EMPLOYMENT AGREEMENT - LESTER GANN
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of May 22, 1995, (the "Effective Date"), between Industrial Fabricator and
Repair, Inc., a Tennessee corporation (the "Company"), whose principal place of
business is 3007 West Industrial Parkway, Knoxville, Tennessee 37921 and Lester
A. Gann, an individual (the "Employee"), who resides in Knoxville, Tennessee.
WHEREAS, the Company is a Tennessee corporation engaged in the manufacture
of specialized contracting for machinery, tools and design work related thereto
(the "Business"); and
WHEREAS, the Company desires to employ the Employee and the Employee
desires to be in the employ of the Company; and
WHEREAS, the Company has established a valuable reputation and goodwill in
its business, with expertise in all aspects of the Business; and
WHEREAS, following the date of this Agreement, the Company will expand the
scope of its Business to include the manufacture of thawing trays as more
specifically described in Section 7 hereof (the "Business Activities"); and
WHEREAS, the Employee, by virtue of the Employee's employment with the
Company, is familiar with and possessed with the manner, methods, trade secrets
and other confidential information pertaining to the Business Activities;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Company and the Employee do hereby agree as follows:
1. RECITALS. The above recitals are true, correct, and are herein
incorporated by reference.
2. EMPLOYMENT. The Company hereby employs the Employee, and the
Employee hereby accepts employment, upon the terms and conditions hereinafter
set forth.
3. AUTHORITY AND POWER DURING EMPLOYMENT PERIOD.
a. DUTIES AND RESPONSIBILITIES. During the term of this Agreement, the
Employee shall serve in a management position with the Company as President of
the Company and shall have such operating supervision over property, business
and affairs of the Company, as are directed by the Board of Directors of the
Company.
b. TIME DEVOTED. Throughout the term of the Agreement, the Employee
shall devote substantially all of the Employee's business time and attention to
the business and affairs of the Company consistent with the Employee's position
with the Company, except for reasonable vacations and except for illness or
incapacity.
4. TERM. The Term of employment hereunder will commence on the
Effective date as set forth above and end three (3) years from the Effective
Date, unless terminated pursuant to Section 6 of this Agreement.
5. COMPENSATION AND BENEFITS.
a. SALARY. The Employee shall be paid a base salary (the "Base
Salary"), payable bi-weekly, at an annual rate of Ninety Six Thousand Dollars
($96,000).
b. PERFORMANCE-BASED BONUS. As additional compensation, the Employee
may be entitled to receive a performance-based bonus (the "Bonus"), as
determined by the Board of Directors of the Company.
c. EMPLOYEE BENEFITS. The Employee shall be entitled to participate in
all benefit programs of the Company currently existing or hereafter made
available to other salaried employees, including, but not limited to, pension
and other retirement plans, group life insurance, hospitalization, surgical and
major medical coverage, sick leave, salary continuation, vacation and holidays,
long-term disability, and other fringe benefits.
d. BUSINESS EXPENSE REIMBURSEMENT. During the Term of employment, the
Employee shall be entitled to receive proper reimbursement for all reasonable,
out of-pocket expenses incurred by the Employee (in accordance with the policies
and procedures established by the Company for its managers) in performing
services hereunder, provided the Employee properly accounts therefor. Expenses
in excess of $10,000 individually or $10,000 in the aggregate shall require
approval of the Board of Directors.
6. CONSEQUENCES OF TERMINATION OF EMPLOYMENT.
a. DEATH. In the event of the death of the Employee during the Term of
the Agreement, Base Salary shall be paid to the Employee's designated
beneficiary, or, in the absence of such designation, to the estate or other
legal representative of the Employee for a period of thirty (30) days from and
after the date of death. Other death benefits will be determined in accordance
with the terms of the Company's benefit programs and plans.
b. DISABILITY. In the event of the Employee's disability, the Employee
shall be entitled to compensation in accordance with the Company's disability
compensation practice for its senior officers. "Disability," for the purposes of
this Agreement, shall be deemed to have occurred in the event (A) the Employee
is unable by reason of sickness or accident, to perform the Employee's duties
under this Agreement for an aggregate of 90 days in any twelve-month period or
45 consecutive days, or (B) the Employee has a guardian of the person or estate
appointed by a court of competent jurisdiction. Termination due to disability
shall be deemed to have occurred upon the first day of the month following the
determination of disability as defined in the preceding sentence.
c. TERMINATION BY THE COMPANY FOR CAUSE. Nothing herein shall prevent
the Company from terminating Employment for "Cause," as hereinafter defined. The
Employee shall continue to receive salary only for the period ending with the
date of such termination as provided in this Section 6(c). Any rights and
benefits the Employee may have in respect of any other compensation shall be
determined in accordance with the terms of such other compensation arrangements
or such plans or programs.
ii. "Cause" shall mean (A) committing or participating in an
injurious act of fraud, gross neglect, misrepresentation, embezzlement or
dishonesty against the Company; (B) committing or participating in any other
injurious act or omission wantonly, willfully, recklessly or in a manner which
was grossly negligent against the Company, monetarily or otherwise; (C) engaging
in a criminal enterprise involving moral turpitude; (D) an act or acts (1)
constituting a felony under the laws of the United States or any state thereof
or (11) if applicable, loss of any state or federal license required for the
Employee to perform the Employee's material duties or responsibilities for the
Company; or (E) any assignment of this Agreement by the Employee in violation of
Section 13 of this Agreement.
iii. Notwithstanding anything else contained in this Agreement, this
Agreement will not be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Employee a notice of termination stating
that the Employee committed one of the types of conduct set forth in this
Section 6(c) contained in this Agreement and specifying the particulars thereof.
7. COVENANT NOT TO COMPETE AND NON-DISCLOSURE OF INFORMATION.
a. COVENANT NOT TO COMPETE. Except as set forth in Section 6(d)(ii)
of this Agreement, the Employee acknowledges and recognizes the highly
competitive nature of the Company's business constitutes a substantial asset of
the Company having been acquired through considerable time, money and effort.
Accordingly, in consideration of the execution of this Agreement, the Employee
agrees to the following:
I. That during the Restricted Period (as hereinafter defined)
and within the Restricted Area (as hereinafter defined), the Employee will not,
individually or in conjunction with others, directly or indirectly, engage in
any Business Activities (as hereinafter defined), whether as an officer,
director, proprietor, employer, partner, independent contractor, investor (other
than as a holder solely as an investment of less than one percent (1%) of the
outstanding capital stock of a publicly traded corporation), consultant,
advisor, agent or otherwise.
ii. That during the Restricted Period and within the
Restricted Area, the Employee will not, directly or indirectly, compete with the
Company by soliciting, inducing or influencing any of the Company's clients
which have a business relationship with the Company at the time during the
Restricted Period to discontinue or reduce the extent of such relationship with
the Company.
iii. That during the Restricted Period and within the
Restricted Area, the Employee will not (A) directly or indirectly recruit,
solicit or otherwise influence any employee or agent of the Company to
discontinue such employment or agency relationship with the Company, or (B)
employ or seek to employ, or cause or permit any business which competes
directly or indirectly with the Business Activities of the Company (the
"Competitive Business") to employ or seek to employ for any Competitive Business
any person who is then (or was at any time within six (6) months prior to the
date Employee or the Competitive Business employs or seeks to employ such
person) employed by the Company.
iv. That during the Restricted Period the Employee will not
interfere with, or disrupt or attempt to disrupt any past, present or
prospective relationship, contractual or otherwise, between the Company and any
customer, employee or agent of the Company.
b. NON-DISCLOSURE OF INFORMATION. The Employee acknowledges that the
Company's trade secrets, private or secret processes, methods and ideas, as they
exist from time to time, customer lists and information concerning the Company's
Business Activities, including products, services, training methods,
development, technical information, marketing activities and procedures, credit
and financial data concerning the Company (the "Proprietary Information") are
valuable, special and unique assets of the Company, access to and knowledge of
which are essential to the performance of the Employee hereunder. In light of
the highly competitive nature of the industry in which the Company's Business
Activities are conducted, the Employee agrees that all Proprietary Information,
heretofore or in the future obtained by the Employee as a result of the
Employee's association with the Company, shall be considered confidential.
In recognition of this fact, the Employee agrees that the Employee, during
the Restricted Period, will not use or disclose any of such Proprietary
Information for the Employee's own purposes or for the benefit of any person or
other entity or organization (except the Company) under any circumstances unless
such Proprietary Information has been publicly disclosed generally or, unless
upon written advice of legal counsel reasonably satisfactory to the Company, the
Employee is legally required to disclose such Proprietary Information. Documents
(as hereinafter defined) prepared by the Employee or that come into the
Employee's possession during the Employee's association with the Company are and
remain the property of the Company, and when this Agreement terminates, such
Documents shall be returned to the Company at the Company's principal place of
business, as provided in the Notice provision (Section 1) of this Agreement.
c. DOCUMENTS. "Documents" shall mean all original written,
recorded, or graphic matters whatsoever, and any and all copies thereof,
including, but not limited to: papers; books; records; tangible things;
correspondence; communications; telex messages; memoranda; work-papers; reports;
affidavits; statements; summaries; analyses; evaluations; client records and
information; agreements; agendas; advertisements; instructions; charges;
manuals; brochures; publications; directories; industry lists; schedules; price
lists; client lists; statistical records; training manuals; computer printouts;
books of account, records and invoices reflecting business operations; all
things similar to any of the foregoing however denominated. In all cases where
originals are not available, the term "Documents" shall also mean identical
copies of original documents or non-identical copies thereof.
d. RESTRICTIVE PERIOD. The "Restrictive Period" shall be deemed
to be twelve (12) months following termination of this Agreement.
e. RESTRICTED AREA. The Restricted Area shall be deemed to mean
within the United States of America.
f. BUSINESS ACTIVITIES. "Business Activities" shall be deemed to
include any business activities concerning the manufacture of thawing trays and
other new products developed by Naturale Home Products, Inc., a company 15%
owned by Workforce Systems Corp.("Workforce"), the Company's parent, and any
additional activities which the Company or any of its affiliates may engage in
during the term of this Agreement which Workforce shall bring to the Company and
which have not historically been engaged in by the Company prior to such
introduction by Workforce.
g. COVENANTS AS ESSENTIAL ELEMENTS OF THIS AGREEMENT. It is
understood by and between the parties hereto that the foregoing covenants
contained in Sections 7(a) and (b) are essential elements of this Agreement, and
that but for the agreement by the Employee to comply with such covenants, the
Company would not have agreed to enter into this Agreement. Such covenants by
the Employee shall be construed to be agreements independent of any other
provisions of this Agreement. The existence of any other claim or cause of
action, whether predicated on any other provision in this Agreement, or
otherwise, as a result of the relationship between the parties shall not
constitute a defense to the enforcement of such covenants against the Employee.
In the event Employee shall be in violation of the aforementioned restrictive
covenants, the time limitation thereof with respect to the defaulting party
shall be extended for a period of time equal to the period of time during which
breach or breaches should occur; and in the event Company should require or seek
relief from breach in any court or other tribunal, any covenant shall be
extended for a period of time equal to the pendency of such proceeding,
including appeals thereof.
h. SURVIVAL AFTER TERMINATION OF AGREEMENT. Notwithstanding
anything to the contrary contained in this Agreement, the covenants in Sections
7(a) and (b) shall survive the termination of this Agreement and the Employee's
employment with Company.
i. REMEDIES.
i. The Employee acknowledges and agrees that the Company's
remedy at law for a breach or threatened breach of any of the provisions of
Section 7(a) or (b) herein would be inadequate and the breach shall be per se
deemed as causing irreparable harm to the Company. In recognition of this fact,
in the event of a breach by the Employee of any of the provisions of Section
7(a) or (b), the Employee agrees that, in addition to any remedy at law
available to the Company, including, but not limited to monetary damages, all
rights of the Employee to payment or otherwise under this Agreement and all
amounts then or thereafter due to the Employee from the Company under this
Agreement may be- terminated and the Company, without posting any bond, shall be
entitled to obtain, and the Employee agrees not to oppose the Company's request
for equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction or any other equitable remedy which may
then be available to the Company.
ii. The Employee acknowledges that the granting of a
temporary injunction, temporary restraining order or permanent injunction merely
prohibiting the use of Proprietary Information would not be an adequate remedy
upon breach or threatened breach of Section 7(a) or (b) and consequently agrees,
upon proof of any such breach, to the granting of injunctive relief prohibiting
any form of competition with the Company. Nothing herein contained shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for such breach or threatened breach.
8. WITHHOLDING. Anything to the contrary notwithstanding, all payments
required to be made by the Company hereunder to the Employee or the Employee's
estate or beneficiaries shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company may reasonably
determine it should withhold pursuant to any applicable law or regulation. In
lieu of withholding such amounts, the Company may accept other arrangements
pursuant to which it is satisfied that such tax and other payroll obligations
will be satisfied in a manner complying with applicable law or regulation.
9. NOTICES. Any notice required or permitted to be given under the
terms of this Agreement shall be sufficient if in writing and if sent postage
prepaid by registered or certified mail, return receipt requested; by overnight
delivery; by courier; or by confirmed Telecopy, in the case of the Employee to
the Employee's last place of business or residence as shown on the records of
the Company, or in the case of the Company, to its principal office as set forth
in the first paragraph of this Agreement, or at such other place as it may
designate.
10. WAIVER. Unless agreed in writing, the failure of either party, at
any time, to require performance by the other of any provisions hereunder shall
not affect its right thereafter to enforce the same, nor shall a waiver by
either party of any breach of any provision hereof be taken or held to be a
waiver of any other preceding or succeeding breach of any term or provision of
this Agreement. No extension of time for the performance of any obligation or
act shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
11. COMPLETENESS AND MODIFICATION. This Agreement constitutes the entire
understanding between the parties hereto superseding all prior and
contemporaneous agreements or understandings among the parties hereto concerning
the Employment Agreement. This Agreement may be amended, modified, superseded or
canceled, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
parties or, in the case of a waiver, by the party to be charged.
12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one agreement.
13. BINDING EFFECT/ASSIGNMENT. This Agreement shall be binding upon the
parties hereto, their heirs, legal representatives, successors and assigns. This
Agreement shall not be assignable by the Employee but shall be assignable by the
Company in connection with the sale, transfer or other disposition of its
business or to any of the Company's affiliates controlled by or under common
control with the Company.
14. GOVERNING LAW. This Agreement shall become valid when executed and
accepted by Company. The parties agree that it shall be deemed made and entered
into in the State of Tennessee and shall be governed and construed under and in
accordance with the laws of the State of Tennessee. Anything in this Agreement
to the contrary notwithstanding, the Employee shall conduct the Employee's
business in a lawful manner and faithfully comply with applicable laws or
regulations of the state, city or other political subdivision in which the
Employee is located.
15. FURTHER ASSURANCES. All parties hereto shall execute and deliver
such other instruments and do such other acts as may be necessary to carry out
the intent and purposes of this Agreement.
16. HEADINGS. The headings of the sections are for convenience only and
shall not control or affect the meaning or construction or limit the scope or
intent of any of the provisions of this Agreement.
17. SURVIVAL. Any termination of this Agreement shall not, however,
affect the ongoing provisions of this Agreement which shall survive such
termination in accordance with their terms.
18. SEVERABILITY. The invalidity or unenforceability, in whole or in
part, of any covenant, promise or undertaking, or any section, subsection,
paragraph, sentence, clause, phrase or word or of any provision of this
Agreement shall not affect the or enforceability of the remaining portions
thereof.
19. ENFORCEMENT. Should it become necessary for any party to institute
legal action to enforce the terms and conditions of this Agreement, the
successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs.
20. INDEPENDENT LEGAL COUNSEL. The parties have either (I) been
represented by independent legal counsel in connection with the negotiation and
execution of this Employment Agreement, or (ii) each has had the opportunity to
obtain independent legal counsel, has been advised that it is in their best
interests to do so, and by execution of this Employment Agreement has waived
such right.
21. CONSTRUCTION. This Agreement shall be construed within the fair
meaning of each of its terms and not against the party drafting the document.
THE EMPLOYEE ACKNOWLEDGES THAT THE EMPLOYEE HAS READ ALL OF THE TERMS OF
THIS AGREEMENT, UNDERSTANDS THE AGREEMENT, AND AGREES TO ABIDE BY ITS TERMS AND
CONDITIONS.
IN WITNESS WHEREOF, the parties have executed this Agreement as of date
set forth in the first paragraph of this Agreement.
Witness: THE COMPANY:
INDUSTRIAL FABRICATION AND REPAIR,
INC.
s/s Ella Boutwell Chesnutt, Chairman
Witness: THE EMPLOYEE
s/s Lester E. Gann