EMPLOYMENT AGREEMENT
This Employment Agreement (hereinafter referred to as the "Agreement") is
made as of the 2nd day of January 1996, between DYNECO CORPORATION, a Minnesota
corporation (hereinafter referred to as the "Company") and RALPH E. NELSON, an
individual resident of the State of Florida (hereinafter referred to as the
"Employee").
W I T N E S S E T H :
WHEREAS, the Company is in the business of designing, developing,
manufacturing, marketing and licensing air compressors and related technology;
and
WHEREAS, the Company believes that Employee's employment with the Company
under the terms of this Agreement will be beneficial to the success of the
Company's business; and
WHEREAS, the Company and Employee are entering into this Agreement to set
forth the terms and conditions relating to Employee's employment with the
Company.
NOW, THEREFORE, for and in consideration of the premises, the mutual
promises and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and Employee hereby agree as follows:
Section 1. EMPLOYMENT. Subject to the terms hereof, the Company hereby
employs Employee, and the Employee hereby accepts such employment for the term
of this Agreement.
Section 2. TERM. The term of this Agreement shall commence on the date
hereof and continue for a period of five (5) years, unless sooner terminated as
provided in this Agreement.
Section 3. DUTIES AND RESPONSIBILITIES OF EMPLOYEE. Employee is being
employed in an executive management capacity for the conduct of the business of
Company, and for such other assignments as the Board of Directors of the Company
may, from time to time, assign to Employee. Employee shall serve as Vice
President and Chief Financial Officer of Company and shall be responsible for
overall management of the Company's financial condition. Employee covenants
that he will use his best efforts, on a full time basis, to enhance the business
of the Company at all times as required or deemed appropriate.
Section 4. CASH COMPENSATION. For all services to be rendered by the
Employee under this Agreement, the Company shall pay Employee an annual gross
salary in the amount of Sixty Five Thousand and No/100 Dollars ($65,000) payable
in accordance with the payroll payment practices from time to time adopted by
the Company. Employee's cash compensation may be increased by the Board of
Directors of the Company from time to time during the term hereof; provided,
however, that the Board of Directors shall review the cash compensation payable
to Employee hereunder on at least an annual basis.
Section 5. NONCASH COMPENSATION. In addition to the cash compensation
payable to Employee under Section 4 above, Employee shall be entitled to
purchase 10,000 shares of the Company's $.01 par value common stock ("Common
Stock") at a purchase price of $1.00 per share
upon the first anniversary date of this Agreement. Upon the second, third,
fourth and fifth anniversary dates of this Agreement, respectively, Employee
shall be entitled to purchase 10,000 shares of the Company's Common Stock at
a purchase price of $2.00 per share. Employee's right to purchase the Common
Stock of the Company as provided in this Section 5 shall vest as of the last
day of each applicable anniversary date. If this Agreement is terminated at
any time during the five year period during which the rights of Employee to
purchase shares of the Company's Common Stock shall vest, all such rights of
Employee that have not vested shall be forfeited on the date the Agreement is
terminated.
Section 6. WORKING FACILITIES. Employee shall be furnished with such
office space, office equipment, secretarial help and such other facilities,
equipment and services as may be reasonably needed or beneficial for the
performance by Employee of the duties contemplated hereunder. All costs of same
shall be borne by the Company.
Section 7. EXPENSES. The Company recognizes that in the performance of
duties by Employee in the furtherance of the business of the Company, Employee
will incur expenses. Employee shall be reimbursed for such reasonable and
necessary expenditures when so incurred.
Section 8. VACATION AND EMPLOYEE BENEFITS. Employee shall be entitled
to such Employee health and disability insurance and other employee fringe
benefits as the Board of Directors deems appropriate; PROVIDED, however, that
the Company shall pay one-half of Employee's monthly payment obligations when
due under COBRA. Employee shall also be entitled to paid vacations as follows:
6 months of full time service - 1 week of vacation; 1 year of full time service
- - 2 weeks of vacation; 5 years of full time service - 3 weeks of vacation; 7
years of full time service - 4 weeks of vacation.
Section 9. TERMINATION. This Agreement shall be terminated prior to
the end of the term provided in Section 2 above, upon the occurrence of any one
of the following events:
(a) Company shall have the right to immediately terminate Employee's
employment under this Agreement if:
(i) Employee shall continue to violate any of the provisions of
this Agreement after thirty (30) days immediately following his
receipt of a written notice from Company setting forth the
violations;
(ii) Employee is convicted of (from which no appeal may be taken)
or pleads guilty or nolo contendre to or confesses to any act of
fraud, misappropriation or embezzlement or to any felony or to
any misdemeanor involving moral turpitude;
(iii) Employee, in the judgment of Company, has engaged in a
dishonest act to the damage or prejudice of Company or any
affiliate of Company or in conduct or activities materially
damaging to the business or reputation of Company or any
affiliate of Company; or
2
(iv) Employee has failed without reasonable cause to devote
adequate business time and best efforts to its duties hereunder.
(b) Employee and Company each shall have the right to terminate his
employment on sixty (60) days written notice to the other.
Section 10. EFFECT OF TERMINATION. Upon termination of this Agreement,
Employee shall be entitled to receive only that compensation accrued but unpaid
pursuant to Section 4 above as of the date of termination and his rights to
purchase the Company's Common Stock as provided in Section 5 above. The Company
shall not have any further liability to Employee.
Section 11. CONFIDENTIAL INFORMATION. Employee agrees that he will not
directly or indirectly use, publish, disclose or divulge any confidential
information or trade secrets or anything relating thereto to any person or
entity not in the employ of Company, except in the course of performing his
duties and (a) with respect to confidential information for a period of two (2)
years immediately following any termination of his employment and (b) with
respect to trade secrets for so long as the trade secret remains a trade secret.
For purposes of this Agreement, the term "trade secret" means trade secrets as
defined by Florida law and "confidential information" means data and information
relating to the business of the Company (which does not rise to the status of a
trade secret) which will be disclosed to Employee or of which Employee becomes
aware as a consequence of or through his relationship to the Company and which
has value to the Company and is not generally known to its competitors. The
provisions in this Agreement restricting the use of confidential information
shall survive for a period of two (2) years following termination of employment
and those restricting the use of trade secrets shall survive for so long as is
permitted by law. Upon termination of employment, Employee immediately shall
surrender to the Company, in good condition, any and all material containing
confidential information and trade secrets provided to or obtained directly or
indirectly by Employee, and Employee shall not keep any copies, summaries or
photocopies thereof.
Section 12. NON-COMPETITION. Employee agrees that during the term of
his employment with the Company and for a period of two (2) years immediately
thereafter, he will not engage in any "Competitive Business Activity" within the
"Non-Compete Territory."
(a) For purposes of this Agreement, the term "Competitive Business
Activity" shall mean any activity which Employee directly or indirectly
owns, manages, operates, controls, is employed by (either as an employee or
independent contractor) or participates in the ownership, management,
operation or control of any business that is engaged in the sale of
products or services that are the same as or similar to the products or
services of the type offered or provided by the Company.
(b) For purposes of this Agreement, the term "Non-Compete Territory"
shall mean the States of Florida and Minnesota and each of the other states
located in the continental United States in which the Company is engaged in
business, it being agreed and stipulated that the Company has customers and
substantial services and marketing efforts in each of these states and has
conducted substantial business therein.
3
Section 13. SOLICITATION OF CUSTOMERS. Employee agrees that during the
term of his employment with the Company, and for a period of two (2) years
immediately thereafter, he shall not, directly or indirectly, through one or
more intermediaries or otherwise, solicit, direct or appropriate, or attempt to
solicit, direct or appropriate any person or entity which is at the time a
customer of the Company with which the Company or any affiliate thereof has an
existing relationship for the sale of products or services that are the same or
similar to the products or services of the type offered by the Company.
Section 14. SOLICITATION OF EMPLOYEES. Employee agrees that during the
period of this Agreement and for a period of two (2) years immediately
thereafter, Employee shall not, directly or indirectly, through one or more
intermediaries or otherwise, employ, induce, solicit for employment, or assist
others in employing, inducing or soliciting for employment any person who is at
the time an agent or employee of Company or any affiliate thereof.
Section 15. SPECIFIC PERFORMANCE. Employee agrees that the nature of
Company's business is unique and that, therefore, Employee's knowledge in and
with respect to Company's business will be special and not generally known by
many companies or individuals in any industry in which compressor or vacuum pump
technology is applicable. In addition, Employee agrees that it will be
difficult to measure damages to Company from any breach of Employee's promises
in paragraphs 11, 12, 13 and 14 hereof and that money damages alone will
therefore be an inadequate remedy for such breach. Accordingly and without
limiting the right of Company to pursue other legal and equitable rights
available to it for violation of said paragraphs and because Company has relied
on the undertakings of Employee in giving Employee this Agreement, Employee
hereby agrees that Company shall be entitled to specific performance of this
Agreement and that Employee shall not urge in any action at law or in equity
that Company has an adequate remedy at law.
Section 16. AGREEMENT TO INDEMNIFY. In addition to, and not in lieu of,
any other rights or remedies which Company may possess at law, in equity or
otherwise by virtue of this Agreement, Employee agrees to indemnify, defend and
hold harmless Company, from and against any and all claims, actions or causes of
action, assessments, investigations, arbitrations, proceedings of an
administrative nature, suits, awards, judgments, decrees, settlements, court
costs at both trial and appellate levels, losses, damages, liabilities, costs
and expenses of any nature whatsoever, including, without limitation, interest,
taxes, penalties, and attorneys' fees and expenses, asserted against, resulting
to, imposed upon or incurred by Company or any member thereof, directly or
indirectly, by reason of or resulting from a breach by Employee of any term or
condition of this Agreement.
Section 17. MISCELLANEOUS.
(a) All questions with respect to the construction of this Agreement
and the rights, duties, obligations and liabilities of the parties under
said documents shall be determined in accordance with the applicable
provisions of the laws of the State of Florida.
(b) This Agreement shall be binding upon all parties hereto, their
heirs, successors, guardians and personal and legal representatives.
4
(c) This Agreement sets forth all of the promises, agreements,
conditions and understandings among the parties hereto with respect to
Employee's employment and there are no promises, agreements, conditions, or
understandings, oral or written, expressed or implied, other than as set
forth in this Agreement.
(d) In the event there is any conflict between any provision of this
Agreement and any statute, law, ordinance or regulation, the latter shall
prevail, but in such event the provisions of this Agreement thus affected
shall be curtailed and limited only to the extent necessary to conform with
said requirement of law. In the event that any part of this Agreement
shall be held to be indefinite, invalid or otherwise unenforceable, the
entire Agreement shall not fail on account thereof, and the balance of the
Agreement shall continue in full force and effect.
(e) Should either party be required to engage legal counsel for the
purpose of enforcing or preventing the breach of any of the provisions of
this Agreement, then the prevailing party to such action shall be entitled
to be reimbursed by the losing party for all costs and expenses incurred
thereby, including, but not limited to, reasonable attorneys' fees,
expenses and all other costs incurred as a result of the losing party's
conduct.
IN WITNESS WHEREOF, the corporate party hereto has caused this Agreement to
be executed by its duly authorized officer, and the individual party has
hereunto affixed his hand, as of the day and year first above written.
COMPANY:
DYNECO CORPORATION
By: /s/ Richard D. Besser
-----------------------------------
Richard D. Besser
Chief Executive Officer
EMPLOYEE:
/s/ Ralph E. Nelson
--------------------------------------(Seal)
Ralph E. Nelson
5