assumed by Xxxxxxxx during the Term, the
Company shall pay Xxxxxxxx the following amounts during the Term:
(a) a salary (the "Salary") in an amount equal to $125,000 per annum. The
Company shall review the Salary payable to Xxxxxxxx after the expiration of each
one year period during the Term beginning on the date hereof and any increases
in Salary shall be made at the sole discretion of the Board, which increases
following the Earn Out Period shall not be any less than the increase in the
Consumer Price Index - All Urban for the preceding one year period. The Salary
shall be payable to Xxxxxxxx in accordance with the Company's ordinary payment
practices for salaried employees.
(b) if, at any time during the Term, the maximum amount of Contingent
Consideration (as such term is defined in the Purchase Agreement) is earned in
any Earn Out Period, the Company shall pay Xxxxxxxx a bonus (the "Bonus") in an
amount equal to $75,000.
(c) beginning on October 1, 2002 and through the remainder of the Term, if
any, Xxxxxxxx shall be entitled to such bonuses as determined by the Board, in
its sole discretion.
4. BENEFITS. During the Term, Xxxxxxxx shall be entitled to participate
in such employee benefit plans and programs as are maintained by the Company, to
the extent that the Company maintains such plans and programs for salaried
employees of the Company and his position, tenure, compensation, age, health and
other qualifications make him eligible to participate. The Company does not
promise the adoption or continuance of any particular plan or program during the
Term, and Priester's (and his dependents') participation in any such plan or
program shall be subject to the provisions, rules, regulations and laws
applicable thereto. Notwithstanding the foregoing, if Priester's employment
hereunder is terminated for any reason whatsoever, until Xxxxxxxx attains (or
would have obtained in the case of death) the age of 62 1/2, the Company agrees
to provide Xxxxxxxx, his wife and his dependent children with medical insurance
with at least the same level of coverage as the medical insurance maintained by
CDI immediately prior to the date hereof.
5. REIMBURSEMENT OF EXPENSES. During the Term, Xxxxxxxx shall be
entitled to prompt reimbursement for ordinary, necessary and reasonable
out-of-pocket trade or business expenses which Xxxxxxxx incurs in connection
with performing his duties under this Agreement. The reimbursement of all such
expenses shall be made upon presentation of evidence reasonably
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satisfactory to the Company of the amounts and nature of such expenses and
shall be subject to the reasonable approval of the Board.
6. RESTRICTIVE COVENANTS. Xxxxxxxx acknowledges and agrees that (a)
through his past and continuing services to the Selling Entities and the
Company, he will learn valuable trade secrets and other proprietary information
relating to the Company's business; (b) Priester's services to the Company are
unique in nature; (c) the Company's business is international in scope; and (d)
the Company would be irreparably damaged if Xxxxxxxx was to provide services to
any person or entity in violation of the restrictions contained in this
Agreement. Accordingly, as an inducement to the Company to enter into this
Agreement and acquire substantially all of the operating assets of the Selling
Entities, Xxxxxxxx agrees that during the Term and for the longer of (i) until
October 5, 2002; or (ii) two years after the earlier of (x) Priester's
termination of employment or (y) the expiration of the Term (such period being
referred to herein as the "Restricted Period"), Xxxxxxxx shall not, directly or
indirectly, either for himself or for any other person or entity, without the
prior written consent of the Company:
(a) anywhere in the United States or Canada, engage or participate
in, or assist, advise or be connected with (including as an employee, owner,
partner, shareholder, officer, director, advisor, consultant, agent or (without
limitation by the specific enumeration of the foregoing) otherwise), or permit
his name to be used by or render services for, any person or entity engaged in,
or making plans to engage in, a business that competes with the business
conducted by, or proposed to be conducted by, the Company or its Affiliates (a
"Competing Business");
(b) solicit, attempt to solicit, aid in the solicitation of or accept
any orders from any person or entity who is or has been a customer of the
Company or its Affiliates, at any time during the period beginning one year
prior to the expiration of the Term through the Restricted Period, to purchase
products or services from any person or entity which products or services could
have been supplied or performed, as the case may be, by the Company or its
Affiliates (other than on behalf of the Company or its Affiliates);
(c) solicit, attempt to solicit or aid in the solicitation of any
person or entity who is or has been a customer, supplier, licensor, licensee or
person or entity having any other business relationship with the Company or any
of its Affiliates, at any time during the period beginning one year prior to the
expiration of the Term through the Restrictive Period, to cease doing business
with or alter its business relationship with the Company or its Affiliates; or
(d) solicit or hire any person or entity who is a director, officer,
employee, independent contractor or agent of the Company or any of its
Affiliates to perform services for any person or entity other than the Company
or its Affiliates or to terminate his or her employment with the Company or its
Affiliates; provided, however, that Xxxxxxxx may employ any director, officer,
employee, independent contractor or agent of the Company or any of its
Affiliates for services of a personal nature, as long as such services are not
for a Competing Business.
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Additionally, as an inducement to the Company to enter into this Agreement,
Xxxxxxxx agrees that during the Term, Xxxxxxxx shall not, directly or
indirectly, either for himself or for any other person or entity, without the
prior written consent of the Company, take any action which might divert from
the Company or any of its Affiliates (as defined herein) any opportunity (each,
an "Opportunity") which would be within the scope of the Company's or such
Affiliate's then business and shall offer each Opportunity to the Company, which
the Company may, in its sole discretion, decide to pursue or not. As used
herein, an "Affiliate" shall mean and include any person or entity which
controls a party, which such party controls or which is under common control
with such party. "Control" means the power, direct or indirect, to direct or
cause the direction of the management and policies of a person or entity through
voting securities, contract or otherwise. Notwithstanding the foregoing, the
ownership of up to 2% of the issued capital stock of any publicly traded company
by itself shall not constitute a violation of any provision of this Section 6.
7. DISCLOSURE OF CONFIDENTIAL INFORMATION. Xxxxxxxx recognizes that he
will occupy a position of trust and confidence with the Company as to
Confidential Information (as herein defined) pertaining to the Company and its
Affiliates. As an inducement for the Company to enter into this Agreement,
Xxxxxxxx therefore agrees that:
(a) for the longest period permitted by law from the date of this
Agreement, Xxxxxxxx and each Affiliate of Xxxxxxxx shall hold in the strictest
confidence and shall not, other than as required by law, without the prior
written consent of the Company, use for his own benefit or that of any third
party or disclose to any person, firm or corporation (except the Company, an
Affiliate of the Company or employees of the Company and its Affiliates) any
Confidential Information. For purposes of this Agreement, intending that the
term shall be broadly construed to include anything protectible as a trade
secret or confidential information under applicable law, "Confidential
Information" shall mean all information, and all documents and other tangible
items which record information relating to or useful in connection with the
Company's business (including the business of any of the Company's Affiliates),
which at the time or times concerned is protectible as a trade secret or
confidential information under applicable law, and which has been or is from
time to time disclosed to or known by Xxxxxxxx either before or after the date
hereof.
(b) Xxxxxxxx and each Affiliate of Xxxxxxxx (and if deceased, their
personal representatives) shall promptly following a request therefor from the
Company return to the Company, without retaining copies, all tangible items
which are or which contain Confidential Information. Xxxxxxxx shall also
surrender all computer print-outs, laboratory books, floppy disks and other such
media for storing software and information, work papers, files, client lists,
telephone and/or address books, rolodex cards, internal memoranda, appointment
books, calendars, keys and other tangible things entrusted to Xxxxxxxx by the
Company or its Affiliates or authored in whole or in part by Xxxxxxxx within the
scope of his duties to the Company or its Affiliates if such things contain
Confidential Information.
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(c) at the request of the Company made at any time or from time to
time during the Restricted Period, Xxxxxxxx and each Affiliate of Xxxxxxxx (and
if deceased, their personal representatives) shall make, execute and deliver all
applications, papers, assignments, conveyances, instruments or other documents
and shall perform or cause to be performed such other lawful acts as the Company
may reasonably deem necessary or desirable to implement any of the provisions of
this Agreement, and shall give testimony and cooperate with the Company, its
Affiliates or their respective representatives in any controversy or legal
proceedings involving the Company, its Affiliates or their respective
representatives with respect to any Confidential Information. The Company shall
reimburse Xxxxxxxx and each Affiliate of Xxxxxxxx for all reasonable expenses
incurred in connection with complying with the provisions of this Section 7(c).
8. INVENTIONS. Xxxxxxxx acknowledges that in his capacity as an
executive officer of the Company, whether before or after the date hereof, he
will be involved in (i) the conception or making of improvements, discoveries,
inventions or the like (whether patentable or unpatentable and whether or not
reduced to practice), (ii) the authorship of copyrightable works or (iii) the
development of trade secrets or confidential information relating to the Company
and its Affiliates. Xxxxxxxx acknowledges that all such intellectual property
is the exclusive property of the Company or one of its Affiliates, as the case
may be. Xxxxxxxx hereby waives any rights he may have in or to such
intellectual property, and Xxxxxxxx hereby assigns to the Company all right,
title and interest in and to such intellectual property, including, without
limitation, all copyright, neighboring rights and similar rights, title or
interest. At the Company's request and at no expense to Xxxxxxxx, Xxxxxxxx
shall execute and deliver all such papers, including, without limitation, any
assignment documents, and shall provide such cooperation as may be necessary or
desirable, or as the Company may reasonably request, in order to enable the
Company to secure and exercise its rights to such intellectual property.
9. SPECIFIC PERFORMANCE. Xxxxxxxx agrees that any violation by him of
Sections 6, 7 or 8 of this Agreement would be highly injurious to the Company
and its Affiliates and would cause irreparable harm to the Company and its
Affiliates. By reason of the foregoing, Xxxxxxxx consents and agrees that if he
violates any provision of Sections 6, 7 or 8 of this Agreement, the Company and
its Affiliates shall be entitled, in addition to any other rights and remedies
that they may have, to apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or prevent
any continuing violation of, the provisions of such section. In the event
Xxxxxxxx breaches a covenant contained in this Agreement, the Restricted Period
applicable to Xxxxxxxx with respect to such breached covenant shall be extended
for the period of such breach. Xxxxxxxx also recognizes that the territorial,
time and scope limitations set forth in Sections 6 and 7 are reasonable and are
properly required for the protection of the Company and its Affiliates and in
the event that any such territorial, time or scope limitation is deemed to be
unreasonable by a court of competent jurisdiction, the Company and Xxxxxxxx
agree, and Xxxxxxxx submits, to the reduction of any or all of said territorial,
time or scope limitations to such an area, period or scope as said court shall
deem reasonable under the circumstances. Xxxxxxxx represents, warrants and
acknowledges that he has available to him sufficient other
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means of support so that observance of the covenants contained in Sections 6,
7 and 8 shall not deprive him of his ability to earn a livelihood or support
his dependents.
10. TERMINATION FOR CAUSE. During the Term, Priester's employment with
the Company may be terminated by the Board "for cause", which shall include (a)
Priester's conviction for a felony; (b) Priester's commission of an act which
the Board, in its reasonable discretion, determines involved personal dishonesty
or fraud involving personal profit in connection with Priester's employment with
the Company; or (c) Priester's commission of an act which the Board shall have
found, in its reasonable discretion, to have involved willful misconduct or
gross negligence on the part of Xxxxxxxx in the conduct of his duties hereunder.
In the event of termination under this Section 10, the Company's obligations
under this Agreement shall cease and Xxxxxxxx shall forfeit all his rights to
receive any compensation or benefits under this Agreement, except that (a)
Xxxxxxxx shall be entitled to his Salary and benefits for services already
performed as of the date of termination of this Agreement; and (b) the medical
benefits provided in the last sentence of Section 4.
11. DEATH OR DISABILITY.
(a) This Agreement shall terminate upon Priester's death.
(b) If Xxxxxxxx becomes permanently disabled (determined as provided
below) during the Term, his employment with the Company shall terminate as of
the date such permanent disability is determined. Xxxxxxxx shall be considered
to be permanently disabled for purposes of this Agreement if he is unable by
reason of accident or illness (including mental illness) to perform the material
duties of his regular position with the Company and is (i) not expected to
recover from his disability within a period of six (6) months from the
commencement of the disability; or (ii) not expected to be able to perform his
material duties of his regular position with the Company for a period of six (6)
months in any consecutive twelve (12) month period as a result of the same
disability. If at any time Xxxxxxxx claims or is claimed to be permanently
disabled, a physician acceptable to both Xxxxxxxx, or his personal
representative, and the Company (which acceptances shall not be unreasonably
withheld) shall be retained by the Company and shall examine Xxxxxxxx. Xxxxxxxx
shall cooperate fully with the physician. If the physician determines that
Xxxxxxxx is permanently disabled, the physician shall deliver to the Company a
certificate certifying both that Xxxxxxxx is permanently disabled and the date
upon which the condition of permanent disability commenced. The determination
of the physician shall be conclusive.
(c) Priester's right to his compensation and benefits under this Agreement
shall cease upon his death or disability, except that Xxxxxxxx (or his estate or
heirs) shall be entitled to his (i) Salary and benefits for services already
performed as of the date of his death or disability; and (ii) the Bonus that
Xxxxxxxx would have otherwise earned in the year of his death or disability, as
the case may be, multiplied by the following fraction, the numerator or which is
equal to the number of days that Xxxxxxxx remained employed by the Company in
the year of such death or disability, as the case may be, and the denominator of
which is equal to 365.
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12. EFFECT OF TERMINATION.
(a) Either the Company or Xxxxxxxx may terminate Priester's employment
hereunder at any time for any reason.
(b) Upon the Company's termination of Priester's employment with the
Company for any reason other than death, disability or cause, the Company shall
pay Xxxxxxxx his Salary through the remainder of the Employment Term in
accordance with the Company's ordinary payment practices for salaried employees
and his Bonus through the remainder of the Employment Term in accordance with
the provisions of Section 3(b) hereof. Xxxxxxxx shall accept such payment in
full satisfaction of any and all obligations he may have against the Company,
whether statutory or otherwise, and shall thereafter release the Company form
any and all claims, both present and future, that he may have against it.
(c) Upon Priester's termination of his employment with the Company for any
reason other than death or disability, the Company's obligations under this
Agreement shall cease and Xxxxxxxx shall forfeit all his rights to receive any
compensation or benefits under this Agreement, except that (i) Xxxxxxxx shall be
entitled to his Salary and benefits for services already performed as of the
date of termination of this Agreement; and (ii) the medical benefits provided in
the last sentence of Section 4. Xxxxxxxx shall accept such payment in full
satisfaction of any and all obligations he may have against the Company, whether
statutory or otherwise, and shall thereafter release the Company form any and
all claims, both present and future, that he may have against it.
13. MISCELLANEOUS.
(a) All notices required or permitted to be given hereunder shall be
in writing and shall be deemed given (i) when delivered in person at the time of
such delivery or by telecopy with receipt of transmission indicating the date
and time (provided, however, that notice delivered by telecopy shall only be
effective if such notice is also delivered by hand or deposited in the United
States mail, postage prepaid, registered or certified mail, on or before two (2)
business days after its delivery by telecopy), or (ii) when received if given by
a nationally recognized overnight courier service, addressed as follows:
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if to Xxxxxxxx:
Xxxx Xxxxxxxx
000 Xxxxxxxxx Xxxx
Xxxxx, Xxxxx Xxxxxxxx 00000
with a copy to:
Xxxxxxxxxxx Xxxxxx Xxxx & Xxxx, P.C.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Few, Jr.
Fax: (000) 000-0000
If to the Company:
Total Control Products, Inc.
0000 X. Xxxxxx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxx 00000
Attn: Nic Gihl, President
Fax: (000) 000-0000
with a copy to:
X'Xxxxxx & Xxxxxx
00 Xxxxx XxXxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxx
Telecopier: (000) 000-0000
and/or to such other address or addressees as may be designated by notice
given in accordance with the provisions hereof.
(b) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, successors and permitted
assigns. As to Xxxxxxxx, this Agreement is a personal service contract and
shall not be assignable by Xxxxxxxx, but all obligations and agreements of
Xxxxxxxx hereunder shall be binding upon and enforceable against Xxxxxxxx and
Priester's personal representatives, heirs, legatees and devices.
(c) The parties adopt the Recitals to this Agreement and agree and
affirm that construction of this Agreement shall be guided thereby; this
Agreement contains all of the agreements between the parties with respect to
the subject matter hereof; and this
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Agreement supersedes all other agreements, oral or written, between the
parties hereto with respect to the subject matter hereof.
(d) No change or modification of this Agreement shall be valid
unless the same shall be in writing and signed by all of the parties hereto.
No waiver of any provisions of this Agreement shall be valid unless in
writing and signed by the waiving party. No waiver of any of the provisions
of this Agreement shall be deemed, or shall constitute, a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a
continuing waiver, unless so provided in the waiver.
(e) If any provisions of this Agreement (or portions thereof)
shall, for any reason, be invalid or unenforceable, such provisions (or
portions thereof) shall be ineffective only to the extent of such invalidity
or unenforceability, and the remaining provisions of this Agreement (or
portions thereof) shall nevertheless be valid, enforceable and of full force
and effect.
(f) The section or paragraph headings or titles herein are for
convenience of reference only and shall not be deemed a part of this
Agreement.
(g) This Agreement may be executed in multiple counterparts, each
of which shall be deemed to be an original and all of which taken together
shall constitute a single instrument.
(h) Notwithstanding anything to the contrary contained herein,
Priester's rights and obligations under Sections 6, 7, 8 and 9 and the last
sentence of Section 4 shall survive the expiration or termination of this
Agreement.
(i) This Agreement shall be governed and controlled as to
validity, enforcement, interpretation, construction, effect and in all other
respects by the laws of the State of South Carolina.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
/s/Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx
THE COMPANY:
SC ACQUISITION #1, INC.
By /s/Nic Gihl
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Title: President
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