EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and effective this 1st
day of March, 1998, by and between Xxxxxxx Electric, Co. a corporation with its
principal place of business at 0000 Xxxx Xxxxxx XX, Xxxxxxxxxxx, XX 00000, (the
"Company"), and Xxxx Xxxxx, an individual residing at 0000 Xxxxxxxxxx Xxxxx,
Xxxx Xxxxx, XX 00000 (the "Employee").
RECITALS
The Company desires to employ the Employee, and the Employee desires to be
employed by the Company. In consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Term of Employment. The Term (the "Initial Term") of this Agreement
shall commence on March 1st, 1998 (the "Commencement Date") and, subject to the
further provisions of this Agreement, shall end on the 1st day of March, 2001;
provided, however, this Agreement shall be automatically renewed for successive
one (1) year periods ("Renewal Term") unless, at least ninety (90) days prior to
the expiration of the Initial Term or any Renewal Term, either party gives
written notice to the other party specifically electing to terminate this
Agreement at the end of the Initial Term or any such Renewal Term.
2. Title; Capacity. The Employee shall serve as Vice President of the
Company until he is made President of the Company, which shall occur no later
than March 1, 1999. As Vice President, he shall be subject to the supervision
of, and shall have such authority as is delegated to him by the Board and
President of the Company. As President, he shall be subject to the supervision
of, and shall have such authority as is delegated to him by the Board of the
Company.
The Employee hereby accepts such employment and agrees to undertake
the duties and responsibilities inherent in such position and such other duties
and responsibilities as the Board or its designee shall from time to time
reasonably assign to him. His duties as Vice President will include overall
company operation, including but not limited to responsibility for purchasing,
tele/data division, service coordinator, field superintendents and safety
director. His duties as President will include but not be limited to the overall
direction of the Company, including all day-to-day operational and financial
aspects; he will be responsible for maintaining the corporate relationship with
customers, and the bonding and banking community. The Employee agrees to devote
his entire business time, attention and energies to the business and interests
of the Company (and its affiliates as required by the Company's investments and
the Employee's positions therein) during the Employment Period. The Employee
agrees to abide by the rules, regulations, instructions, personnel practices and
policies of the Company and any changes therein which may be adopted from time
to time. The Employee acknowledges receipt of copies of all such rules and
policies committed to writing as of the date of this Agreement.
3. Compensation and Benefits.
a. Salary. The Company shall pay the employee, in semi-monthly
installments, an annual base salary of $115,000.00 commencing on the
Commencement Date and continuing until the Employee becomes President,
at which time Employee's base salary will be adjusted by mutual
consent of the Company and Employee. Such salary shall be subject to
merit increases on an annual basis as determined by the Board and the
Employee.
b. Fringe Benefits. The Employee shall be entitled to participate in all
profit-sharing and benefit programs that the Company establishes and
makes available to its employees, if any, to the extent that
Employee's position, tenure, salary, age, health and other
qualifications make him eligible to participate.
c. Reimbursement of Expenses. The Company shall reimburse the Employee
for all reasonable travel, entertainment and other expenses incurred
or paid by the Employee in connection with, or related to, the
performance of his duties, responsibilities or services under this
Agreement, upon presentation by the Employee of documentation, expense
statements, vouchers and/or such other supporting information as the
Company may request, provided, however, that the amount available for
such travel, entertainment and other expenses may be fixed in advance
by the Manager. Upon prior approval by the President, the Company
shall reimburse Employee, or directly pay for, dues and membership
fees for industry organizations relevant to Employee's duties.
d. Bonus. The parties agree that a performance-based bonus plan will be
paid to Employee, providing for a percentage of the annual earnings of
the Company. The bonus shall be based on Company Net Income Before
Taxes ("NIBT"), after certain adjustments. The adjustments (add backs)
to Net Income Before Taxes are: (1) interest expense; (2) employee
bonuses; and (3) holding company allocations, administration charges,
goodwill amortization and chairman compensation. Profit sharing and
pension contributions will have been deducted in arriving at NIBT, and
no adjustment will be made for these items. The amount of the bonus
shall be based on the following schedule:
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NIBT as Adjusted Percentage Bonus
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$0 - $2,000,000 3.25%
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$2,000,000 - $4,000,000 4.75%
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Over $4,000,000 5.25%
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Example calculations:
$3,000,000 in NIBT
$2,000,000 x 3.25% = $ 65,000
$1,000,000 X 4.75% = $ 47,500
TOTAL $112,500
Such bonus shall be paid as soon as practicable after the end of each
calendar year but in no event later than March 1 of the year following the
calendar year for which the bonus is issued, commencing with the 1998
calendar year. It is understood and agreed by the Employee that if
Employee's employment is terminated pursuant to Section 4 before the end of
a calendar year, his bonus shall be prorated based on the based upon the
amount of income as defined above earned by the Company through the end of
the month in which the Employee's employment is terminated.
4. Employment Termination. The employment of the Employee by the Company
pursuant to this Agreement shall terminate upon the occurrence of any
of the following:
a. Expiration of the Employment Period in accordance with Section 1;
b. At the election of the Company, for "Cause", immediately upon
written notice by the Company to the Employee. "Cause" for such
termination shall include, but not limited to, the following:
i. Dishonesty of the Employee with respect to the Company;
ii. Willful misfeasance or nonfeasance of duty intended to
injure or having the effect of injuring the reputation,
business or business relationships of the Company or its
respective officers, directors or employees;
iii. Upon a charge by a governmental entity against the Employee
of any crime involving moral turpitude or which could
reflect unfavorably upon the Company or upon the filing of
any civil action involving a charge of embezzlement, theft,
fraud, or other similar act;
iv. Willful or prolonged absence from work by the Employee
(other than by reason of disability due to physical or
mental illness) or failure, neglect or refusal by the
Employee to perform his duties and responsibilities without
the same being corrected upon ten (10) days prior written
notice;
v. Failure of the Employee to meet agreed-upon performance
standards without the same being corrected upon thirty (30)
days prior written notice; or
vi. Breach by the Employee of any of the covenants contained in
this Agreement.
c. Immediately upon the Employee's death or 90 days after inception
of a disability of the Employee that has lasted 90 consecutive
days. As used in this Agreement, the term "disability" shall mean
the inability of the employee, due to a physical or mental
disability, which substantially and materially affects one or
more major life activities, to perform the essential functions of
his job on a permanent basis with or without reasonable
accommodation. A determination of disability shall be made by a
physician mutually agreed upon the Company and the Employee.
d. At the election of the Company or the Employee, with or without
cause upon 90 days written notice by one party to the other.
5. Effect of Termination.
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a. Termination for Cause or at Election of Either Party. In the
event the Employee's employment is terminated for cause pursuant
to Section 4(b) i, ii, iii, iv, or vi, the Company shall pay to
the Employee the compensation and benefits otherwise payable to
him under Section 3 through the last day of his actual employment
by the Company. In the event the Employee's employment is
terminated at the election of the Company pursuant to Section
4(d) or Section 4(b)v, or at the election of the Employee
pursuant to Section 4(d), the Company shall pay to the Employee
the compensation and benefits otherwise payable to him under
Section 3 for twelve months following the last day of his actual
employment by the Company excluding compensation as defined by
Section 3(d) and any profit sharing compensation.
b. Termination for Death or Disability. If the Employee's employment
is terminated by death or because of disability pursuant to
Section 4(c), the Company shall pay to the estate of the Employee
or to the Employee, as the case may be, the compensation which
would otherwise be payable to the Employee up to the end of the
month in which the termination of his employment because of death
or disability occurs.
c. Survival. The provisions of Sections 6, 7, 8, 11, 13, 14 and 18
shall survive the termination of this Agreement.
6. Non-Compete.
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a. During the Employment Period and for a period of eighteen (18)
months after the termination or expiration thereof, the Employee
will not directly or indirectly, in the territory comprised by
the continental United States (except for subsection (1), below,
which shall be limited to the State of Minnesota):
(1) as an individual proprietor, partner, stockholder, officer,
employee, director, joint venturer, investor, lender, or in
any other capacity whatsoever (other than as the holder of
not more than five percent (5%) of the total outstanding
stock of, a publicly held company), engage in the business
within the State of Minnesota of electrical contracting and
services as defined by standard industry definitions or
(2) recruit, solicit or induce, or attempt to induce employee or
employees of the Company to terminate their employment with,
or otherwise cease their relationship with, the Company; or
(3) solicit, divert or take away, or attempt to divert or to
take away, the business or patronage of any of the clients,
customers or accounts of the Company, or prospective
clients, customers or accounts, of the Company which were
contacted, solicited or served by the Employee while
employed by the Company.
b. If any restriction set forth in this Section 6 is found by any
court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range
of activities or in too broad a geographic area, it shall be
interpreted to extend only over the maximum period of time, range
of activities or geographic area as to which it may be
enforceable.
c. The restrictions contained in this Section 6 are necessary for
the protection of the business and goodwill of the Company and
are considered by the Employee to be reasonable for such purpose.
The Employee agrees that any breach of this Section 6 will cause
the Company substantial damage and therefore, in the event of any
such breach, in addition to such other remedies which may be
available, the Company shall have the right to seek specific
performance and injunctive relief. The prevailing party in a
legal proceeding to remedy a breach under this Agreement shall be
entitled to receive its reasonable attorney's fees, expert
witness fees, and out-of-pocket costs incurred in connection with
such proceeding, in addition to any other relief it may be
granted.
d. As part of the consideration to Employee for undertaking the
restrictions contained in this Section 6, the Company shall pay
to the Employee upon
execution of this Agreement the sum of $100,000.00, and the sum
of $75,000.00 on March 2nd, 1999, and the sum of $50,000 on March
2nd, 2000. Any sums due and remaining shall be paid to Employee's
estate within 21 days of Employee's death. Termination of the
Employee's employment with the Company for any reason shall not
affect the payment of any amounts under this Section 6.d., except
as provided for in Section 8.
7. Proprietary Information and Developments
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a. Proprietary Information.
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i. Employee agrees that all information and know-how, whether or not
in writing, of a private, secret or confidential nature
concerning the Company's business or financial affairs
(collectively, "Proprietary Information") is and shall be the
exclusive property of the Company. By way of illustration, but
not limitation, Proprietary Information may include inventions,
products, processes, methods, techniques, formulas, compositions,
compounds, projects, developments, plans, research data, clinical
data, financial data, personnel data, computer programs, and
customer and supplier lists. Employee will not disclose any
Proprietary Information to others outside the Company or use the
same for any unauthorized purposes without written approval by an
officer of the Company, either during or after his employment,
unless and until such Proprietary Information has become public
knowledge without fault by the Employee.
ii. Employee agrees that all files, letters, memoranda, reports,
records, data, sketches, drawings, laboratory notebooks, program
listings, or other written, photographic, or other tangible
material containing Proprietary Information, whether created by
the Employee or others, which shall come into his custody or
possession, shall be and are the exclusive property of the
Company to be used by the Employee only in the performance of his
duties for the Company.
iii. Employee agrees that his obligation not to disclose or use
information, know-how and records of the types set forth in
paragraphs (a) and (b) above, also extends to such types of
information, know-how, records and tangible property of customers
of the Company or suppliers to the Company or other third parties
who may have disclosed or entrusted the same to the Company or to
the Employee in the course of the Company's business.
b. Developments.
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i. Employee will make full and prompt disclosure to the Company of
all inventions, improvements, discoveries, methods, developments,
software, and works of authorship, whether patentable or not,
which are created, made, conceived or reduced to practice by the
Employee or under his direction or jointly with others during his
employment by the Company, whether or not during normal working
hours or on the premises of the Company (all of which are
collectively referred to in this Agreement as "Developments").
ii. Employee agrees to assign and does hereby assign to the Company
(or any person or entity designated by the Company) all his
right, title and interest in and to all Developments and all
related patents, patent applications, copyrights and copyright
applications. However, this Section 7.2(b) shall not apply to
Developments which do not relate to the present or planned
business or research and development of the Company and which are
made and conceived by the Employee not during normal working
hours, not on the Company's premises and not using the Company's
tools, devices, equipment or Proprietary Information.
iii. Employee agrees to cooperate fully with the Company, both during
and after his employment with the Company, with respect to the
procurement, maintenance and enforcement of copyrights and
patents (both in the United States and foreign countries)
relating to Developments. Employee shall sign all papers,
including, without limitation, copyright applications, patent
applications, declarations, oaths, formal assignments, assignment
of proprietary rights, and powers of attorney, which the Company
may deem necessary or desirable in order to protect its rights
and interests in any Development.
d. Other Agreements. Employee hereby represents that he is not bound
by the terms of any agreement with any previous employer or other
party to refrain from using or disclosing any trade secret or
confidential or proprietary information in the course of his
employment with the Company or to refrain from competing,
directly or indirectly, with the business of such previous
employer or any other party. Employee further represents that his
performance of all the terms of this Agreement and as an employee
of the Company does not and will not breach any agreement to keep
in confidence proprietary information, knowledge or data acquired
by him in confidence or in trust prior to his employment with the
Company.
e. Company's Right to Notify Subsequent Employers. The Company may
do all permissible things, and take all permissible action,
necessary or advisable, in the Company's discretion, to protect
its rights under this Section 7, including without limitation
notifying any subsequent employer
of the Employee of the existence of (and furnishing to any such
employer) the provisions of this Agreement.
8. Liquidated Damages. Insofar as any damages sustained by the Company in
the case of a breach by the Employee of the provisions of this
Agreement are difficult to calculate, the parties hereto agree that if
the Employee breaches or violates the terms of Sections 6 or 7 of this
Agreement, the Company shall be entitled, in addition to any other
right and remedy available to it, to retain as liquidated damages any
sums owed but not paid by the Company to the Employee.
9. Notices. All notices required or permitted under this Agreement shall
be in writing and shall be deemed effective upon personal delivery or
upon deposit in the United States Post Office, by registered or
certified mail, postage prepaid, addressed to the other party at the
address shown above, or at such other address or addresses as either
party shall designate to the other in accordance with this Section 9.
10. Pronouns. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular forms of nouns and pronouns shall
include the plural, and vice versa.
11. Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and
understandings, whether written or oral, relating to the subject
matter of this Agreement.
12. Amendment. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee.
13. Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of Minnesota,
without giving effect to that State's conflict of laws provisions.
14. Choice of Venue. All actions or proceedings with respect to this
Agreement shall be instituted only in any state or federal court
sitting in Hennepin County, Minnesota, and by execution and delivery
of this Agreement, the parties irrevocably and unconditionally subject
to the jurisdiction (both subject matter and personal) of each such
court and irrevocably and unconditionally waive: (a) any objection
that the parties might now or hereafter have to the venue of any of
such court; and (b) any claim that any action or proceeding brought in
any such court has been brought in an inconvenient forum.
15. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of both parties and their respective successors and
assigns, including any corporation with which or into which the
Company may be merged or which may
succeed to its assets or business, provided, however, that the
obligations of the Employee are personal and shall not be assigned by
him.
16. Waiver. No delay or omission by the Company in exercising any right
under this Agreement shall operate as a waiver of that or any other
right. A waiver or consent given by the Company on any one occasion
shall be effective only in that instance and shall not be construed as
a bar or waiver of any right on any other occasion.
17. Captions and Headings. The captions of the sections of this Agreement
are for convenience of reference only and in no way define, limit or
affect the scope or substance of any section of this Agreement.
18. Severability. In case any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable, the validity, legality
and enforceability of the remaining provisions shall in no way be
affected or impaired thereby.
19. Counterparts. This Agreement may be executed in a number of
counterparts and all of such counterparts executed by the Company or
the Employee, shall constitute one and the same agreement, and it
shall not be necessary for all parties to execute the same counterpart
hereof.
20. Facsimile Signatures. The parties hereby agree that, for purposes of
the execution of this Agreement, facsimile signatures shall constitute
original signatures.
21. Incorporation by Reference. The preamble and recitals to this
Agreement are hereby incorporated by reference and made a part hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
____________________________
____________________________
Xxxx Xxxxx
Chairman of the Board
EMPLOYEE:
____________________________
Xxxx Xxxxx
