Exhibit (d)(5)
CONSULTING AGREEMENT
DAVID K. LIFSCHULTZ
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This is a Consulting Agreement made on May 15, 2001 by Fluke Electronics
Corporation, a corporation organized under Washington law and having its
principal offices at 6920 Seaway Boulevard, P.O. Box 9090, Everett, Washington
98206-9090 ("Fluke") and David K. Lifschultz ("Lifschultz"), a resident of the
state of New York.
Danaher Corporation, the parent of Fluke, has entered into an Agreement and
Plan of Merger dated as of May 15, 2001 with Saltwater Acquisition Corp. and
Lifschultz Industries, Inc. ("Merger Agreement") under which Saltwater
Acquisition Corp. will acquire all of the issued and outstanding stock of
Lifschultz (the "Acquisition"), a principal asset of which is Hart Scientific
Incorporated ("Hart"), collectively referred to herein as the "Company."
Lifschultz is the Chairman of the Board of Directors and Chief Executive Officer
of the Company, a principal contributor to the success of its business. Fluke
desires that Lifschultz remain available to Fluke and the Company after the
Effective Time of the Acquisition (as such term is defined in the Merger
Agreement) to provide consulting services as described herein. As an inducement
to Fluke to close the Acquisition and in consideration of the terms described
herein, Lifschultz will provide certain business consulting services to the
Company and Fluke, and will agree not to compete with the business of the
Company, according to the terms of this Agreement.
In consideration of the mutual benefits to be derived from the making of
this Agreement and the mutual covenants and obligations herein contained, the
parties agree as follows:
1. Consulting Services. For a period of one year after the Effective Time of
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the Acquisition, Lifschultz shall provide to the Company consulting services
relating to the implementation of Fluke's acquisition of the Company, as well
other aspects of the Company's business as shall be agreed to from time to time
by Lifschultz and the Company (the "Services"). Lifschultz shall perform the
Services for the Company with due diligence and skill and in a prompt and
professional manner. The Services will be provided during normal business hours
Monday through Friday unless otherwise agreed by the parties. Lifschultz's
reasonable travel expenses incurred on behalf of Fluke or the Company shall
comply with Fluke travel policies.
2. Consideration. Subject to the consummation of the Acquisition and in return
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for Lifschultz's provision of the Services and in consideration of the
restrictions upon him described herein, Fluke will pay to Lifschultz three
hundred seventy five thousand dollars ($375,000). That amount shall be paid to
Lifschultz in two installments of $187,500, the first of which shall be paid
upon the Effective Time of the Acquisition and the second on January 1, 2002.
3. Termination of Employment Agreements. Upon the Effective Time, this
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Agreement shall supercede and render null and void, and as of the Effective Time
Lifschultz waives any rights arising from, any employment agreement and any
other agreement Lifschultz has or may have had, written or oral, pertaining to
his employment with Hart including any agreement that may pertain to
compensation as a result of a sale or acquisition of Hart or the Company. In
addition, the Company consents and agrees that all options to purchase common
stock of Lifschultz or any of its subsidiaries shall be cancelled in the manner
and for the consideration set forth in Section 2.9 of the Merger Agreement.
4. Relationship of Parties. As of the Effective Time of the Acquisition,
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Lifschultz shall be an independent contractor and shall perform requested
Services in the manner and by the means determined in Lifschultz, subject at all
times however, to the general direction of Fluke and the Company. As of the
Effective Time of the Acquisition, Lifschultz shall not be an agent or employee
of Fluke or the Company and shall have no authority to bind Fluke or the Company
by contract or otherwise. Lifschultz acknowledges and agrees that as of the
Effective Time of the Acquisition, he shall not be entitled to any benefits or
other compensation not specified in this Agreement and shall not otherwise claim
that he is an employee of Fluke or the Company.
5. Employment Taxes and Benefits. As of the Effective Time of the Acquisition,
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Lifschultz shall report all compensation received by him pursuant to this
Agreement as self-employment income in his tax returns, and Lifschultz shall
indemnify Fluke and the Company and hold it harmless to the extent of any
obligation imposed by law on Fluke or the Company to pay any withholding taxes,
social security, unemployment or disability insurance, or similar items in
connection with any payments made to Lifschultz by Fluke or the Company pursuant
to this Agreement. As of the Effective Time of the Acquisition, Lifschultz shall
not be entitled to participate in any plans, arrangements or distributions by
Fluke or the Company pertaining to any bonus, stock option, profit sharing,
insurance, or similar benefits for employees of Fluke or the Company.
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5. Non-Compete Provisions.
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(a) Lifschultz acknowledges that the covenants he is providing in this
Agreement are reasonable and necessary to the protection of the legitimate
interests of Fluke and its subsidiaries and parent, including, but not limited
to, the goodwill of the Company. Lifschultz further acknowledges that by virtue
of his position with the Company he has developed considerable expertise in the
business operations of the Company. Lifschultz acknowledges that Fluke and its
subsidiaries and parent would be irreparably damaged and its substantial
investment in the Company materially impaired were Lifschultz to engage in an
activity that competes with the business of the Company, Fluke or their
respective subsidiaries and parents in violation of the terms of this Agreement.
Accordingly, Lifschultz acknowledges that he is voluntarily entering into this
Agreement and that the terms and conditions of this Agreement are fair and
reasonable to him in all respects and that Fluke, in addition to any other
remedies that it may have, shall be entitled to obtain injunctive relief,
including specific performance, in the event of any actual or threatened breach
by Lifschultz of any of the provisions of this Agreement.
(b) Accordingly, Lifschultz covenants and agrees that during a period of
three years from the Effective Time of the Acquisition (the "Covenant Period"),
Lifschultz shall not, directly or indirectly within the Market Area, perform any
services for any person or entity engaged in a competing business or, without
limiting the generality of the foregoing, be or become or agree to be or become,
interested in or associated with, in any capacity (whether as a partner,
shareholder, owner, officer, director, employee, principal, agent, creditor,
trustee, consultant, coventurer or otherwise) in any competing business as
defined herein. For purposes of this Agreement, a "competing business" is any
business that competes with the Company in the research, development, marketing
or sale of temperature metrology equipment. Lifschultz agrees that the Company
provides good and services both at its facilities and at the locations of its
customers or clients and that, by the nature of its business, it operates
globally and the Market Area shall therefore be anywhere in the world.
Notwithstanding the provisions of this Article 6(b), Lifschultz may own, solely
as an investment, not more than one percent (1%) of any class of securities of
any competing business that is publicly-traded on any United States national
security exchange or reported on the National Association of Securities Dealers
Automated Quotation System.
(c) Lifschultz acknowledges that, during the Covenant Period, he may
engage in any business activity or gainful employment of any type and in any
place except as described
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above. Lifschultz acknowledges that he will be reasonably able to earn a
livelihood without violating the terms of this Agreement.
6. No Solicitation Provisions. Lifschultz further agrees that during the
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Covenant Period he will not, without Fluke's prior written consent, directly or
indirectly (i) induce or attempt to influence any employee of the Company or
Fluke or their respective subsidiaries or parents to leave its employ, (ii) hire
any person who shall have been an employee of the Company or Fluke or their
respective subsidiaries or parents, within one year preceding the Effective Time
of the Acquisition, (iii) aid or agree to aid any competitor, customer or
supplier of the Company or Fluke or their respective subsidiaries or parents in
any attempt to hire any person who shall have been employed by the Company
within one year preceding the termination of Lifschultz's employment with the
Company, or (iv) induce or attempt to influence any person or business entity
who was a customer of the Company or Fluke or their respective subsidiaries or
parents during any portion of the Covenant Period to transact business with a
competing business.
7. Proprietary Information. Lifschultz acknowledges and understands that
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Proprietary Information is an important asset of the Company and agrees that he
shall not disclose, publish, or use Proprietary Information until such
information is disclosed to the public by its owner or ownership rights
terminate pursuant to law. Lifschultz shall return to the Company all
Proprietary Information in his possession upon the Effective Time of the
Acquisition. Proprietary Information for purposes of this Agreement shall
include Company information that otherwise is not generally known to the public
and that is or has been developed, owned or obtained by either Lifschultz or the
Company. "Proprietary Information" includes, without limitation, any technical
data, trade secrets, good will or know-how, including without limitation,
information related to operations, employee roles and functions, products,
research, inventions, designs, processes, methods, product proposals and
development, products yet to be announced, development engineering, technology-
based components research, computer software, source code, specifications,
confidential manuals, sales and financial materials, forecasts, pricing and cost
data, customer lists, sales figures, projections and plans, business strategies,
unannounced products, or other oral, written or computer-generated information,
including non-technical and non-sales-related information.
8. Independence of Obligations. The covenants of Lifschultz set forth in this
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Agreement shall be construed as independent of any other agreement or
arrangement between the
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Lifschultz and Fluke or the Company. The existence of any claim or cause of
action by Lifschultz against Fluke or the Company shall not constitute a defense
to the enforcement of such covenant against Lifschultz.
9. Release of Claims. For Lifschultz and Lifschultz's respective legal
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successors and assigns, Lifschultz as of the Effective Time (a) releases and
absolutely discharges the Company and all of its subsidiaries, affiliates,
parent, stockholders, employees, agents, attorneys, legal successors and assigns
of and from any and all claims, actions and causes of action, whether now known
or unknown, suspected or unsuspected, which Lifschultz now has, owns or holds,
or at any other time had, owned or held, or will or may have, own or hold based
upon or arising out of any matter, cause, fact, thing, act or omission
whatsoever occurring or existing at any time up to and including the date of the
Effective Time of the Acquisition, and (b) releases and discharges any and all
rights of first refusal, options and other claims or preemptive rights he has
with respect to any securities, assets, properties or businesses of the Company
or any of its subsidiaries, affiliates or parent.
10. Indemnification. Lifschultz shall indemnify, defend, protect and hold
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harmless Fluke, the Company and each of their respective subsidiaries,
affiliates, directors, officers, managers, employees, members, assigns and
successors (collectively, "Buyer Indemnified Parties") from, against and in
respect of any and all costs, liabilities, fees, expenses and other damages
suffered, sustained, incurred or paid by any of the Buyer Indemnified Parties in
connection with, resulting from or arising out of, directly or indirectly, any
of the liens or encumbrances related to or arising out of legal actions
involving Lifschultz Fast Freight, Inc. that are by or against Consolidated
Freightways, Yellow Freight Systems and Roadway Express, and any liabilities or
obligations relating thereto. These same indemnification obligations shall also
apply to the March 10, 1994 judgment lien held by Zurich Insurance Company
against Lifschultz Fast Freight, Inc. (judgment number 000633793-01).
Lifschultz's liability under this indemnification article shall not exceed two
hundred and fifty thousand dollars ($250,000).
11. Severability, Reformation. If any provision of this Agreement is held by a
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court of competent jurisdiction to be excessively broad as to duration,
activity, subject or geographic scope, this Agreement shall be modified to
extend only over the maximum duration, activity or subject as to which such
provision shall be valid and enforceable under applicable law. If any provision
of this Agreement shall, for any reason, be held by a court of competent
jurisdiction to
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be invalid, illegal or unenforceable, such invalidity, illegality or
unenforceability shall not affect any other provisions of this agreement, but
this agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
12. Specific Enforcement. Lifschultz acknowledges that it would be difficult to
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measure the damages that might result from any breach of any of the agreements
or covenants of the Lifschultz contained herein, and that any breach of any such
covenants or agreements will result in irreparable injury to Fluke or to the
Company, for which money damages could not adequately compensate. If a breach of
such covenants or agreement occurs, Fluke shall be entitled, in addition to all
of the rights and remedies that it may have at law or in equity, to
(a) immediate reimbursement by Lifschultz to Fluke of the $350,000 paid to
him pursuant to Article 2 of this Agreement and
(b) injunctive relief to enjoin and restrain Lifschultz and all other
persons and entities involved therein from continuing such breach. If Fluke
resorts to litigation to enforce any of the covenants or agreements contained
herein that have a fixed term, then such term shall be extended for a period of
time equal to the period during which a breach of the covenant or agreement was
occurring, or, if later, the last day of the original fixed term of such
covenant or agreement.
13. Notices. All notices and other communications given pursuant to this
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Agreement shall be in writing and shall be delivered in hand, sent by telecopier
and confirmed by mailing of a copy thereof by ordinary mail on the same or
immediately following business day, or sent by certified mail, return receipt
requested, with postage and fees prepaid, addressed or delivered to the party
for whom the notice or other communication is intended at that party's address
set forth in the heading of this Agreement or to such other address for a party,
notice of which, complying with these provisions, has been give by that party to
the other. All such notices, requests, demands or other communications will be
deemed to have been effectively given when received by the person addressed.
14. Waiver.
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(a) No failure on the part of any party to exercise any power, right,
privilege or remedy under this Agreement and no delay on the party of any party
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of the power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or
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remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy.
(b) No party will be deemed to have waived any claim arising out of this
Agreement or any power, right, privilege or remedy provided under this Agreement
unless the waiver of the claim, power, right, privilege or remedy is set forth
expressly in a written instrument duly executed and delivered on behalf of the
waiving party; and any such waiver shall not be applicable or have any effect
except in the specific instance in which it is given.
5. Survival. The respective obligations of the parties under this Agreement
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that by their nature would continue beyond the termination, cancellation or
expiration, shall survive termination, cancellation, or expiration, including
but not limited to Articles 6 through 18.
16. Assignment. This Agreement shall be assignable by the Company or Fluke to
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any person, firm or corporation that may become a successor in interest to the
Company or Fluke or any of their respective subsidiaries or affiliates. This
assignment can include Articles 5 and 6. The duties and obligations under this
Agreement are personal to Lifschultz and he shall have no right to assign this
Agreement.
17. Binding Effect. This Agreement shall be binding upon and shall inure to the
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benefit of Fluke and its successors and assigns and upon Lifschultz and his
heirs and legal representatives.
18. Applicable Law; Jurisdiction. Except to the extent governed by federal law,
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this Agreement shall be governed by and construed in accordance with the laws of
the state of Utah without giving effect to the conflict of laws provisions
thereunder. Each of the parties hereby absolutely and irrevocably consents and
submits to the jurisdiction of the courts of the state of Washington or the
state of Utah and of any federal court sitting in Seattle or Salt Lake City in
connection with any actions or proceedings brought against any party arising out
of or relating to this Agreement. In any such action or proceeding, the parties
each hereby absolutely and irrevocably (i) waive any objection to jurisdiction
or venue, (ii) waive personal service of any summons, complaint, declaration or
other process, and (iii) agree that the service thereof may be made by certified
or registered first-class mail directed to such party, as the case may be, at
their addresses set forth under the signature lines of this Agreement.
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19. Counterparts. This Agreement may be executed in several counterparts, each
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of which shall be deemed to be an original and all of which taken together shall
constitute one and the same instrument.
20. Termination. This Agreement shall terminate and have no effect and be void,
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and no party hereto shall have any obligation hereunder, upon termination of the
Offer (as defined in the Merger Agreement) or termination of the Merger
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this agreement as of the date
first above written.
FLUKE ELECTRONICS CORPORATION
By /s/ Christopher C. McMahon /s/ David K. Lifschultz
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David K. Lifschultz
Address: Address:
6920 Seaway Blvd.
P.O. Box 9090, MS 203A
Everett, WA 98206-9090
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