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EXHIBIT 10.17
EMPLOYMENT AGREEMENT
This Agreement (this "Agreement"), is made as of May 1, 1992, by and
between Transition Engineering, Inc., a Minnesota corporation (the "Company"),
and Xxxx X. Xxxx, an individual resident of Hennepin County, Minnesota
("Executive").
WHEREAS, Executive has been an employee of the Company since 1988; and
WHEREAS, the Company wishes to employ Executive to continue to render
services for the Company on the terms and conditions set forth in this
Agreement, and Executive wishes to be retained and employed by the Company on
such terms and conditions.
NOW, THEREFORE, in consideration of the premises and the respective
undertakings of the Company and Executive set forth below, the Company and
Executive agree as follows:
1. Employment. The Company hereby employs Executive, and Executive
accepts such employment and agrees to perform services for the Company, for the
period and upon the other terms and conditions set forth in this Agreement.
2. Term. Unless terminated at an earlier date in accordance with
Section 9 of this Agreement, the term of Executive's employment hereunder shall
commence on the date of this Agreement and continue until December 31, 1994.
Thereafter, the term of this Agreement shall be automatically extended for
successive one (l) year periods unless either party objects to such extension
by written notice to the other party at least 60 days prior to the end of the
initial term or any extension term.
3. Position and Duties.
3.01 Service with Company. During the term of this Agreement,
Executive agrees to perform such reasonable employment duties as the Board of
Directors of the Company shall assign to him from time to time. Executive also
agrees to serve, for any period for which he is elected, as an officer or
director of the Company; provided, however, that Executive shall not be
entitled to any additional compensation for serving as an officer or director.
3.02 Performance of Duties. Executive agrees to serve the Company
faithfully and to be the best of his ability and to devote his full time,
attention and efforts to the business and affairs of the Company during the
term of this
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Agreement. Executive hereby confirms that he is under no contractual
commitments inconsistent with his obligations set forth in this Agreement, and
that during the term of this Agreement, he will not render or perform services
for any other corporation, firm, entity or person which are inconsistent with
the provisions of this Agreement.
4. Compensation.
4.01. Base Salary. As compensation in full for all services to be
rendered by Executive under this Agreement, the Company shall pay to Executive
a base salary of $85,000 per year, which salary shall be paid on a bi-weekly
(every two weeks) basis in accordance with the Company's normal payroll
procedures and policies.
4.02 Incentive Compensation. In addition to the base salary
described in Section 4.01, Executive shall be eligible to participate in any
incentive compensation plans that may be established by the Board of Directors
of the Company from time to time.
4.03 Annual Bonus. If, during each calendar year 1992, 1993 and
1994, (i) the Company achieves the financial targets set forth on Exhibit A
hereto and (ii) Executive continues to be employed by the Company, pursuant to
the terms of this Agreement, during the full calendar year in question, then
Executive shall, for each year in which such targets are met, be entitled to
receive a bonus based on the formula set forth on Exhibit A, but in no event
shall such bonus for any given year exceed 40% of Executive's base salary for
such year. The bonus shall be paid on March 15, in the year following the
achievement of the targets. At least 60 days prior to the end of each calendar
year beginning in 1994, the Company and Executive shall establish a financial
target for such year and, if such target is met, Executive shall likewise
receive a bonus based on a formula to be established by Executive and the
Company. In the event of any disagreement regarding the calculation of the
amount of the bonus for Executive, the determination of the Board of Directors
of the Company shall control.
4.04 Participation in Benefit Plans. Executive shall also be
entitled to participate in all employee benefit plans or programs (including
vacation time) of the Company to the extent that his position, title, tenure,
salary, age, health and other qualifications make him eligible to participate.
The Company does not guarantee the adoption or continuance of any particular
employee benefit plan or program during the term of this Agreement, and
Executive's participation in any such plan or program shall be subject to the
provisions, rules and regulations applicable thereto.
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4.05 Expenses. The Company will pay or reimburse Executive for all
reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement, subject to the presentment of
appropriate receipts in accordance with the Company's normal policies for
expense verification.
5. Confidential Information. Except as permitted or directed by the
Company's Board of Directors, during the term of this Agreement or at any time
thereafter Executive shall not divulge, furnish or make accessible to anyone or
use in any way (other than in the ordinary course of the business of the
Company) any confidential or secret knowledge or information of the Company
that Executive has acquired or become acquainted with or will acquire or become
acquainted with prior to the termination of the period of his employment by the
Company (including employment by the Company or any affiliated companies prior
to the date of this Agreement), whether developed by himself or by others,
concerning any trade secrets, confidential or secret designs, processes,
formulae, plans, devices or material (whether or not patented or patentable)
directly or indirectly useful in any aspect of the business of the Company, any
customer or supplier lists of the Company, any confidential or secret
development or research work of the Company, or any other confidential
information or secret aspects of the business of the Company. Executive
acknowledges that the above-described knowledge or information constitutes a
unique and valuable asset of the Company and represents a substantial
investment of time and expense by the Company and its predecessors, and that
any disclosure or other use of such knowledge or information other than for the
sole benefit of the Company would be wrongful and would cause irreparable harm
to the Company. Both during and after the term of this Agreement, Executive
will refrain from any acts or omissions that would reduce the value of such
knowledge or information to the Company. The foregoing obligations of
confidentiality, however, shall not apply to any knowledge or information that
is now published or that subsequently becomes generally publicly known in the
form in which it was obtained from the Company, other than as a direct or
indirect result of the breach of this Agreement by Executive.
6. Ventures. If, during the term of this Agreement, Executive is
engaged in or associated with the planning or implementing of any project,
program or venture involving the Company and a third party or parties, all
rights in such project, program or venture shall belong to the Company. Except
as formally approved by the Company's Board of Directors, Executive shall not
be entitled to any interest in such project, program or venture or to any
commission, finder's fee or other compensation in connection therewith other
than the salary to be paid to Executive as provided in this Agreement.
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7. Noncompetition Covenant.
7.01 Agreement Not to Compete. Executive agrees that, during the
term of his employment by the Company and for a period of (i) twelve months
after termination of such employment, if such termination is effected pursuant
to subparagraphs (ii), (iii) or (iv) of Section 9(b) hereof or (ii) six months
after termination of such employment, if such termination is effected pursuant
to Section 9(c) hereof, he shall not, directly or indirectly, engage in
competition with the Company in any manner or capacity (e.g., as an advisor,
principal, agent, partner, officer, director, stockholder, employee, member of
any association, or otherwise) in any phase of the business which the Company
is conducting during the term of this Agreement, including the design,
development, manufacture or selling of devices or components related to the
products or services being sold by the Company or solicit from the Company's
customers any business that the Company is capable of performing during the
term of this Agreement or at the time of Executive's termination. In the event
of termination of Executive's employment pursuant to Section 2 hereof or
pursuant to Section 9(b)(i) hereof, Executive's obligations pursuant to this
Section 7.01 shall terminate upon his termination of employment.
7.02 Geographic Extent of Covenant. The obligations of Executive
under Section 7.01 shall apply to any domestic or foreign city in which the
Company
(a) has engaged in business during the term of this Agreement through
production, promotional, sales or marketing activity, or otherwise, or
(b) has otherwise established its goodwill, business reputation, or any
customer or supplier relations.
7.03 Limitation on Covenant. Ownership by Executive, as a passive
investment, of less than five percent (5%) of the outstanding shares of capital
stock of any corporation listed on a national securities exchange or publicly
traded in the over-the-counter market shall not constitute a breach of this
Section 7.
7.04 Indirect Competition. Executive further agrees that, during
the term of this Agreement, he will not, directly or indirectly, assist or
encourage any other person in carrying out, directly or indirectly, any
activity that would be prohibited by the above provisions of this Section 7, if
such activity were carried out by Executive, either directly or indirectly; and
in particular Executive agrees that he will not, directly or indirectly, induce
any employee of the Company to carry out, directly or indirectly, any such
activity.
7.05 Other Employees. Executive further agrees that, both during
the term of this Agreement and for a period of twelve months following
termination of
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his employment, he will not attempt to persuade officers or employees of the
Company to leave the employ of the Company.
8. Patent and Related Matters.
8.01 Disclosure and Assignment. Executive will promptly disclose
in writing to the Company complete information concerning each and every
invention, discovery, improvement, device, design, apparatus, practice,
process, method or product, whether patentable or not, made, developed,
perfected, devised, conceived or first reduced to practice by Executive, either
solely or in collaboration with others, during the term of this agreement, or
within six months thereafter, whether or not during regular working hours,
relating either directly or indirectly to the business, products, practices or
techniques of the Company (hereinafter referred to as "Developments").
Executive, to the extent that he has the legal right to do so, hereby
acknowledges that any and all of said Developments are the property of the
Company and hereby assigns and agrees to assign to the Company any and all of
Executive's right, title and interest in and to any and all of such
Developments.
8.02 Future Developments. As to any future Developments made by
Executive which relate to the business, products or practices of the Company
and which are first conceived or reduced to practice during the term of this
Agreement, or within six months thereafter, but which are claimed for any
reason to belong to an entity or person other than the Company, Executive will
promptly disclose the same in writing to the Company and shall not disclose the
same to others if the Company, within twenty (20) days thereafter, shall claim
ownership of such Developments under the terms of this Agreement. If the
Company makes such claim, Executive agrees that, insofar as the rights (if any)
of Executive are involved, it will be settled by arbitration in accordance with
the rules then obtaining of the American Arbitration Association. The locale
of the arbitration shall be Minneapolis, Minnesota. If the Company makes no
such claim, Executive hereby acknowledges that the Company has made no promise
to receive and hold in confidence any such information disclosed by Executive.
8.03 Limitation on Sections 8.01 and 8.02. The provisions of
Sections 8.01 and 8.02 shall not apply to any Development meeting the following
conditions:
(a) such Development was developed entirely on Executive's own
time; and
(b) such Development was made without the use of any Company
equipment, supplies, facility or trade secret information; and
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(c) such Development does not relate (i) directly to the business
of the Company, or (ii) to the Company's actual or demonstratably
anticipated research or development; and
(d) such Development does not result from any work performed by
Executive for the Company.
8.04 Assistance of Executive. Upon request and without further
compensation therefor, but at no expense to Executive, and whether during the
term of this Agreement or thereafter, Executive will do all lawful acts,
including, but not limited to, the execution of papers and lawful oaths and the
giving of testimony, that in the opinion of the Company, its successors and
assigns, may be necessary or desirable in obtaining, sustaining, reissuing,
extending and enforcing United States and foreign Letters Patent, including,
but not limited to, design patents, on any and all of such Developments, and
for perfecting, affirming and recording the Company's complete ownership and
title thereto, and to cooperate otherwise in all proceedings and matters
relating thereto.
8.05 Records. Executive will keep complete, accurate and authentic
accounts, notes, data and records of all Developments in the manner and form
requested by the Company. Such accounts, notes, data and records shall be the
property of the Company, and, upon its request, Executive will promptly
surrender same to it or, if not previously surrendered upon its request or
otherwise, Executive will surrender the same, and all copies thereof, to the
Company upon the conclusion of his employment.
8.06 Obligations, Restrictions and Limitations. Executive
understands that the Company may enter into agreements or arrangements with
agencies of the United States Government, and that the Company may be subject
to laws and regulations which impose obligations, restrictions and limitations
on it with respect to inventions and patents which may be acquired by it or
which may be conceived or developed by employees, consultants or other agents
rendering services to it. Executive agrees that he shall be bound by all such
obligations, restrictions and limitations applicable to any such invention
conceived or developed by him during the term of this Agreement and shall take
any and all further action which may be required to discharge such obligations
and to comply with such restrictions and limitations.
9. Termination.
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9.01 Grounds for Termination. This Agreement shall terminate prior
to the expiration of the initial term set forth in Section 2 or any extension
thereof in the event that at any time during such initial term or any extension
thereof:
(a) Executive shall die.
(b) The Board of Directors of the Company shall
determine that:
(i) Executive has become disabled,
(ii) Executive has breached this Agreement in any
material respect, which breach is not cured
by Executive or is not capable of being
cured by Executive within thirty (30) days
after written notice of such breach is
delivered to Executive,
(iii) Executive has engaged in willful and
material misconduct, including willful and
material failure to perform his duties as an
officer or employee of the Company and
including illegal or dishonest acts, or
(iv) Executive has breached his duty of loyalty
to the Company.
(c) Executive is otherwise terminated by the Company (the
right to terminate Executive at any time, with or without
cause, is expressly reserved by the Company and
acknowledged by Executive, subject to the Company's
obligations pursuant to Section 10.01 hereof, if
applicable).
Notwithstanding any termination of this Agreement, Executive, in consideration
of his employment hereunder to the date of such termination, shall remain bound
by the provisions of this Agreement which specifically relate to periods,
activities or obligations upon or subsequent to the termination of Executive's
employment.
9.02 "Disability" Defined. The Board of Directors may determine
that Executive has become disabled, for the purpose of this Agreement in the
event that Executive shall fail, because of illness or incapacity, to render
services of the character contemplated by this Agreement over a period of 90
days during any one year period. The existence or nonexistence of grounds for
termination of this Agreement for any reason under Section 9.01(b)(i) will be
determined in good faith
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by the Board of Directors after notice in writing given to Executive at least
thirty (30) days prior to such determination. During such thirty (30) day
period, Executive shall be permitted to make a presentation to the Board of
Directors for its consideration.
9.03 Surrender of Records and Property. Upon termination of his
employment with the Company, Executive shall deliver promptly to the Company
all records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof, which are the
property of the Company or which relate in any way to the business, products,
practices or techniques of the Company, and all other property, trade secrets
and confidential information of the Company, which in any of these cases are in
his possession or under his control.
10. Severance.
10.01 Severance Payments. In the event that the Company terminates
Executive pursuant to paragraph (c) of Section 9 hereof (but not in the event
that Executive terminates his employment or Executive's employment is
terminated pursuant to Section 2 hereof or paragraphs (a) or (b) of Section 9
hereof), the Company shall pay to Executive his base salary, as then in effect,
for a period of six months following the date of termination. Executive
acknowledges and agrees that his sole right to receive compensation pursuant to
this Agreement following any termination shall be limited to the severance
payments described in this Section 10.01.
11. Miscellaneous.
11.01 Governing Law. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of
Minnesota.
11.02 Prior Agreements. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
all prior agreements and understandings, whether oral or written, with respect
to Executive's employment with the Company and any rights to acquire an
interest in the Company, specifically including that certain Transition
Engineering, Inc. Employment Agreement, dated January 29, 1988, that may or may
not have been executed by Executive and the Company, but which Executive and
the Company agree is hereby terminated, void and of no further force or effect.
Except for that certain Stock Option Agreement, of even date herewith, between
the Company and Executive, the parties hereto have made no agreements,
representations or warranties relating to the subject matter of this Agreement
that are not set forth herein.
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11.03 Withholding Taxes. The Company may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes as shall
be required pursuant to any law or governmental regulation or ruling.
11.04 Amendments. No amendment or modification of this Agreement
shall be deemed effective unless made in writing and signed by the parties
hereto.
11.05 No Waiver. No term or condition of this Agreement shall be
deemed to have been waived, nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any
written waiver shall not be deemed a continuing waiver unless specifically
stated, shall operate only as to the specific term or condition waived and
shall not constitute a waiver of such term or condition for the future or as to
any act other than that specifically waived.
11.06 Severability. To the extent any provision of this Agreement
shall be invalid or unenforceable, it shall be considered deleted herefrom and
the remainder of such provision and of this Agreement shall be unaffected and
shall continue in full force and effect. In furtherance and not in limitation
of the foregoing, should the duration or geographical extent of, or business
activities covered by, any provision of this Agreement be in excess of that
which is valid and enforceable under applicable law, then such provision shall
be construed to cover only that duration, extent or activities which may
validly and enforceably be covered. Executive acknowledges the uncertainty of
the law in this respect and expressly stipulates that this Agreement be given
the construction which renders its provisions valid and enforceable to the
maximum extent (not exceeding its express terms) possible under applicable law.
11.07 Assignment. This Agreement shall not be assignable, in whole
or in part, by either party without the written consent of the other party,
except that the Company may, without the consent of Executive, assign its
rights and obligations under this Agreement to (i) any corporation, firm or
other business entity which controls the Company, specifically including
Americable, Inc., presently the sole shareholder of the Company, and North Star
Universal, Inc., presently the sole shareholder of Americable, Inc. and (ii)
any corporation, firm or other business entity with or into which the Company
may merge or consolidate, or to which the Company may sell or transfer all or
substantially all of its assets, or of which 50% or more of the equity
investment and of the voting control is owned, directly or indirectly, by, or
is under common ownership with, the Company. After any such
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assignment by the Company, the Company shall be discharged from all further
liability hereunder and such assignee shall thereafter be deemed to be the
Company for the purposes of all provisions of this Agreement including this
Section 11.
11.08 Notices. All communications and notices provided under this
Agreement or any instrument executed pursuant hereto shall be in writing and
sent by first class certified mail, and if to the Company, addressed and
delivered to it at:
Transition Engineering, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxxxxxxxx, XX 00000
With a copy to:
North Star Universal, Inc.
610 Park National Bank Building
0000 Xxxxxxx Xxxxxxxxx
Xx. Xxxxx Xxxx, Xxxxxxxxx 00000
Attention: President
and if addressed or delivered to Executive at:
Xxxx X. Xxxx
0000 Xxxx Xxxxxx, Xx. 000
Xxxxx, XX 00000
or to any party at such other address as may be designated by such party in a
notice to the other parties. Any notice, if mailed properly addressed, shall
be deemed given on the third business day after mailing postage prepaid.
11.09 Injunctive Relief. Executive agrees that it would be
difficult to compensate the Company fully for damages for any violation of the
provisions of this Agreement, including without limitation the provisions of
Sections 5, 7, 8 and 9.03. Accordingly, Executive specifically agrees that the
Company shall be entitled to temporary and permanent injunctive relief to
enforce the provisions of this Agreement and that such relief may be granted
without the necessity of proving actual damages. This provision with respect
to injunctive relief shall, however, diminish the right of the Company to claim
and recover damages in addition to injunctive relief.
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IN WITNESS WHEREOF, Executive and the Company have executed this Agreement
as of the date set forth in the first paragraph.
TRANSITION ENGINEERING, INC.
By: /s/
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/s/ Xxxx X. Xxxx
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Xxxx X. Xxxx
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EMPLOYMENT AGREEMENT
"EXHIBIT A"
MAXIMUM BONUS AS
PERCENTAGE OF A PERCENTAGE OF
TARGET ACHIEVED BASE SALARY
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Less than 80% 0%
80 - 100% 0 - 10%
101 - 120% 11 - 20%
121 - 130% 21 - 30%
131 - 140% 31 - 40%
Target operating profit for the twelve months ended December 31,
1992 . . . . . . . . . . . . . . $750 000
1993 . . . . . . . . . . . . . . The greater of $900,000 or
125% of the actual operating
profit for 1992.
1994 . . . . . . . . . . . . . . The greater of $1,125,000 or
125% of the actual operating
profit for 1993.
Operating profit is defined as Revenues less all costs except for internal
interest allocations in excess of $30,000 for 1992, federal and state income
taxes and gains on the sale of assets. Internal interest allocations for 1993
and 1994 will be based on market rates and additional capital invested by
Americable Inc. or North Star Universal, Inc. in the Company.
