EXHIBIT 10.1
NONCOMPETE AND TERMINATION AGREEMENT
THIS AGREEMENT (the "Agreement"), made and entered into this day of
19 , by and between XXXX X. XXXXXXX COMPANY (the "Company") and ("Employee");
In consideration of the mutual promises and agreements contained herein,
the parties hereto, intending to be legally bound, hereby agree as follows:
Section 1. Noncompetition Undertakings.
1.1 Acknowledgement of Access to Confidential Matters.
Employee and the Company recognize and acknowledge that as a result of his
employment with the Company:
(a) Employee has had and will continue to have access to
technology utilized by the Company and its subsidiaries (collectively, the
"Company") in connection with their operations, which, technology is unique to
the Company, including production operating systems, order entry systems,
conveyor systems, quality control practices and other technology developed by
the Company for its various products and systems.
(b) Employee has had and will continue to have access to
and knowledge of all financial statements and related data for the Company,
including pricing, sales and training manuals, and other confidential materials
utilized by the Company; complete and detailed knowledge of all the products of
the Company and their capacities and specifications; and knowledge of all of
the systems and procedures of the Company with regard to selling, pricing, and
financing its products.
(c) Employee has had and will continue to have specific
knowledge regarding the Company's customers, including their specific needs and
current and anticipated requirements for the Company's products.
1.2 Potential Injury to Company. Employee further recognizes,
acknowledges and agrees that the confidential information and trade secrets
specified herein constitute valuable, special and unique assets of the Company
and that the improper use or disclosure thereof would cause substantial loss of
competitive advantage and other injury to the Company. Employee further agrees
that the training and experience gained while employed by the Company and the
knowledge acquired during such employment regarding the aforesaid information
would enable him to injure and cause substantial harm to the Company if he
should compete with the Company in its business before the expiration of a
reasonable time after termination of his employment with the Company.
1.3 Noncompetition. For the reasons recited in subsections 1.1 and
1.2 above and except as set forth below, Employee covenants and agrees that so
long as he is an employee of the Company and for a period of two (2) years after
termination of such employment, whether by Employee or by the Company, Employee
will not serve as an officer, executive, employee in a managerial capacity,
partner, consultant or stockholder (other than as a stockholder of the Company)
of any entity engaged in competition with the Company in the continental United
States, Puerto Rico or the Virgin Islands. The agreements of Employee contained
herein shall not prevent him from purchasing or owning an investment of not more
than 1% of the outstanding capital stock of a publicly held company engaged in
competition with the Company, so long as his only relationship with such company
is as an investor.
The covenant not to compete set forth in this subsection 1.3 shall
not apply to Employee in the event his employment with the Company is terminated
pursuant to either Section 3.1 or Section 3.2 hereof.
The covenants on the part of Employee contained in this Section 1.3,
and in Sections 1.4 and Section 1.5 hereof, shall be construed as agreements
independent of any other provision in this Agreement, and the existence of any
claim or cause of action of Employee against the Company, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by the Company of said covenants.
1.4 Nondisclosure. Employee further covenants and agrees that
neither during his employment by the Company nor after termination of such
employment, whether by Employee or by the Company, will he, for any reason or in
any manner whatsoever:
(a) disclose any trade secrets belonging to the Company, or
(b) for a period of two (2) years after such termination,
disclose any confidential information belonging to the Company, including, but
not limited to, the trade secrets and confidential information described in
subsection 1.1 above, of which he acquired knowledge during and on account of
his employment with the Company.
1.5 Company Materials. Employee further covenants and agrees
that, neither during his employment by the Company nor after termination of his
employment with the Company for any reason whatsoever, will he take from the
Company or any of its offices any customer lists, manuals or other records of
the Company, regardless of whether he has worked on such records, or any account
to which they pertain.
Section 2. Termination of Employment.
2.1 Termination. Except as provided in Section 2.2 hereof, nothing
herein shall affect the rights of the Company or Employee to terminate the
Employee's employment with the Company, with or without cause; provided,
however, that the covenants and agreements contained herein shall survive any
such termination of employment as provided for herein.
2.2 Company Obligation. The Company agrees that it will not
terminate Employee's employment with the Company, without good cause, for a
period of six (6) months from the date hereof.
Section 3. Effect of Certain Terminations of Employment.
3.1 By the Company.
(a) In the event that, at any time after a "Change in
Control" of the Company (as hereinafter defined), shall have occurred,
Employee's employment with the Company is terminated by the Company or its
successor for any reason other than for "Good Cause" (as defined below),
then (i) the Company or its successor shall pay to Employee, in a lump sum at
the time of such termination, his "Severance Pay" (as hereinafter defined) and
(ii) the covenant not to compete of Employee contained in Section 1.3 hereof
shall no longer be applicable.
(b) Any reduction in Employee's base compensation or a
material reduction or adverse change in his duties and responsibilities, or any
change in his work which involves a relocation of his principal place of
employment by more than 50 miles or which requires a change in his residence
shall be treated as a termination of his employment by the Company under this
Section 3.1 unless either (i) Employee consents in writing to such reduction or
change, (ii) the Company can demonstrate by clear and convincing evidence that
such reduction or change was based primarily on Employee's failure to
reasonably perform his duties and responsibilities under the circumstances and,
further, that such reduction or change was made only after the Company had
provided Employee with written notice of such failure and a reasonable period
of time to correct such failure or (iii) such reduction or change comes more
than two years after such Change in Control.
(c) In the event of any involuntary termination of
employment of the Employee by the Company, other than termination for Good
Cause, Employee shall be entitled to receive, in a lump sum within ten business
days after the effective date of such termination, an amount equal to the base
salary to which Employee would have been entitled for the next twelve months,
had his employment continued with the Company. For the purposes of this
agreement, Good Cause shall consist of (i) embezzlement of funds, the
commission of fraud against the Employer, or gross negligence or willful
misconduct in the performance of Employee's duties, (ii) the failure of
Employee to devote substantially his full time to the fulfillment of his duties
with the Company, or (iii) the Employee's conviction of a felony or any act of
fraud or any other act of moral turpitude.
3.2 By Employee. In the event that, within one year after a Change
in Control shall have occurred, Employee shall resign as an employee of the
Company for any reason whatsoever, then (i) the Company shall pay to Employee,
in a lump sum within ten (10) business days after such termination, his
Severance Pay (as hereinafter defined) and (ii) the covenant not to compete of
Employee contained in Section 1.3 hereof shall no longer be applicable.
3.3 Change in Control of the Company. For purposes of this
Agreement, a Change in Control shall be deemed to have occurred
(a) upon the sale by the Company of all or substantially
all of its assets, the consolidation of the Company with another person, or the
merger of the Company with any person as a result of which merger the Company
is not the surviving entity, or
(b) if beneficial ownership of more than 50% ownership of
the common stock of the Company is held by any person or entity. "Beneficial
Ownership" shall have the meaning provided in Rule 13d-3 under the Securities
Exchange Act of 1934.
3.4 Severance Pay. For the purpose of this Agreement, the
Employee's Severance Pay shall equal the lesser of
(a) three times Employee's average compensation as
reported by the Company to the Internal Revenue Service on its form W-2 (or any
successor to such form) for the five calendar year period (or such lesser
period as he has been employed by the Company) which immediately precedes the
date his employment terminates under either Section 3.1 or Section 3.2, or
(b) the maximum payment which the Company can make to
Employee as a result of a Change in Control (i) without the Company's federal
income tax deduction for any portion of such payment being denied as an "excess
parachute payment" under Section 280G of the Internal Revenue Code of 1986, as
amended ("Code") or any successor to such section, and (ii) without Employee
being subject to a federal excise tax on all or any part of such payment under
Code Section 4999 or any successor to such section, where a public accounting
firm reasonably acceptable to Employee shall (at the Company's expense)
calculate such payment, certify to Employee that such payment satisfies the
requirements of this Section 3.4(b) and prepare and sign Employee's federal
income tax return for the year for which such payment is reportable on such
return.
Section 4. Term of Agreement. This Agreement shall commence on the
date first set forth above and shall continue for an initial term of five years
from such date. Thereafter, this Agreement shall automatically be renewed for
successive twelve- month periods, unless terminated by either party upon written
notice at least six months prior to the anniversary date hereof.
Section 5. Miscellaneous.
5.1 Binding Effect.
(a) This Agreement shall inure to the benefit of and
shall be binding upon Employee, his executor, administrator and heirs but may
not be assigned by him. This Agreement shall be binding upon the Company and
its successors and assigns.
(b) (i) Prior to a Change in Control of the Company this
Agreement may not be transferred or assigned by the Company, either by
voluntary action or by operation of law. (ii) After a Change in Control of the
Company, this Agreement may be transferred or assigned by the Company and shall
be binding on the transferee or assignee; provided, however, that Employee
shall be given written notice thereof at least twenty (20) days prior to the
proposed transfer or assignment.
5.2 Invalid Provisions. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
and unenforceable provision were omitted.
5.3 Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
5.4. Entire Agreement. This Agreement is intended by the parties
hereto to be the final expression of their agreement and is the complete and
exclusive statement thereof notwithstanding any representation or statements to
the contrary heretofore made. This Agreement may be modified only by written
instrument signed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
XXXX X. XXXXXXX COMPANY
[CORPORATE SEAL] BY:
Attest:
EMPLOYEE
WITNESS:
