EXHIBIT 10.7
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement"), dated as of the 24
day of March, 1997, by and between the individual named on the signature page
hereof, having the address set forth on such signature page ("Executive"), and
SAC TECHNOLOGIES, INC., a Minnesota corporation (the "Company"), with offices at
4444 West 76th Street, Suite 600, Edina, Minnesota 55435.
W I T N E S E T H:
The Company wishes to employ Executive, and Executive desires
to be employed by the Company, all on the terms, and subject to the conditions,
hereinafter set forth.
Contemporaneously herewith, Executive has executed and
delivered to the Company a Non-Competition Letter (the "Non-Competition
Agreement"), a copy of which is attached hereto as Exhibit A.
NOW, THEREFORE, in consideration of the premises, of the
mutual covenants and agreements hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Employment; Term. (a) Subject to the provisions of
paragraph 3, the Company hereby employs Executive, and Executive hereby accepts
such employment, and agrees to serve the Company, upon the terms and conditions
hereinafter set forth, for a term commencing on the date hereof and (unless
sooner terminated as hereinafter provided) expiring on March 24, 2002 (such term
of employment being hereinafter referred to as the "term of full time
employment"). During the term of full time employment, Executive shall devote
his full time and attention and best efforts to the business and affairs of the
Company and will faithfully and diligently perform, in a competent and
professional manner and to the best of his ability, all of his duties and
responsibilities hereunder.
(b) Position; Authority. During the term of full time
employment, Executive shall hold the title and office of, and serve in the
position of, the office of the Company set forth on the signature page hereof.
Subject to the provisions of the Company's Restated Articles of Incorporation
and By-Laws, and to the ultimate control of the Board of Directors of the
Company, to whom he shall report, Executive shall generally have the duties,
responsibilities and authority appropriate to his office and title, as
understood and best practiced, generally, in the business community in
Minnesota, as well as those duties and responsibilities of an executive nature
as may from time to time be assigned to him by the Board of Directors of the
Company. More specifically, Executive will have authority, with consultation
from other senior executives and the Board of Directors, regarding business
decisions in the ordinary course of business regarding marketing and sales,
policy, finance, business development, personnel, and administration with an
ultimate objective of increasing the value of the Company. Notwithstanding the
foregoing, it is understood and agreed that Executive's initial focus will be
marketing and sales.
(c) Conduct. During the term of this Agreement, Executive will
not conduct himself in any manner which would tend to harm the reputation or
goodwill of the Company in the biometrics industry or the financial world.
(d) Place of Employment. Except with his prior consent,
Executive's normal work location will not be more than thirty (30) miles from
the Company's present headquarters in Edina, Minnesota; provided that Executive
shall undertake all travel required in connection with the performance of his
duties hereunder.
2. Compensation. (a) Salary. During the term of this
Agreement, the Company shall pay Executive the initial salary set forth on the
signature page hereof in semi- monthly installments, subject to all applicable
withholdings (the "Base Salary").
(b) Bonus Plan. During the term of full time employment,
Executive shall be entitled to participate in the following Bonus Plan:
(i) A guaranteed bonus upon Executive's completion of
one (1) year of service hereunder equal to twenty-five (25%)
percent of Base Salary.
(ii) A bonus equal to sixty (60%) percent of Base
Salary upon Executive's completion of any year of service
hereunder in which the Company's gross revenue projected
budget for the fiscal year-end immediately preceding is met.
It is agreed that the Company's first fiscal year (ending
December 31, 1997) gross revenue projections is $5.6 million.
(iii) A bonus equal to one hundred (100%) percent of
Base Salary upon Executive's completion of any year of service
hereunder in which the Company's gross revenue projected
budget for the fiscal year-end immediately preceding are
exceeded by forty (40%) percent or more.
(iv) The Company and Executive shall meet every six
months during the term of full-time employment to determine
whether the bonus incentive plan or the budgeted revenue
projections should be adjusted.
Bonuses will be accrued and paid out on a monthly pro-rated basis if Executive's
employment is terminated.
(c) Expenses. In addition to the compensation provided above,
the Company shall reimburse Executive for all reasonable and necessary vouchered
business and entertainment expenses incurred by him during the term of this
Agreement, in the performance of his duties and responsibilities under this
Agreement in accordance with the Company's policies as from time to time in
effect. Executive shall submit appropriate substantiation of such expenses
monthly in arrears.
(d) Perquisites and Benefits. During the term of full time
employment, Executive shall be entitled to continue to participate in such
benefit programs (including any annually administered stock incentive program)
and receive such perquisites as may from time to time be established by the
Company for its executives. In addition:
(i) The Company will reimburse to Executive in full
all premiums paid by Executive for medical benefit coverage
for Executive's family until such time as Executive's family
has established residency in Minnesota, and will further
absorb the full cost of Executive's COBRA coverage (estimated
at $403.00 per month) until Executive and his family have
established residency in Minnesota and Executive and his
family can be covered under the Blue Cross PPO health plan or
such other plan as the Company may from time to time provide
for its executives;
(ii) The Company will provide a maximum $40,000
moving allowance to assist in covering Executive's costs in
selling his existing home, transporting his family and
possessions, and closing costs incurred in the purchase of a
new home. This allowance will be paid against substantiated
incurred costs, and Executive agrees to mitigate the expenses
incurred by him in these matters to the best of his ability;
(iii) The Company will provide Executive with an
apartment mutually agreeable to the Company and to Executive
until such time, not in excess of twelve (12) months, as a new
home can be purchased by Executive;
(iv) The Company will pay mileage to Executive at the
approved Internal Revenue Service rate for automobile travel
between Executive's present Iowa residence and the Company's
Minnesota headquarters until Executive's family is relocated
to Minnesota for up to twelve (12) months;
(v) The Company agrees to purchase a One Million
Dollar key-man life insurance policy on Executive of which the
Company shall be the owner and fifty (50%) percent
beneficiary, and Executive's beneficiaries shall be a fifty
(50%) percent beneficiary;
(vi) The Company will provide Executive a monthly car
allowance of $300, and a cellular phone with pager and voice
mail capability; and
(vii) The Company will provide Executive four weeks
of vacation annually, to be taken at such times as will
accommodate the reasonable needs of the Company, and which may
not be accumulated from year to year.
3. Termination. (a) The Executive's term of full time
employment hereunder may be terminated immediately for "cause" (as hereinafter
defined), and thereafter the Company shall have no obligation to Executive with
respect to a Continuation of Executive's Base Salary or other benefits or
perquisites from and after the date of termination. As used herein, "cause"
shall mean and include only:
(i) Executive's repeated failure or refusal to
perform or observe, in any material respect, his duties,
responsibilities or obligations as provided herein, if such
breach is not cured, if curable, within ten days after written
notice thereof to Executive by the Company;
(ii) Any dishonesty affecting the Company, or any
customer or employee of any of the foregoing;
(iii) Excessive use of alcohol, or use of illegal
drugs, interfering with performance of Executive's obligations
under this Agreement, continuing after warning;
(iv) Conviction of a felony or of any crime involving
misrepresentation, moral turpitude or fraud; or
(v) Commission by Executive of any willful or
intentional act which could reasonably be expected to
materially injure the reputation, business or business
relationships of the Company and/or Executive, if such breach
is not cured, if curable, within ten days after written notice
thereof to Executive by the Company.
(b) The following acts of the Company shall constitute
constructive termination giving rise to the following rights of Executive: (i)
an adverse change in Executive's status or position in the Company such as a
diminution of Executive's duties, responsibilities or authority without
Executive's consent; (ii) a reduction by the Company in Executive's Base Salary
for other than austerity reasons; (iii) the taking of any action by the Company
which would materially adversely affect the physical conditions existing prior
to the date of this Agreement in or under which Executive performs his duties
hereunder; (iv) the failure of the Company to comply with any material provision
of this Agreement other than for austerity reasons which has not been cured
within ten (10) calendar days after notice of such noncompliance has been given
by Executive to the Company; or (v) the occurrence of (i)-(iv) or a furlough or
termination as a result of the Company's being acquired or merged by or into
another entity. In the event of constructive termination as a result of
(i)-(iv), Executive shall be entitled to have his Base Salary continued for a
period of one (1) year (two (2) years in the event of constructive termination
as a result of (v)), and, the Company will bear the entire expense of medical
benefit coverage for Executive and his family for up to a continued period of
one (1) year (this obligation to terminate upon Executive's re-employment), all
unused prorated vacation will be paid, and such fee as may be incurred by
Executive for outplacement services by such service company as shall be mutually
selected by the Company and the Executive, shall be paid by the Company up to a
maximum of $10,000. Executive will seek to mitigate the expense to the Company
of such outplacement services.
(c) This Agreement shall terminate immediately upon the death
or disability of Executive. As used herein the term "disability" shall mean the
inability of Executive to perform, in all material respects, his duties and
responsibilities contemplated under this Agreement for a period of more than 365
calendar days, whether or not continuous, during the term hereof, due to
physical or mental incapacity or impairment. A determination of disability shall
be made by a physician satisfactory to both the Executive and the Board of
Directors of the Company; provided that if Executive and the Board of Directors
of the Company cannot agree as to a physician, then each shall select a
physician and these two together shall select a third physician, whose sole
determination as to disability shall be binding on all parties.
(d) Executive may voluntarily terminate Executive's employment
hereunder at any time upon ninety (90) days prior written notice. During such
notice period, Executive shall continue his full time duties hereunder only at
the request of the Company. In the event Executive voluntarily terminates
Executive's employment hereunder, the Company shall have no obligation to
Executive with respect to a continuation of Executive's Base Salary or other
benefits or perquisites from and after the date of termination, and in addition
Executive shall be obligated to reimburse to the Company the amount of $3,333
per month (or portion thereof) for each month less than twelve months that
Executive is employed by the Company.
(e) The Company may involuntarily terminate Executive's
employment hereunder without "cause" at any time upon ninety (90) days prior
written notice. During such notice period, Executive shall continue his full
time duties hereunder only at the request of the Company. In the event of
involuntary termination without cause, the Company shall be obligated to pay
Executive the same salary continuation and benefit continuation as Executive
would receive were he constructively terminated under subparagraphs
3(b)(i)-(iv).
(f) The termination by the Company of this Agreement shall be
without prejudice to any claim which the Company or Executive may have, at law
or in equity, arising out of or in connection with the events giving rise to
such termination.
4. Confidential Information.
(a) Definition. As used herein the term "Confidential
Information" shall mean and include any and all confidential, proprietary,
secret or non-public information related in any way to the business or
operations, present or future, of the Company, or any customer (as such term is
defined in the Non-Competition Agreement) of the Company, which is now, or in
the future shall become, known to Executive as a result of his relationship with
the Company; provided, that Executive's commitment hereunder with respect to
Confidential Information shall not extend to any part of such Confidential
Information which:
(i) was known by Executive prior to its disclosure to
him, through no wrongful act of any person;
(ii) was known or available to the public prior to
its disclosure to Executive;
(iii) becomes known or available to the public
subsequent to disclosure to Executive through no wrongful act
of any person; or
(iv) was disclosed to Executive at any time by a
third party having a bona fide right to disclose such
information to Executive.
(b) Confidential Information to be kept in Confidence.
Executive acknowledges that the Confidential Information was acquired and/or
developed by the owner thereof at great expense, is a special, valuable and
unique asset of the owner thereof, and represents the sole and exclusive
property of the owner thereof. Executive has obtained and in the course of his
employment with the Company will continue to obtain, Confidential Information
and personal knowledge of and influence over customers of the Company. Executive
further acknowledges that, under appropriate circumstances, his rendering of
services to the Company's customers will necessarily require his knowledge,
development and use of certain Confidential Information of the Company, and his
disclosure to customers and others requiring knowledge thereof in the proper
performance of their duties for the Company or customers, of certain
Confidential Information of the Company (such as, without limitation, marketing
plans, budgets, designs, customer preferences and policies, and identity of
appropriate personnel of customers with sufficient authority to influence a
shift in suppliers). Executive acknowledges that any wrongful use or disclosure
of any Confidential Information would greatly damage the owner thereof, causing
it irreparable injury. Executive covenants and agrees that, at all times during
the term of this Agreement and for a period of three (3) years thereafter, he
shall not, directly or indirectly, publish, divulge or disclose, in whole or in
part, or suffer the use by any third party, for his own benefit or the benefit
of any person, any Confidential Information, other than:
(i) in the due course of performing his duties on
behalf of the Company, but then only to officers, employees or
others acting on behalf of the Company, or any customer, where
the duties of such person require such disclosure;
(ii) upon the prior express written instructions of
the Board of Directors of the Company; or
(iii) as may be required by law;
provided, that in the event that any Confidential Information shall be subject
to a restriction extending beyond the expiration of such three (3) year period,
Executive shall abide by such restriction during said extended period. Executive
shall at all times abide by the Company's policies and regulations with respect
to the protection of its Confidential Information, as in effect from time to
time.
(c) Materials; Return at Termination. Executive acknowledges
and agrees that all copies of all memoranda, documents, data, records, notes and
other written information in his possession or under his control, which contain
or pertain to any Confidential Information, shall at all times be the sole and
exclusive property of the Company. In the event Executive's employment
terminates for any reason, Executive shall promptly deliver to the Company all
copies of all such materials in his possession or under his control.
(d) Confidential Information of Others. Executive will not
inappropriately use, disclose to the Company or induce the Company to use any
confidential, proprietary, secret or non-public information or documents in his
possession belonging to any third party (other than customers). Executive
represents and warrants that his employment with the Company will not require
him to violate any obligation to or confidence with another.
(e) Specific Performance; Injunctive Relief. The parties
recognize, acknowledge and agree that, if Executive breaches any of the
foregoing provisions of this Section 4, the Company will suffer irreparable
injury, and money damages will not provide an adequate remedy to the Company.
Accordingly, Executive agrees that, in any such event, the Company shall be
entitled to have the provisions of this Agreement specifically enforced by any
court having equity jurisdiction, without being required to post a bond or other
security and without having to prove the inadequacy of the available remedies at
law. In addition, the Company shall be entitled to avail itself of all such
other actions and remedies available to it under law or in equity and shall be
entitled to such damages as it sustains by reason of such breach.
5. Intellectual Property. (a) During the term of this
Agreement, Executive will disclose to the Company all ideas, inventions and
business plans developed by him which relate directly or indirectly to the
Company's business, including without limitation any process, operation, product
or improvement which may be patentable or copyrightable. Executive agrees that
all of the foregoing will be the sole and exclusive property of the Company and
that he will at the Company's request and cost do whatever is necessary to
secure the rights thereto, by patent, copyright or otherwise, for the benefit of
the Company. Executive, to the extent that Executive has the legal right to do
so, 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 the foregoing.
(b) It is further agreed and the Executive is hereby notified
that the agreement in subparagraph (a) above does not apply to any such ideas,
inventions and business plans for which no equipment, supplies, facility or
confidential information of the Company was used and which was developed
entirely on the Executive's own time, and
(i) which do not relate (aa) directly to the business
of the Company, or (bb) to the Company's actual or
demonstrably anticipated research and development, or
(ii) which do not result from any work performed by
the Executive for the Company.
6. Life Insurance. Executive agrees that the Company shall
have the right to obtain life insurance on Executive's life in addition to the
life insurance specified in subparagraph 2(d)(v), at the Company's sole expense
and with the Company as the sole beneficiary thereof. Executive shall (a)
cooperate fully with the Company in obtaining such life insurance, (b) sign any
necessary consents, applications and other related forms or documents and (c)
take any required medical examinations.
7. Notices.
All notices hereunder shall be given in writing by personal
delivery by registered or certified mail, return receipt requested, postage
prepaid or by hand delivery addressed to the parties at the following respective
addresses or at such other address as may be designated in writing by either
party to the other in the manner set forth herein:
If to the Company:
SAC Technologies, Inc.
4444 West 76th Street
Suite 600
Edina, Minnesota 55435
in each case with a copy to:
Doherty Rumble & Butler Professional Association
3500 Fifth Street Towers
150 South Fifth Street
St. Paul, Minnesota 55402
Attention: Stephen E. Smith, Esq.
If to Executive:
To his address as set forth on
the signature page hereof
Notices which are hand delivered shall be effective on the date of delivery.
Notices delivered by mail or otherwise as aforesaid shall be deemed effectively
given upon the third calendar day subsequent to the postmark date thereof.
8. Miscellaneous. (a) The failure of either party at any time
to require performance by the other party of any provision hereunder shall in no
way affect the right of that party thereafter to enforce the same, nor shall it
affect any other party's right to enforce the same, or to enforce any of the
other provisions in this Agreement; nor shall the waiver by either party of the
breach of any provision hereof be taken or held to be a waiver of any subsequent
breach of such provision or as a waiver of the provision itself.
(b) This Agreement is a personal contract calling for the
provision of unique services by Executive, and Executive's rights and
obligations hereunder may not be sold, transferred, assigned, pledged or
hypothecated by Executive. In the event of any attempted assignment or transfer
of rights hereunder by Executive contrary to the provisions hereof, the Company
shall have no further liability for payments hereunder. The rights and
obligations of the Company hereunder shall be binding upon and run in favor of
the successors and assigns of the Company.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement.
(d) This Agreement has been made, shall be interpreted and
enforced in accordance with, and shall be governed in all respects by, the laws
of the State of Minnesota.
(e) It is not in the best interest of either of the parties to
become engaged in litigation in the event a dispute between them should arise.
Accordingly, if any dispute between the parties arises out of or in connection
with this Agreement ( including any questions of fraud or questions concerning
the validity or enforceability of this Agreement or any of the rights and
obligations herein described), such dispute will immediately go before a single
professional mediator for quick resolution. The parties shall cooperate in
determining the process of mediation, the selection of the mediator and the
timing of the process and of the determination. In the event such professional
mediator for any reason (including the non-cooperation of either party), has not
rendered his or her determination of the disputed issue within sixty days of the
date upon which one party notifies the other in writing that he or it wishes to
submit a dispute to mediation, then the disputed issue will be determined by
binding arbitration in Minneapolis, Minnesota pursuant to the Rules then in
effect of the American Arbitration Association. Any award rendered shall be
final and conclusive upon the parties and a judgment thereon may be entered in a
Court having competent jurisdiction. The party submitting such dispute shall
request and the American Arbitration Association shall (i) appoint a neutral
arbitrator who is knowledgeable in the area of employment law; (ii) direct the
arbitrator to follow substantive rules of law; and (iii) require the award to be
accompanied by findings of fact and a statement of the reasons for the decision,
all of which shall issue within ninety days of the appointment of the
arbitrator. Neither party shall be represented by legal counsel at any mediation
or arbitration proceeding. The Company will bear all costs incurred with respect
to the foregoing mediation or arbitration processes up to and including the
amount of $10,000. All costs and expenses incurred by either party in excess of
said amount shall be paid in accordance with the award of same by the arbitrator
or mediator appointed.
(f) This Agreement (which includes the Exhibit hereto) sets
forth the entire understanding between the parties as to the subject matter of
this Agreement and merges and supersedes all prior agreements (including without
limitation any prior Employment Agreement to which Company and Executive are
parties, which the parties hereby expressly agree shall be deemed terminated
without obligation of any party thereto upon the effectiveness of this
Agreement), commitments, representations, writings and discussions between the
parties with respect to that subject matter. This Agreement may be terminated,
altered, modified or changed only by a written instrument signed by both parties
hereto.
(g) The provisions of this Agreement which by their terms call
for performance subsequent to termination of this Agreement or termination of
Executive's employment hereunder (including without limitation the provisions of
paragraphs 4 and 5 hereof), shall survive such termination.
(h) The Executive represents and warrants that he is not party
to or subject to any agreement, covenant, understanding, or under any
obligation, contractual or otherwise, to any firm, person or corporation, which
would prevent his employment by the Company or adversely affect his ability to
serve as an employee of the Company, as herein contemplated.
IN WITNESS WHEREOF, Executive and the Company have executed
this Agreement as of the date first above written.
Attest: SAC TECHNOLOGIES, INC.
/S/ Richard T. Fiskum By:/s/ Barry M. Wendt
___________________________ ______________________________
Authorized Signature
Witness: EXECUTIVE:
/s/Timothy N. Tracey
___________________________ ______________________________
Name: Timothy N. Tracey
Address: 7610 Princeton Drive, NE
Cedar Rapids, Iowa 52402
Office(s): Chief Operating Officer
Initial Salary: $167,000
NON-COMPETITION LETTER
March 27, 1997
SAC Technologies, Inc.
4444 West 76th Street
Suite 600
Edina, Minnesota 55435
Dear Sirs:
Contemporaneously herewith, I am entering into an Employment Agreement
with SAC Technologies, Inc., a Minnesota corporation. As used herein, the term
the "Company" shall mean and include SAC Technologies, Inc., together with all
of its parents, subsidiaries and affiliated companies from time to time.
I execute this letter in consideration of the Company's entering into a
long term Employment Agreement with me, and also to induce third party investors
to invest in the Company, a corporation in which I am a major shareholder.
Accordingly, in consideration of and reliance upon the foregoing:
1. I hereby covenant and agree that, during my term of employment with
the Company and thereafter during the "Non-Competition Period," I will not,
directly or indirectly:
(a) attempt, in any manner, to solicit from any customer (such
term as used throughout this letter agreement having the meaning
ascribed to it below) of the Company (except on behalf of the Company),
business of the type performed by the Company or to persuade any
customer of the Company to cease to do business or to reduce the amount
of business which any customer has customarily done or contemplates
doing with the Company, whether or not the relationship between the
Company and such customer was originally established in whole or in
part through my efforts; or
(b) employ or attempt to employ or assist anyone else to
employ any person who is then or at any time during the preceding year
was in the Company's employ; or
(c) render any services of the type rendered by the Company to
its customers to or for any customer of the Company, unless such
services are rendered as an employee or consultant of the Company; or
(d) control, manage, operate, be employed or engaged by, or
otherwise participate or engage in business as, or own any interest in,
or be connected in any manner with, directly or indirectly, any Entity
(as defined below), whether as an individual proprietor, partner,
shareholder, joint venturer, officer, director, consultant, finder,
broker, employee, trustee, or in any other manner whatsoever, except
for the Company, if such Entity is engaged in any business in the
United States of the type and character engaged in and competitive with
that conducted by the Company; provided, however, that nothing
contained in this clause shall be deemed to prohibit me from owning
less than 2% of the shares of a publicly held corporation engaged in
any such business.
As used in this letter agreement, the term (a) "Entity" shall mean an individual
proprietorship, partnership, corporation, joint venture, trust or any other form
of business entity; and (b) "customer" shall mean and include (1) anyone who is
then a customer of the Company, (2) anyone who was a customer at any time during
the one year period immediately preceding the date of termination of my
employment with the Company, and (3) any prospective customer to whom the
Company had made a presentation (or similar offering of services) within the one
year period immediately preceding the date of such termination.
2. I acknowledge and agree (i) that the services rendered and to be
rendered by me for the Company are of a special, unique, extraordinary and
intellectual character, (ii) that I have and will continue to develop a personal
acquaintanceship and relationship with the Company's customers, as well as an
intimate knowledge of those customers' affairs and requirements, which may
constitute the Company's primary or only contact with such customers, (iii) that
the Company's relationships with established customers are likely to be placed
in my hands and (iv) that my position with the Company places me in a position
of utmost confidence and trust with respect to the customers and employees of
the Company. I also acknowledge that the customers serviced by the Company are
located throughout the United States and accordingly, it is reasonable that the
restrictive covenants set forth above are not limited by specific geographic
area. Consequently, I agree that it is fair, reasonable and necessary for the
protection of the business, operations, assets and reputation of the Company
that I make the covenants contained herein.
3. I acknowledge and agree that the covenants made by me above are of
the essence of this letter agreement and in the event of breach or contemplated
breach of any of the covenants and agreements herein contained, the Company
shall in addition to all other remedies available at law or in equity have the
right to both temporary and permanent injunctions and damages with respect to
any such actual or contemplated breach.
4. Each of the covenants and agreements set forth in this letter
agreement are separate and independent covenants, each of which has been
separately bargained for. The provisions of this covenant shall be enforced to
the fullest extent permissible. Should the whole or any part or provision of any
such separate covenants be held or declared invalid, such invalidity shall not
in any way affect the validity of any other covenant or agreement herein or of
any part or provision of the same covenant not also held or declared invalid. If
any covenant shall be found to be invalid but would be valid if some part
thereof were deleted or the period or area of application reduced, then such
covenant shall apply with such minimum modification as may be necessary to make
it valid and effective.
5. I hereby acknowledge receipt of fair and adequate consideration for
my covenants made and given herein, and agree that the "Non-Competition Period"
for purposes hereof, is defined as:
(a) In the event of the constructive termination of my
employment with the Company by the Company without "cause," the period
ending on the date of such constructive termination;
(b) In the event of the termination of my employment with the
Company by the Company with "cause," the period commencing on the
effective date of my termination and ending on the third December 31
next following the date of my termination; and
(c) In the event of the termination of my employment with the
Company by me voluntarily, the period commencing on the effective date
of my termination and ending on the second anniversary thereof.
(d) In the event of my "constructive termination" as defined
in my Employment Agreement, this non-compete letter shall be null,
void, and of no further effect.
6. Nothing contained in this letter agreement shall limit my ability to
deal with the Company's customers in connection with business activities
unrelated to, and non-competitive with, the business activities of the Company
from and after the date hereof.
7. This letter agreement may be assigned either in whole or in part and
without the consent of the undersigned by the Company to any affiliate of the
Company, or any successor to all or any substantial part of the assets, business
or property of the Company. This letter agreement is not assignable either in
whole or in part by the undersigned. The interpretation and enforcement of this
letter agreement is to be construed and the legal relations between the parties
determined in accordance with the laws of the state of Minnesota applicable to
contracts made in and to be wholly performed within such state. Any judicial
proceeding brought against me or any dispute arising out of this letter
agreement or any matter related hereto shall be brought in the courts of the
State of Minnesota (including the United States District Court for the State of
Minnesota), and, by execution and delivery of this letter agreement, I accept
the exclusive jurisdiction of the aforesaid courts, and agree that service on me
by mail shall constitute good and valid personal service, and irrevocably agree
to be bound by any judgment rendered thereby in connection with this letter
agreement.
Very truly yours,
/s/ Timothy N. Tracey
- ----------------------------------------
Print Name: Timothy N. Tracey
Address: 7610 Princeton Drive, NE
Cedar Rapids, Iowa 52402