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EXHIBIT 10.1
EMPLOYMENT AND NON-COMPETITION AGREEMENT
EMPLOYMENT AND NON-COMPETITION AGREEMENT, dated as of May 26, 1995, by
and between SIMONDS INDUSTRIES, INC., a Delaware corporation (the "Company"),
and Ross B. George of Fitchburg, Massachusetts ("Employee").
W I T N E S S E T H:
WHEREAS, the Company, SI Holding Corporation ("Holding"), the Company's
common stockholders (the "Stockholders") (including Employee), and certain other
parties, have entered into that certain Stock Purchase Agreement dated as of May
26, 1995 (the "Stock Purchase Agreement") pursuant to which Holding has agreed
to purchase from the Stockholders all of the outstanding common stock of the
Company; and
WHEREAS, the closing of the transactions under the Stock Purchase
Agreement is taking place on the date hereof; and
WHEREAS, the parties hereto acknowledge that Holding is making its
investment in the Company in part in reliance upon the Employee's expertise and
knowledge in the industries in which the Company shall conduct its business; and
WHEREAS, Employee has agreed to enter into this Agreement in order to
assure company of Employee's continued expertise and involvement in the conduct
of the Company's business, subject to the terms and conditions as hereinafter
provided; and
WHEREAS, the Company desires to employ Employee as Chief Executive
Officer of the Company and Employee desires to be employed by the Company in
such capacity, upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 CAUSE. Cause shall mean (a) an act of fraud, embezzlement,
misappropriation or breach of fiduciary duty against the Company by Employee as
determined by the Company's Board of Directors in its reasonable discretion, (b)
any intentional, knowing or reckless action or inaction by Employee which causes
the breach of a representation, warranty or covenant by the Company or any
Management Stockholder under any of the Related Agreements (as such terms are
defined in the Stockholder Agreement), (c) conviction of Employee by a court of
competent jurisdiction of or a plea of guilty or nolo contendere by Employee to
any felony or crime involving moral turpitude, (d) the habitual drug addiction
or intoxication of Employee, (e) the willful failure or refusal of Employee to
perform his duties under the terms of his employment with the Company, including
the willful failure or refusal of Employee to follow the instructions
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of the Company's Board of Directors, (f) the breach by Employee of any terms of
this Agreement (including, without limitation, the breach of any
non-competition, non-disclosure, or other restrictive covenants), or (g) the
breach by Employee of any of the covenants, terms, and provisions of Sections
3.1, 5 and 7 of the Stockholder Agreement.
1.02 CONTRACT TERM. "Contract Term" shall mean the period commencing on
the Effective Date and expiring five (5) years after the Effective Date.
1.03 DIRECTORS. "Directors" shall mean the Board of Directors of the
Company.
1.04 DISABILITY. Employee shall be deemed to have a disability if an
independent medical doctor (selected by the Company's health or disability
insurer) certifies that such Employee has for six (6) months, consecutive or
non-consecutive, in any twelve (12) month period been disabled in such a manner
that he is unable to perform the essential functions of his then current
position. Any refusal by Employee to submit to a medical examination for the
purpose of certifying disability shall be deemed to constitute conclusive
evidence of such Employee's disability.
1.05. EFFECTIVE DATE. "Effective Date" shall mean the date of this
Agreement.
1.06 STOCKHOLDER AGREEMENT. "Stockholder Agreement" means that certain
stockholder agreement by and among the common shareholders of Holding dated as
of May 26, 1995.
ARTICLE II
EMPLOYMENT AND SERVICES
2.01 CAPACITY AND SERVICES. The Company hereby employs Employee to
serve in the capacity of Chief Executive Officer of the Company, and Employee
hereby accepts such employment, upon the terms and conditions set forth in this
Agreement. During the period the Employee is employed by the Company, Employee
shall devote substantially all of his attention and energies on a full-time
basis to the business and affairs of the Company and use his best efforts to
promote its interests; provided, however, that Employee may devote reasonable
periods of time for personal purposes, trade associations and charitable
activities consistent with past practices so long as such purposes or activities
do not (i) cause or result in a breach of Article III hereof or (ii) adversely
affect the interests of the Company or materially detract from or interfere with
the performance of the services otherwise required to be performed by Employee
as set forth herein. While the Employee is employed by the Company, Employee
shall neither accept nor hold any other employment without approval of the
Directors. In his capacity as Chief Executive Officer of the Company, Employee
shall be responsible for the supervision and control over, and responsibility
for, the financial affairs and operations of the Company, and shall have such
other powers and duties as determined by the Directors from time to time. Such
services to be provided by Employee hereunder shall be provided for the benefit
of the Company without regard to whether any of the Company's operations are
conducted directly by the Company, through Holding, or through any subsidiaries,
joint ventures or unincorporated division of the Company. While the Employee is
employed by the Company, the Company shall provide
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Employee with an office and support staff reasonably necessary for the proper
performance of his duties hereunder and consistent with the past practices of
the Company.
2.02 LIMITATION ON AUTHORITY OF EMPLOYEE. The authority of Employee as
Chief Executive Officer of the Company shall have such limitations as shall be
prescribed by the Directors.
2.03 BASE SALARY. The Company shall pay Employee a salary, determined
on an annual basis by the Directors, for the services rendered by Employee to
the Company while the Employee is employed by the Company (the "Base Salary").
Employee's Base Salary shall in no event be less than his annual salary in
effect on May 26, 1995, as adjusted by any increases during the term of this
Agreement, and shall be amortized for payment upon such dates as Company
customarily pays its employees.
2.04 BONUS. While the Employee is employed by the Company, Employee
shall be entitled to participate in any bonus plan approved by the Directors.
2.05 FRINGE BENEFITS. While the Employee is employed by the Company,
Employee shall be entitled to such employee fringe benefits as are set forth in
the Company's Standard Executive Benefits Program, with present provisions as
set forth generally in Exhibit A attached hereto. Additionally, Employee shall
be entitled to a Company vehicle approved by the Directors as to make and model.
If Employee recognizes additional taxable income as a result of use of a Company
vehicle, Company shall pay Employee such additional amount as shall be necessary
to cover such additional tax on a grossed up basis. Employee's participation in
any benefit program shall be at the same level of employee/employer contribution
as has been set for all participants in such plan.
2.06 BUSINESS EXPENSES. While the Employee is employed by the Company,
the Company will reimburse Employee for all reasonable travel and out-of-pocket
expenses actually incurred by him, consistent with past practices of the
Company, or as otherwise directed by the Directors for the purpose of and in
connection with performing his services to the Company hereunder. Such
reimbursement shall be made upon presentation by Employee to the Company of
vouchers or other statements itemizing such expenses in reasonable detail.
2.07 DEATH OR DISABILITY. In the event of the death or Disability of
Employee while the Employee is employed by the Company, the Company shall have
no further obligations or liability to Employee hereunder, except to pay to
Employee or Employee's estate (i) the amount of Employee's Base Salary in effect
as of the date of death or Disability earned but unpaid to the date of
Employee's death or Disability (including Base Salary for a period of ninety
(90) days between date of Disability and the commencement of disability
insurance benefits under the Company's policy), plus (ii) any unpaid bonus
declared or to be declared by the Directors for prior periods and for the period
in which his death or Disability shall occur (prorated to the date of such death
or Disability), plus (iii) any unreimbursed business expenses incurred by
Employee prior to his death or Disability and presented for payment pursuant to
Section 2.06 hereof.
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2.08 VOLUNTARY TERMINATION BY EMPLOYEE OR TERMINATION FOR CAUSE. In the
event the Employee voluntarily terminates his employment with the Company or the
Employee's employment with the Company is terminated for Cause, the Company
shall have no further obligations or liability to Employee hereunder, except to
pay to Employee (in addition to and without regard for benefits, if any, due or
to become due under any insurance, retirement or other similar plan of the
Company or any other person or entity) (i) the amount of Employee's Base Salary
in effect as of the date of termination earned but unpaid to the date of such
termination, PLUS (ii) any unreimbursed business expenses incurred by Employee
prior to such termination and presented for payment pursuant to Section 2.06
hereof.
2.09 TERMINATION NOT FOR CAUSE. In the event the Company terminates the
Employee's employment with the Company for any reason other than as set forth in
Sections 2.07 or 2.08 above, the Company shall have no further obligations or
liability to Employee hereunder, except to pay to Employee (in addition to
benefits, if any, due or to become due under any insurance, retirement or other
similar plan of the company or any other person or entity) (i) the amount of
Employee's Base Salary in effect as of the date of termination earned but unpaid
to the date of such termination, PLUS (ii) any unpaid bonus declared or to be
declared by the Directors for prior periods and for the period in which such
termination shall occur (pro-rated to the date of such termination), PLUS (iii)
any unreimbursed business expenses incurred by Employee prior to his termination
and presented for payment pursuant to Section 2.06 hereof, PLUS (iv) amounts
payable pursuant to this Agreement as if the Employee was still employed by the
Company.
2.10 NOTICE AND POST-TERMINATION ARRANGEMENTS.
(a) Employee may terminate Employee's employment under this Agreement
only upon at least ninety (90) days' prior written notice.
(b) Upon Company's termination of this Agreement under Section 2.08 or
2.09 HEREOF, Company may require that Employee remain actively on the job for a
period ending ninety (90) days from the date of termination, with full Base
Salary and fringe benefits (subject to Section 2.10(d)), but Employee shall have
no right to remain on the job upon receipt of such notice.
(c) Subject to Section 2.10(d), Company shall have the right to
continue Employee's Base Salary and fringe benefits for a period designated by
Company but not to exceed two (2) years subsequent to the effective date of (i)
any termination under Section 2.08 or 2.09 or (ii) the expiration of the term of
this Agreement; provided, however, that Company shall so notify Employee within
ninety (90) days after the effective date of any termination under Section 2.08
or 2.09 hereof.
(d) Company shall have the option at any time to make a lump sum
payment of all amounts due Employee as Base Salary during any period or part
thereof for which Company has elected to continue Employee's Base Salary under
Section 2.10(c) hereof.
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ARTICLE III
CONFIDENTIALITY AND NONCOMPETITION
The parties acknowledge that the Company presently conducts business
throughout the United States, Canada and Europe. Further, the parties
acknowledge that Employee is extremely knowledgeable about Company's services,
pricing, operations and customers.
3.01 CONFIDENTIALITY. Under no circumstances and at no time, during or
after the Employee's employment with the Company, shall Employee in any manner
whether directly or indirectly, use for his own benefit or the benefit of any
other person, firm, entity or corporation or disclose, divulge, render or offer,
any knowledge or information with respect to the confidential affairs or plans,
trade secrets or know-how of the Company and its subsidiaries and affiliates,
including, without limitation, any work product prepared by the Employee in the
course of his employment with the Company ("Confidential Information"), except
on behalf of the Company in the course of the proper performance of his duties
hereunder. Employee acknowledges and agrees that any and all such Confidential
Information will be received and held by him in a confidential capacity, and
that disclosure of such Confidential Information would pose a direct threat to
the Company in the hands of its competitors. For purposes of this section 3.01,
the term "Confidential Information" shall not include any information which is
generally available to the public other than as a result of a disclosure by
Employee.
3.02 COVENANT NOT TO COMPETE.
(a) During such time as the Employee is employed by the Company and
for such period after termination or expiration of this Agreement as Company has
elected to continue Employee's Base Salary under Section 2.10(c) or make a Lump
Sum Payment under Section 2.10(d), Employee hereby agrees that Employee will
not, singly, jointly, or as an employee, agent or partner of any partnership or
as an officer, agent, employee, director, stockholder (except for not more than
one percent (1%) of the outstanding stock of any company listed on a national
securities exchange or actively traded in the over-the-counter market) or
investor in any other corporation or entity, or as a consultant, advisor, or
independent contractor to any such partnership, corporation or entity, or in any
other capacity, directly, indirectly or beneficially,:
(i) own, manage, operate, join, control, or participate in the
ownership, management, operation, or control of, or work for (as an employee,
agent, consultant, advisor or independent contractor), or permit the use of his
name by, or provide financial or other assistance to, any person, partnership,
corporation, or entity which is in direct or indirect competition within the
United States or Canada (the "Protected Territory") with the business as
conducted by the Company on the date hereof or at any time during Employee's
employment with the Company;
(ii) induce or attempt to induce any person who, on the date
hereof or at any time during Employee's employment with the Company, is an
employee of the Company, to terminate his or her employment with the Company,
except in the proper performance of his duties hereunder; or
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(iii) induce or attempt to induce any person, business, or entity
which is a contracting party with the Company or any of its affiliates, as of
the date hereof or at any time during Employee's employment with the Company (a
"Customer"), to terminate or modify in any way adverse to the interests of the
Company, any written or oral agreement or understanding with the Company, except
in the proper performance of his duties hereunder, and if any Customer attempts
to induce or solicit the Employee to perform or provide any services for it
other than in connection with the Company's or its affiliates' activities,
Employee shall immediately reject such offer or solicitation and inform such
Customer of the restrictions and obligations imposed on the Employee by this
Agreement.
(b) The Company and Employee agree that the covenants set forth in
this Section 3.02 have been negotiated with advice of counsel in the course of
the negotiation and execution of the Stock Purchase Agreement, which endeavor
shall result in the receipt by Employee of greater tangible and intangible
benefits than would otherwise accrue to him, and therefore the Company and
Employee agree that these covenants should and shall be enforced to the fullest
extent permitted by law. Accordingly, if in any judicial or similar proceeding a
court or any similar judicial body shall determine that such covenant is
unenforceable because it covers too extensive a geographical area or survives
too long a period of time, or for any other reason, then the parties intend that
such covenant shall be deemed to cover only such maximum geographical area and
maximum period of time and shall otherwise be deemed to be limited in such
manner as will permit enforceability by such court or similar body.
3.03 SPECIFIC PERFORMANCE. Employee agrees that his breach of the
provisions of Sections 3.01 or 3.02 above will cause irreparable damage to the
Company and that the recovery by the Company of money damages will not
constitute an adequate remedy for such breach. Accordingly, Employee agrees that
the provisions of Sections 3.01 or 3.02 above may be specifically enforced
against him in addition to any other rights or remedies available to the Company
on account of any such breach, and Employee expressly waives the defense in any
equitable proceeding that there is an adequate remedy at law for any such
breach.
ARTICLE IV
MISCELLANEOUS
4.01 TERMINATION OF PRIOR AGREEMENTS. This Agreement is intended to
supersede all prior employment agreements between Company and Employee. By
execution of this Agreement, Employee and Company hereby terminate that certain
Employment Agreement between Company and Employee dated January 20, 1989 and all
other prior employment agreements, which shall be of no further force and
effect.
4.02 ASSIGNMENT. This Agreement is personal to Employee and shall not
be assigned, transferred, hypothecated, pledged or in any way encumbered by him;
PROVIDED, that the rights and obligations of Employee hereunder shall be binding
upon, and inure to the benefit of, Employee's estate. This Agreement shall be
binding upon, and inure to the benefit of, the Company's successors and assigns.
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4.03 AMENDMENT. This Agreement may not be amended, modified or
supplemented in any respect except by written agreement entered into by the
parties hereto.
4.04 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts without resort to its conflict of laws rules.
4.05 COUNTERPART; HEADINGS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The headings of the
Articles and Sections of this Agreement are inserted for convenience only and
shall not constitute a part hereof.
4.06 ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties pertaining to the subject matter contained in it.
4.07 NOTICES. All notices given hereunder shall be in writing and shall
be delivered personally or sent by prepaid registered or certified mail, return
receipt requested, or by nationally recognized overnight courier service, and
addressed as follows:
If to the Company:
Simonds Industries, Inc.
135 Intervale Road
Fitchburg, MA 01420
With a copy to each of:
SI Holding Corporation
c/o Fleet Venture Resources, Inc.
111 Westminster Street
Providence, RI 02903
Attention: Habib Y. Gorgi, Executive Vice President
Hinckley, Allen & Snyder
1500 Fleet Center
Providence, RI 02903
Attention: Richard G. Small, Esq.
If to Employee:
Ross B. George
Chief Executive Officer
Simonds Industries, Inc.
135 Intervale Road
Fitchburg, MA 01420
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All notices shall be deemed to be given on the date received at the address of
the addressee, or, if delivered personally, on the date delivered.
4.08 SEVERABILITY. Any provision of this Agreement which is held by a
court of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to auch jurisdiction(s), ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
IN WITNESS WHEREOF, Employee has executed this Agreement and the Company
has caused this Agreement to be executed as an instrument under seal as of the
day and year first above written.
SIMONDS INDUSTRIES, INC.
By:
--------------------------------
Title: Executive Vice President/CFO
-------------------------------
Ross B. George
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EXHIBIT A
[Standard Executive Benefits Program]
10
FIRST AMENDMENT TO
EMPLOYMENT AND NON-COMPETITION AGREEMENT
This First Amendment to that certain Employment and Non-Competition
Agreement (the "Agreement"), dated as of May 26, 1995, by and between Simonds
Industries Inc., a Delaware corporation (the "Company") as successor by merger
to the company formerly known as Simonds Industries Inc. ("Old Simonds"), and
Ross B. George of Fitchburg, Massachusetts ("Employee").
W I T N E S S E T H:
WHEREAS, the Company is the successor by merger to Old Simonds, and as a
result thereof is a party to the Agreement; and
WHEREAS, the Company and the Employee wish to amend the Agreement in the
manner set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree to amend the Agreement as follows:
1. Section 1.02 is amended in its entirety to provide as follows:
"1.02 CONTRACT TERM. "Contract Term" shall mean the period commencing
on May 26, 1995 through May 25, 2000, and continuing thereafter until
terminated as set forth herein."
2. Section 2.09 is amended in its entirety to provide as follows:
"2.09 TERMINATION NOT FOR CAUSE. At any time after May 25, 2000, the
Company may terminate the Employee's employment with the Company for
any reason other than as set forth in Sections 2.07 or 2.08 above, and
have no further obligations or liability to Employee hereunder, except
(A) to pay to Employee (in addition to benefits, if any, due or to
become due under any insurance, retirement or other similar plan of
the Company or any other person or entity) (i) the amount of
Employee's Base Salary in effect as of the date of termination for a
period of one year after the date of such termination payable as if
Employee was still employed by the Company, PLUS, (ii) any unpaid
bonus declared or to be declared by the Directors for prior periods,
PLUS (iii) any unreimbursed business expenses incurred by Employee
prior to his termination and presented for payment pursuant to Section
2.06 hereof, and (B) to provide Employee continued coverage under the
Company's Standard Executive Benefits Program in effect with respect
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Employee as of the date of termination for a period of one year after
the date of such termination."
3. Section 2.10(b) is amended in its entirety to provide as follows:
"(b) Upon Company's termination of this Agreement under Sections 2.08
or 2.09, Company may require that Employee remain actively on the job
for a period ending ninety (90) days from the date of termination,
with full Base Salary and fringe benefits pursuant to Section 2.09
(subject to Section 2.10(d)), but Employee shall have no right to
remain on the job upon receipt of such notice."
4. Section 4.07 is amended in its entirety to provide as follows:
"4.07 NOTICES. All notices given hereunder shall be in writing and
shall be delivered personally or sent by prepaid registered or
certified mail, return receipt requested, or by nationally recognized
overnight courier service, and addressed as follows:
If to the Company:
Simonds Industries Inc.
135 Intervale Road
Fitchburg, MA 01420
With a copy to each of:
Fleet Venture Resources, Inc.
50 Kennedy Plaza, Suite 1200
Providence, RI 02903
Attention: Habib Y. Gorgi, President
Edwards & Angell, LLP
One BankBoston Plaza
Providence, RI 02903
Attention: Richard G. Small, Esq.
If to Employee:
Ross B. George
Chief Executive Officer
Simonds Industries Inc.
135 Intervale Road
Fitchburg, MA 01420
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All notices shall be deemed to be given on the date received at the
address of the addressee, or, if delivered personally, on the date
delivered."
IN WITNESS WHEREOF, Employee has executed this First Amendment to the
Agreement and the Company has caused this Agreement to be executed as an
instrument under seal as of this 7th day of July, 1998.
Simonds Industries Inc.
By: _________________________________
Title: ______________________________
_____________________________________
Ross B. George
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EXHIBIT A
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[Standard Executive Benefits Program]