EXHIBIT 10.17
EXECUTIVE EMPLOYMENT AGREEMENT
BY AND BETWEEN
ANICOM, INC.
AND
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made as of
October 1, 1996 by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Executive") and ANICOM, INC.,
a Delaware corporation (the "Company").
PRELIMINARY RECITALS
WHEREAS, the Company desires to employ Executive, and Executive desires
to be employed by the Company, as Vice President and Chief Financial Officer of
the Company on the terms and conditions set forth in this Agreement.
WHEREAS, the Company is engaged in the business of selling and
distributing communication related wire, cable, fiber optics and computer
network and connectivity products (the "Business").
NOW, THEREFORE, in consideration of the mutual covenants in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are acknowledged, the Company and Executive agree as follows:
1. Employment of Executive. The Company hereby employs Executive as the
Company's Vice President and Chief Financial Officer, and Executive hereby
accepts such employment and agrees to act as Vice President and Chief Financial
Officer of the Company, all in accordance with the terms and conditions of this
Agreement.
2. Term of Employment. Executive's employment under this Agreement will
begin on the date of this Agreement and will continue until the tenth (10th)
anniversary of the date of this Agreement (the "Initial Employment Period" and
together with any Renewal Period (as defined), if any, the "Employment Period").
The terms and conditions of this Agreement shall be automatically renewed for
subsequent terms of ten (10) years (each, a "Renewal Period") unless at least
one hundred twenty (120) days prior to the commencement of a Renewal Period,
either the Company or the Executive shall give notice to the other of its or his
intent to not renew this Agreement. If notice of intent not to renew this
Agreement is given by either the Company or the Executive pursuant to this
Section 2, such notice shall constitute termination without Cause for purposes
of this Agreement, and any rights of the Executive arising as a result of such
termination without Cause shall survive termination of this Agreement.
Notwithstanding anything to the contrary contained herein, the Employment Period
is subject to termination at any time pursuant to Section 8.
3. Offices and Duties. Subject to Section 8, during the Employment
Period, Executive will perform the duties of Vice President and Chief Financial
Officer of the Company as described in the Company's Bylaws and such other
duties as the Company's Board of
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Directors may prescribe from time to time. Executive agrees that during the
Employment Period, he will devote substantially all of his business time and
attention to fulfill his duties under this Agreement.
4. Compensation
(a) Base Salary. During the Employment Period, the Company
will pay Executive a base salary (the "Base Salary") in accordance with
the Company's normal payroll practices for executive officers. The Base
Salary during the Employment Period will be determined in the sole
discretion of the Company's Board of Directors.
(b) Bonuses. Executive will be eligible for, but is not
guaranteed to receive, additional compensation ("Bonus Payments") as
determined from time to time in the sole discretion of the Company's
Board of Directors.
(c) Benefits. Executive will be entitled to participate in
group life and medical insurance plans, profit-sharing and similar
plans, and other "fringe benefits" (collectively, "Benefits"),
comparable to those made available by the Company to its other senior
executive employees, in accordance with the terms of such plans.
(d) Withholding. All compensation payable to Executive under
this Agreement is stated in gross amount and will be subject to all
applicable withholding taxes, other normal payroll deductions, and any
other amounts required by law to be withheld.
(e) Expenses. The Company, in accordance with its policies and
past practices, will pay or reimburse Executive for all expenses
(including travel and entertainment expenses) reasonably incurred by
Executive during the Employment Period in connection with the
performance of Executive's duties under this Agreement, provided that
Executive, if so requested by the Company's Board of Directors, must
provide to the Company documentation or evidence of expenses for which
Executive seeks reimbursement.
5. Covenant Not to Compete.
5.1 Executive's Acknowledgment. Executive agrees and
acknowledges that in order to assure the Company that it will retain its value
and that of the Business as a going concern, it is necessary that Executive
undertake not to utilize his special knowledge of the Business and his
relationships with customers and suppliers to compete with the Company.
Executive further acknowledges that:
(a) the Company is currently engaged in the Business;
(b) Executive has occupied a position of trust and confidence
with the Company prior to the date of this Agreement and will continue
to acquire an intimate knowledge of all proprietary and confidential
information concerning the Business;
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(c) the agreements and covenants contained in this Section 5
are essential to protect the Company and the goodwill of the Business;
(d) the Company would be irreparably damaged if Executive were
to provide services to any person or entity in violation of the
provisions of this Agreement;
(e) the scope and duration of the Restrictive Covenants are
reasonably designed to protect a protectible interest of the Company
and are not excessive in light
of the circumstances; and
(f) Executive has a means to support himself and his
dependents other than by engaging in the Business, or a business
similar to the Business, and the provisions of this Section 5 will not
impair such ability.
5.2 Non-Compete. The "Restricted Period" for purposes of this
Agreement shall be the period of time commencing on the date hereof and ending
on the date two (2) years after termination of Executive's employment for any
reason, provided that, if a Change in Control occurs and, following the
effective date of the Change in Control, the Executive's employment with the
Company is terminated by the Executive for Good Reason or by the Company without
Cause, then the "Restricted Period" shall end on the effective date of the
termination of Executive's employment unless otherwise extended pursuant to
Section 11 below. Executive hereby agrees that at all times during the
Restricted Period, Executive shall not, directly or indirectly, as employee,
agent, consultant, stockholder, director, co-partner or in any other individual
or representative capacity, own, operate, manage, control, engage in, invest in
or participate in any manner in, act as a consultant or advisor to, render
services for (alone or in association with any person, firm, corporation or
entity), or otherwise assist any person or entity that engages in or owns,
invests in, operates, manages or controls any venture or enterprise that
directly or indirectly engages or proposes to engage in the Business anywhere
within thirty (30) miles of any office of the Company (the "Territory");
provided, however, that nothing contained herein shall be construed to prevent
Executive from investing in the stock of any competing corporation listed on a
national securities exchange or traded in the over-the-counter market, but only
if Executive is not involved in the business of said corporation and if
Executive and his associates (as such term is defined in Regulation 14(A)
promulgated under the Securities Exchange Act of 1934, as in effect on the date
hereof), collectively, do not own more than an aggregate of two percent of the
stock of such corporation.
5.3 Non-Solicitation. Without limiting the generality of the
provisions of Section 5.2 above, Executive hereby agrees that during the
Restricted Period Executive will not, directly or indirectly, solicit, or
participate as employee, agent, consultant, stockholder, director, partner or in
any other individual or representative capacity in any business which solicits,
business from (i) any Person which is or was a customer of the Business during
the Restricted Period, or from any successor in interest to any such Person for
the purpose of marketing, selling or providing any such Person any services or
products offered by or available from the Company, or encouraging any such
Person to terminate or otherwise alter his, her or its relationship with the
Company, or (ii) any Person who is or was a "Prospective Customer" of the
Business, for the purpose of marketing, selling or providing any such Person any
services offered by or available from the Company or encouraging any such Person
to terminate or
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otherwise alter his, her or its relationship with the Company. For purposes of
this Agreement, "Prospective Customer" shall mean any Person who the Company has
contacted (orally or in writing), during the one year period prior to the
earlier of (i) the date of determination or (ii) the effective date of the
termination of Executive's employment with the Company, for the purpose of
developing a relationship relating to the Business.
5.4 Interference with Employee Relationships. During the
Restricted Period, Executive shall not, directly or indirectly, as employee,
agent, consultant, stockholder, director, co-partner or in any other individual
or representative capacity, without the prior written consent of the Company,
employ or engage, recruit or solicit for employment or engagement, any person
who is or becomes employed or engaged by the Company (during the Employment
Period or the Restricted Period), or otherwise seek to influence or alter any
such person's relationship with the Company.
5.5 Blue-Pencil. If any court of competent jurisdiction shall
at any time deem the term of this Agreement or any particular Restrictive
Covenant too lengthy or the Territory too extensive, the other provisions of
this Section 5 shall nevertheless stand, and the Restricted Period shall be
deemed to be the longest period permissible by law under the circumstances and
the Territory shall be deemed to comprise the largest territory permissible by
law under the circumstances. The court in each case shall reduce the Restricted
Period and/or the Territory to permissible duration or size.
6. Severance Payments. Following a Change in Control of the Company,
if, during the thirty-six (36) months following such Change in Control, (i)
Executive is terminated by the Company without Cause or (ii) Executive
terminates employment with the Company (or its successor or assigns) for Good
Reason, the Company shall pay and provide Executive each of the following:
(a) Within five (5) business days after the effective date of
such termination of employment (the "Effective Date"), the Company (or
its successor or assigns) will pay Executive a lump sum cash payment
equal to the greater of:
(i) seven hundred and fifty thousand dollars
($750,000);
(ii) three (3) times the average annual compensation
that was includible in Executive's gross income during each of
the five (5) full fiscal years immediately prior to the
Effective Date.
(b) Executive and his dependents shall continue to be covered
for thirty-six (36) months after the Effective Date by all survivor
rights, insurance and benefit programs of the Company (or its successor
or assigns) in type and amount at least equivalent to that provided to
him and his dependents by the Company immediately prior to the Change
of Control; provided that if participation in any one or more of such
arrangements is not possible under the terms thereof, the Company (or
its successor or assigns) will provide substantially identical benefits
outside of the programs. The cost of this coverage will be paid by the
Company (or its successor or assigns).
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(c) If all or any portion of the amounts payable to Executive
under this Section 6, either alone or together with other payments
which Executive has the right to receive from the Company, constitute
"excess parachute payments" (within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), that are
subject to the excise tax imposed by Section 4999 of the Code (or
similar tax and/or assessment), the Company (or its successor or
assigns) shall increase the amounts payable pursuant to Section 6(a)
above to the extent necessary to place Executive in the same after-tax
position as he would have been in had no such excise tax been imposed
on the payments hereunder. The determination of the amount of any such
excise taxes shall initially be made by the independent accounting firm
employed by the Company immediately prior to the Change in Control. If,
at a later date, it is determined that the amount of excise taxes
payable by Executive is greater than the amount initially so
determined, then the Company (or its successor or assigns) shall pay
Executive an amount equal to the sum of (i) such additional excise
taxes, (ii) any interest, fines and penalties resulting from such
underpayment, plus (iii) an amount necessary to reimburse Executive for
any income, excise or other taxes payable by Executive with respect to
the amount specified in (i) and (ii) above, and the reimbursement
provided by this (iii).
Upon the occurrence of a Change in Control of the Company, if during
the six (6) months following such Change in Control, Executive terminates
employment with the Company (or its successor or assigns) without Good Reason,
then within five (5) business days after the Effective Date, the Company shall
pay to Executive an amount equal to twenty percent (20%) of the amount described
in Section 6(a) above.
7. Confidential Information. During the term of this Agreement and
thereafter, Executive shall keep secret and retain in strictest confidence, and
shall not, without the prior written consent of the Company, furnish, make
available or disclose to any third party or use for the benefit of himself or
any third party, any Confidential Information, except to the extent reasonably
necessary to carry out Executive's duties and responsibilities to the Company.
As used in this Section 7, "Confidential Information" shall mean any information
relating to the Business or affairs of the Company, including but not limited to
information relating to financial statements, business plans, forecasts,
purchasing plans, customer identities, potential customers, employees,
suppliers, equipment, programs, strategies and information, analyses, profit
margins or other proprietary information used by the Company in connection with
the Business of the Company; provided, however, that Confidential Information
shall not include any information which is in the public domain or becomes known
in the industry through no wrongful act on the part of Executive. Executive
acknowledges that the Confidential Information is vital, sensitive, confidential
and proprietary to the Company.
8. Termination
(a) The Company may terminate the Executive's employment
hereunder at any time, without Cause (as defined in Section 9), upon
not less than sixty (60) days notice to the Executive.
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(b) The Company may terminate Executive's employment hereunder
at any time for Cause by providing to Executive written notice of
termination stating the grounds for termination for Cause. Upon notice
of termination of employment for Cause, the Employment Period will
immediately end and Executive will not be entitled to receive any
further compensation (whether in the form of Base Salary, Bonus
Payments, or Benefits or otherwise) other than accrued but unpaid Base
Salary.
(c) Notwithstanding anything to the contrary in this
Agreement, the Employment Period will terminate upon the death or
Disability of Executive. In the case of termination by the Executive
for Good Reason or Disability, termination shall be effective upon the
date of service of notice by either the Executive or the Company. In
the case of death, termination shall become effective immediately upon
the death of Executive. Upon termination by the Company without Cause,
termination by the Executive for Good Reason, death or Disability,
Executive will be entitled to receive (i) all accrued but unpaid Base
Salary as of the date of such termination, (ii) a pro rata portion of
the Bonus Payments (if any) for the year in which such termination
occurs, and (iii) any amounts payable pursuant to Section 6(a) above,
but all other obligations of the Company to pay Executive any further
compensation, whether in the form of Base Salary, Bonus Payments, or
Benefits (other than death and Disability benefits, if any) or
otherwise, will terminate.
9. Definitions. As used in this Agreement:
"Affiliate" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated association or other
entity (other than the Company) that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company including, without limitation, any member of an affiliated group of
which the Company is a common parent corporation as provided in Section 1504 of
the Code.
"Anixter Family" means ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, their spouses, heirs and any group (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), of which any of the foregoing persons is a member for purposes of
acquiring, holding or disposing of securities of the Company, any trust
established by or for the benefit of any of the foregoing and any other entity
controlled by or for the benefit of any of the foregoing.
"Cause" means (a) an act of fraud or dishonesty by Executive that
results in gain or personal enrichment of Executive at the Company's expense,
(b) Executive's conviction of a felony-class crime or any act involving moral
turpitude, (c) any material breach by Executive of any provision of this
Agreement that has not been cured by Executive within thirty days of written
notice of such breach from the Company, (d) the Executive's willful engaging in
gross misconduct materially injurious to the Company that has not been cured by
Executive within thirty days of written notice specifying the alleged willful
gross misconduct and material injury, or (e) any intentional act or gross
negligence that has a material, detrimental effect on the reputation or Business
of the Company. The decision to terminate Executive's employment for
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Cause, to take other action or to take no action in response to such occurrence
shall be in the sole and exclusive discretion of the Company.
"Change in Control" means the happening of any of the following events:
(a) (i) An acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) (a "Person") of the beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%)
or more of the then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (ii) the approval by the
stockholders of the Company of a reorganization, merger, consolidation,
complete liquidation or dissolution of the Company, the sale or
disposition of all or substantially all of the assets of the Company or
similar corporate transaction (in each case referred to in this Section
9(a) as a "Corporate Transaction") or, if consummation of such
Corporate Transaction is subject, at the time of such approval by
stockholders, to the consent of any government or governmental agency,
the obtaining of such consent (either explicitly or implicitly)
provided such acquisition or beneficial ownership would result in any
other Person's beneficially owning fifty percent (50%) or more of the
Outstanding Company Common Stock; excluding, however, the following:
(A) any acquisition by the Company or by an employee benefit plan (or
related trust) sponsored or maintained by the Company or an Affiliate,
(B) any acquisition by a member of the Anixter Family, or (C) any
acquisition by or consummation of a Corporate Transaction with an
Affiliate.
(b) A change in the composition of the Board such that the
individuals who, as of the date of the Initial Public Offering (the
"Public Offering"), constitute the Board (such Board shall be
hereinafter referred to as the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided, however, for
purposes of this Section 9(b), that any individual who becomes a member
of the Board subsequent to the date of the Company's Public Offering
whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of those
individuals who are members of the Board and who were also members of
the Incumbent Board (or deemed to be such pursuant to this provision)
shall be considered as though such individual were a member of the
Incumbent Board; but, provided, further, that any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board shall not be so considered as a member of
the Incumbent Board.
"Disability" will be deemed to have occurred whenever the Executive has
suffered physical or mental illness, injury, or infirmity that prevents
Executive from fulfilling his duties under this Agreement for a period of ninety
(90) consecutive days in the manner ordinarily required of him as an officer of
the Company and precludes him from actively participating in the management of
the Business of the Company.
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"Good Reason" means the occurrence of any of the following events,
unless (i) such event occurs with the Executive's express prior written consent,
(ii) the event is an isolated, insubstantial or inadvertent action or failure to
act which was not in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive, or (iii) the event
occurs in connection with the termination of the Executive's employment for
Cause, Disability or death:
(a) the assignment to the Executive by the Company of any
duties which are inconsistent with, a diminution of or an adverse
change in the Executive's position, duty, title, office, responsibility
or status with the Company, including without limitation, any
diminution of the Executive's position or responsibility in the
decision or management processes of the Company, reporting
relationships, job description, duties, responsibilities, or any
removal of the Executive from, or any failure to reelect the Executive
to, such position;
(b) a reduction by the Company in the Executive's rate of Base
Salary during the Employment Period;
(c) any failure to either continue in effect any material
Benefits or to substitute and continue other plans, policies, programs
or arrangements providing the Executive with substantially similar
benefits, or the taking of any action which would substantially and
adversely affect the Executive's participation in or materially reduce
the Executive's Benefits or compensation;
(d) any failure by any successor or assignee of the Company to
continue this Agreement in full force and effect or any breach of this
Agreement by the Company (or any successor or assignee of the Company),
unless such breach is cured within thirty (30) days of receiving
written notice of the breach from the Executive.
"Person" means any individual, corporation, trust, proprietorship,
association, governmental body, agency or subdivision or other entity.
10. Remedies. Executive acknowledges and agrees that the covenants set
forth in Sections 5 and 7 of this Agreement (collectively, the "Restrictive
Covenants") are reasonable and necessary for the protection of the Company's
business interests, that irreparable injury will result to the Company if
Executive breaches any of the terms of the Restrictive Covenants, and that in
the event of Executive's actual or threatened breach of any such Restrictive
Covenants, the Company will have no adequate remedy at law. Executive
accordingly agrees that in the event of any actual or threatened breach by him
of any of the Restrictive Covenants, the Company shall be entitled to immediate
temporary injunctive and other equitable relief, without bond and without the
necessity of showing actual monetary damages, subject to hearing as soon
thereafter as possible. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other remedies available to it for
such breach or threatened breach, including the recovery of any damages which it
is able to prove.
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11. Extension of Restricted Period. If a Change in Control occurs, and,
following the effective date of the Change in Control, Executive's employment
with the Company is terminated by the Executive for Good Reason or by the
Company without Cause, Executive shall have the option of extending the
Restricted Period for an additional term of two (2) years after the Effective
Date by giving written notice thereof to the Company on or before the twentieth
(20th) day following the Effective Date (the "Extension Option"). If Executive
exercises the Extension Option, the Company shall pay to Executive in
consideration for the extension of the Restricted Period an amount equal to two
(2) times Executive's highest annual compensation that was includible in
Executive's gross income during any of the five (5) full fiscal years
immediately prior to the Effective Date. The foregoing amount shall be payable
within fifteen (15) business days of Executive's exercise of the Extension
Option.
12. Miscellaneous.
(a) Notices. All notices and other communication between the
parties pursuant to this Agreement must be in writing and will be
deemed given when delivered in person, one (1) business day after being
dispatched by a nationally recognized overnight courier service, three
(3) business days after being deposited in the U.S. Mail, registered or
certified mail, return receipt requested, or one (1) business day after
being sent by facsimile (with receipt acknowledged), to the Company at
the address of its principal office in the Chicago, Illinois
metropolitan area and to Executive (or his representatives) at his
address as shown on the Company's records. Executive (or his
representatives) may change his address for notice purposes by
delivering notice to the Company in accordance with this Section 12(a).
All notices sent to the Company shall also be delivered to ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq., Facsimile No.:
(312-902-1061).
(b) Governing Law. This Agreement will be subject to and
governed by the laws of the State of Illinois, without regard to
principles of conflicts of laws.
(c) Binding Effect. This Agreement will be binding upon and
inure to the benefit of the parties and their respective heirs, legal
representatives, executors, administrators, successors, and assigns,
subject to the limitations on assignment in Section 12(h).
(d) Entire Agreement. This Agreement constitutes the entire
Agreement between the parties with respect to the subject matter of
this Agreement and supersedes any other agreements, whether oral or
written, between the parties with respect to the subject matter of this
Agreement.
(e) Modification. No change or modification of this Agreement
will be valid unless it is in writing and signed by both of the
parties. No waiver of any provision of this Agreement will be valid
unless in writing and signed by the person or party to be charged.
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(f) Severability. If any provision of this Agreement is, for
any reason, invalid or unenforceable, the remaining provisions of this
Agreement will nevertheless be valid and enforceable and will remain in
full force and effect. Any provision of this Agreement that is held
invalid or unenforceable by a court of competent jurisdiction will be
deemed modified to the extent necessary to make it valid and
enforceable and as so modified will remain in full force and effect.
(g) Headings. The headings in this Agreement are inserted for
convenience only and are not to be considered in the interpretation of
construction of the provisions of this Agreement.
(h) Assignability. This Agreement may not be assigned by
either party without the prior written consent of the other party,
except that the Company may assign its rights to, and cause its
obligations under this Agreement to be assumed by, any person or entity
to whom or to which the Company simultaneously transfers by sale,
merger, or otherwise all or substantially all of its assets.
(i) No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by Executive and the
Company to express their mutual intent, and no rule of strict
construction will be applied against Executive or the Company.
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IN WITNESS WHEREOF, the parties have executed this Executive Employment
Agreement as of the date first above written.
ANICOM, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Its: Chairman and Chief Executive Officer
EXECUTIVE:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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