Exhibit 10.3


 


EMPLOYMENT AND
NON-COMPETITION AGREEMENT


 


THIS EMPLOYMENT AND
NON-COMPETITION AGREEMENT (this “Agreement”) is
made as of January 30, 2004, between Poorman-Douglas Corporation, a Rhode
Island corporation (the “Company”), and Jeffrey B. Baker (“Executive”).


 


WHEREAS, this
Agreement is being entered into in connection with the merger (the “Merger”)
of PD Merger Corp. (“Merger Sub”), an Oregon corporation and
wholly-owned subsidiary of EPIQ Systems, Inc. (“Parent”), with and into
P-D Holding Corp., an Oregon corporation (“Emerald”), pursuant to that
certain Agreement and Plan of Merger, dated as of the date hereof, by and among
Parent, Merger Sub, Emerald and each of the Party Shareholders named therein
(the “Merger Agreement”); and


 


WHEREAS, the Company
and Executive desire to enter into this Agreement providing for Executive’s
initial employment by the Company on the terms and conditions provided herein.


 


NOW,
THEREFORE, in consideration of the mutual covenants contained herein, as well
as for the mutual covenants set forth in the Merger Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:


 


1.                                       Employment.  The Company shall employ Executive, and Executive
hereby accepts employment with the Company, upon the terms and conditions set
forth in this Agreement for the period beginning on the date hereof and ending
as provided in Section 4  hereof (the
“Employment Period”).  Although
Executive’s principal location for employment shall be Beaverton, Oregon,
Executive agrees that he will travel as business conditions warrant and as
reasonably requested by the Board of Directors of the Company (the “Board”) and
the president of Parent.


 


2.                                       Position
and Duties.


 


(a)                                  During
the Employment Period, Executive shall serve as the chief executive officer of
the Company and shall have the normal duties, responsibilities, functions and
authority of the chief executive officer of the Company, subject to the power
and authority of each of the Board and the president of Parent to expand or
limit such duties, responsibilities, functions and authority, to overrule
actions of officers of the Company and to alter Executive’s title.  During the Employment Period, Executive shall
render such administrative, financial and other executive and managerial
services to the Company and its Subsidiaries as the president of Parent or the
Board may from time to time lawfully and reasonably direct, including, without
limitation, integrating the Company’s and its Subsidiaries’ business into
Parent’s business.


 


(b)                                 During
the Employment Period, Executive shall report to Parent’s president and shall
devote his best efforts and his full business time and attention (except for
permitted vacation periods and periods of illness or other incapacity) to the
business and affairs of the Company and its Subsidiaries.  Executive shall perform his duties,
responsibilities and functions to the Company and its Subsidiaries hereunder to
the best of his abilities in a diligent, trustworthy, professional and
efficient manner and shall comply with the Company’s and its Subsidiaries’
policies and procedures in all material respects.


 


(c)                                  For
purposes of this Agreement, “Subsidiaries” shall mean any corporation or
other entity of which the securities or other ownership interests having the
voting power to elect a majority of the board of directors or other governing
body are, at the time of determination, owned by the Company, directly or
through one of more Subsidiaries.


 


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3.                                       Compensation
and Benefits.


 


(a)                                  During
the Employment Period, Executive’s base salary shall be not less than $300,000
per annum (the “Minimum Salary Level” and, as adjusted from time to
time, the “Base Salary”), which salary shall be payable by the Company
in regular installments in accordance with the Company’s general payroll
practices (as such practices may be in effect from time to time).  During the Employment Period, Executive
shall be eligible to participate in the Company’s “Pay for Performance” and
other bonus programs (as they may be modified, replaced or eliminated from time
to time).  The Company’s “Pay for
Performance” program, as in effect on the date hereof, is attached hereto as Exhibit
A.


 


(b)                                 During
the Employment Period and until such time as the Company’s employee benefit
programs are consolidated with those of Parent, Executive shall be entitled to
participate in all of the employee benefit programs of the Company for which senior
executive employees of the Company are generally eligible, as such programs may
be modified, replaced or eliminated from time to time.  After such time as the Company’s employee
benefit programs are consolidated with those of Parent, Executive shall be
entitled to participate in all of the employee benefit programs of Parent and
its Subsidiaries for which senior executive employees of Parent are generally
eligible, as such programs may be modified, replaced or eliminated from time to
time.  Any payment which Executive is
required to make pursuant to such employee benefit programs may be adjusted or
implemented from time to time consistent with changes affecting the
participants generally in such programs. 
In addition, during the Employment Period, Executive shall be entitled
to receive the benefits set forth on Exhibit B attached hereto.


 


(c)                                  During
the Employment Period, Executive shall be entitled to up to five (5) weeks of
paid vacation per calendar year, which amount shall be pro rated for any partial
calendar year of employment during the Employment Period; provided,  however,
that Executive shall schedule such vacation time in a manner consistent with
the business needs of Parent, the Company and their Subsidiaries.  Executive’s unused vacation time shall not
be carried forward to any subsequent calendar year, and no compensation shall
be payable in lieu thereof.


 


(d)                                 During
the Employment Period, the Company shall reimburse Executive for all reasonable
and appropriate expenses actually incurred by Executive in the course of
performing Executive’s duties and responsibilities under this Agreement,
consistent with the Company’s policies in effect from time to time with respect
to such expenses, upon presentation of expense statements, vouchers or other
supporting information as may be required under the Company’s policies in
effect from time to time.


 


(e)                                  All
amounts payable to Executive as compensation hereunder (including Section 4
hereof) shall be subject to all required and customary withholding by the
Company.


 


4.                                       Term.


 


(a)                                  The
Employment Period shall end on January 30, 2008 (the “Termination Date”);
provided that (i) the Employment Period shall terminate prior to the
Termination Date immediately upon Executive’s resignation or retirement (with
or without Good Reason), death or Disability, and (ii) the Employment Period
may be terminated by the Company at any time prior to Termination Date for
Cause (as defined below) or without Cause. 
Except as otherwise provided herein, any termination of the Employment
Period by the Company shall be effective as specified in a written notice from
the Company to Executive.


 


(b)                                 If
the Employment Period is terminated by the Company without Cause prior to the
Termination Date, Executive shall be entitled to continue to receive his Base
Salary, payable in regular installments from the date of termination through
the Termination Date (the “Severance Period”). 
In addition, for the year in which Executive’s employment was terminated
without Cause only, Executive shall be entitled to receive, in accordance with
the Company’s then standard payroll practices, a pro rated portion of any bonus
Executive was eligible to receive had Executive’s employment not been
terminated.  Notwithstanding the 


 


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foregoing,
Executive shall not be entitled to receive any amounts pursuant to this Section
4(b) unless (x) Executive has executed and delivered to the Company a
customary release providing for the release of all claims (if any) Executive
may have against Parent or any of its Subsidiaries, employees or directors
(other than claims for severance due hereunder) (the “Release”), and (y) the
Release has become fully effective in all respects, and Executive has not
breached the provisions of the Release or breached the provisions of Sections
5, 6 or 7 hereof.  In
the case of Executive’s termination without Cause, Executive shall not be
entitled to any other salary, compensation or benefits after termination of the
Employment Period, except as specifically provided for in this Section 4(b)
or as otherwise required by applicable law.


 


(c)                                  If,
prior to the Termination Date, (i) Executive terminates the Employment Period
for Good Reason (as defined below), or (ii) the Employment Period terminates
due to Executive’s death, Executive shall be entitled to continue to receive
his Base Salary, payable in regular installments in accordance with the
Company’s then standard payroll practices from the date of termination until
the Termination Date, plus, for the year in which the Employment Period was
terminated, Executive shall be entitled to receive, in accordance with the
Company’s then standard payroll practices, a pro rated portion of any bonus
Executive was eligible to receive had Executive’s employment not been
terminated.  Executive will be eligible
for the payments described in the foregoing sentence if, and only if, (x)
Executive (or his estate, as the case may be) has executed and delivered to the
Company the Release, and (y) the Release has become fully effective in all
respects, and Executive has not breached the provisions of the Release or
breached the provisions of Sections  5, 6 or 7
hereof.  In the case of Executive’s
termination pursuant to this Section 4(c), Executive shall not be
entitled to any other salary, compensation or benefits after termination of the
Employment Period, except as specifically provided for in this Section 4(c) or
as otherwise required by applicable law.


 


(d)                                 If,
prior to the Termination Date, the Employment Period terminates due to
Executive’s Disability, Executive shall be entitled to continue to receive an
amount equal to the amount (if any) by which Executive’s gross Base Salary
exceeds any disability insurance proceeds to be received by Executive in
connection with or as a result of his Disability, payable in regular
installments in accordance with the Company’s then standard payroll practices
from the date of termination until the Termination Date, plus, for the year in
which the Employment Period was terminated due to Executive’s Disability,
Executive shall be entitled to receive, in accordance with the Company’s then
standard payroll practices, a pro rated portion of any bonus Executive was
eligible to receive had Executive’s employment not been terminated.  Executive will be eligible for the payments
described in the foregoing sentence if, and only if, (x) Executive has executed
and delivered to the Company the Release, and (y) the Release has become fully
effective in all respects, and Executive has not breached the provisions of the
Release or breached the provisions of Sections  5, 6 or 7
hereof.  In the case of Executive’s
termination pursuant to this Section 4(d), Executive shall not be entitled to
any other salary, compensation or benefits after termination of the Employment
Period, except as specifically provided for in this Section 4(d) or
as otherwise required by applicable law.


 


(e)                                  If
the Employment Period is terminated at any time for any reason other than as
described in Section 4(a), 4(b) or 4(c)
above, Executive shall only be entitled to receive his Base Salary through the
date of termination and shall not be entitled to any other salary, compensation
or benefits from the Company or its Subsidiaries thereafter, except as required
by applicable law.


 


(f)                                    Except
as otherwise expressly provided herein, all of Executive’s rights to salary,
bonuses, employee benefits and other compensation hereunder which would have
accrued or become payable after the termination or expiration of the Employment
Period shall cease upon such termination or expiration, other than those
expressly required under applicable law.


 


(g)                                 For
purposes of this Agreement, “Cause” shall mean with respect to Executive one or
more of the following: (i) the conviction, plea of guilty or plea of nolo
contendre with respect to (x) a felony of any nature, or (y) any crime
involving fraud with respect to Parent or any of its Subsidiaries or any of
their customers, suppliers or other business relations, (ii) repeated conduct
causing Parent or any of its Subsidiaries substantial public disgrace or
disrepute or substantial economic harm, (iii) the continued failure, as
determined


 


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in the
good faith reasonable judgment of the Board, to perform his duties under this
Agreement as reasonably directed by the Board or Parent’s president, which
failure is not cured, if curable, within ten (10) business days after delivery
of written notice thereof to Executive, (iv) any act or omission aiding or
abetting a competitor, supplier or customer of Parent or any of its
Subsidiaries to the material disadvantage or detriment of Parent or any of its
Subsidiaries, (v) gross negligence or willful misconduct with respect to Parent
or any of its Subsidiaries or (vi) any material breach of this Agreement which,
if curable, is not cured within ten (10) business days after delivery of
written notice thereof to Executive.


 


(h)                                 For
purposes of this Agreement, “Good Reason” shall mean if Executive
resigns from employment with the Company prior to the end of the Employment
Period as a result of one or more of the following reasons: (i) the
Company reduces the amount of the Base Salary below the Minimum Salary Level,
(ii) the Company reduces Executive’s responsibilities to a level which is
materially inconsistent with the position of chief executive officer of the
Company, (iii) the Company fails to pay the Base Salary or other benefits
required to be provided by the Company to Executive hereunder, (iv) the Company
materially reduces the overall compensation or benefits required to be provided
by the Company to Executive hereunder, or (v) any change of Executive’s
principal office location to a location more distant than fifty (50) miles from
Beaverton, Oregon; provided that written notice of Executive’s
resignation for Good Reason must be delivered to the Company within 60 days
after the occurrence of any such event in order for Executive’s resignation
with Good Reason to be effective hereunder; provided further that, in
order for Executive’s resignation for Good Reason to be effective hereunder,
the Company must not have cured such event (if curable) within 20 days after
receiving written notice thereof.


 


(i)                                     For
the purposes of this Agreement, “Disability” shall mean the Executive’s
inability to perform the essential duties, responsibilities and functions of
his position with the Company and its Subsidiaries as a result of any mental or
physical impairment or incapacity even with reasonable accommodations of such
disability or incapacity provided by the Company and its Subsidiaries or if
providing such accommodations would be unreasonable, all as determined by the
Board in its reasonable good faith judgment. 
Executive shall cooperate in all respects with the Company if a question
arises as to whether he has become disabled.


 


5.                                       Confidential
Information.


 


(a)                                  Executive
acknowledges that the information, observations and data (including trade
secrets) obtained by him while employed by the Company and its Subsidiaries
(including those obtained by him while employed by Emerald and its Subsidiaries
prior to the date of this Agreement and the Merger) concerning the business or
affairs of Parent, Emerald, the Company, or any other Subsidiary of Parent (“Confidential
Information”) are the property of Parent, Emerald, the Company, or such
Subsidiary.  Therefore, Executive agrees
that he shall not disclose to any person or entity or use for his own purposes
any Confidential Information or any confidential or proprietary information of
other persons or entities in the possession of Parent and its Subsidiaries (“Third
Party Information”), without the prior written consent of Parent’s
president or the Board, unless and to the extent that the Confidential
Information or Third Party Information becomes generally known to and available
for use by the public other than as a result of Executive’s acts or
omissions.  Executive shall deliver to
the Company at the termination or expiration of the Employment Period, or at
any other time the Company may request, all memoranda, notes, plans, records,
reports, computer files, disks and tapes, printouts and software and other
documents and data (and copies thereof) embodying or relating to Third Party
Information, Confidential Information, Work Product (as defined below) or the
business of Parent, the Company or any other Subsidiaries which Executive may
then possess or have under his control.


 


(b)                                 Executive
shall be prohibited from using or disclosing any confidential information or
trade secrets that Executive may have learned through any prior employment;
provided it is understood that Executive shall be allowed to use the
confidential information and trade secrets of Emerald and its Subsidiaries in
connection with Executive’s duties hereunder. 
If at any time during his employment with the Company or


 


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any of
its Subsidiaries, Executive believes he is being asked to engage in work that
will, or will be likely to, jeopardize any confidentiality or other obligations
Executive may have to former employers, Executive shall immediately advise the
president of Parent so that Executive’s duties can be modified
appropriately.  Executive represents and
warrants to the Company that Executive took nothing with him which belonged to
any former employer when Executive left his prior position and that Executive
has nothing that contains any information which belongs to any former
employer.  If at any time Executive
discovers this is incorrect, Executive shall promptly return any such materials
to Executive’s former employer.  The
Company does not want any such materials, and Executive shall not be permitted
to use or refer to any such materials in the performance of Executive’s duties
hereunder.


 


6.                                       Intellectual
Property, Inventions and Patents. 
Executive acknowledges that all discoveries, concepts, ideas,
inventions, innovations, improvements, developments, methods, designs,
analyses, drawings, reports, patent applications, copyrightable work and mask work
(whether or not including any confidential information) and all registrations
or applications related thereto, all other proprietary information and all
similar or related information (whether or not patentable) which relate to
Parent’s or any of its Subsidiaries’ actual or anticipated business, research
and development or existing or future products or services and which are
conceived, developed or made by Executive (whether alone or jointly with
others) while employed by the Company or its predecessor and its Subsidiaries,
whether before or after the date of this Agreement (“Work Product”), belong to
Parent or such Subsidiary.  Executive
shall promptly disclose such Work Product to the president of Parent and, at
the Company’s expense, perform all actions reasonably requested by the
president of Parent or the Board (whether during or after the Employment
Period) to establish and confirm such ownership (including, without limitation,
assignments, consents, powers of attorney and other instruments).  Executive acknowledges that all Work Product
shall be deemed to constitute “works made for hire” under the U.S. Copyright
Act of 1976, as amended.


 


7.                                       Non-Compete
and Non-Solicitation.


 


(a)                                  Executive
acknowledges that during the course of his employment with the Company and its
Subsidiaries he shall become familiar with Parent’s and the Company’s trade
secrets and with other Confidential Information concerning the Parent, the
Company and their Subsidiaries and that Executive’s services shall be of
special, unique and extraordinary value to Parent, the Company and its
Subsidiaries.  Therefore, in
consideration of the consummation of the transactions contemplated by the
Merger Agreement, the Company’s agreement to employ Executive and the
compensation to be paid to Executive hereunder and under the Merger Agreement,
Executive agrees that, until the later of (i) the date that is five years after
the date hereof and (ii) the date that is two (2) years after the date of
termination of the Employment Period (the “Noncompete Period”),
Executive shall not, anywhere in North America, directly or indirectly own any
interest in, manage, control, participate in, consult with, render services
for, be employed in an executive, managerial or administrative capacity by, or
in any manner engage in any business competing with the businesses of Parent or
any of its Subsidiaries, as such businesses exist or are in process during the
Employment Period or on the date of the termination or expiration of the
Employment Period.  Nothing herein shall
prohibit Executive from being a passive owner of not more than 4.9% of the
outstanding stock of any class of a corporation which is publicly traded, so
long as Executive has no active participation in the business of such
corporation.


 


(b)                                 During
the Noncompete Period, Executive shall not directly or indirectly through
another person or entity (i) induce or attempt to induce any employee of Parent
or any of its Subsidiaries to leave the employ of Parent or such Subsidiary, or
in any way interfere with the relationship between Parent or any of its
Subsidiaries and any employee thereof, (ii) hire any person who was an employee
of Parent or any of its Subsidiaries at any time during the Employment Period
or (iii) induce or attempt to induce any customer, referral source, supplier,
licensee, licensor, franchisee or other business relation of Parent or any of
its Subsidiaries to cease doing business with Parent or such Subsidiary, or in
any way interfere with the relationship between any such customer, supplier,
licensee or business relation and Parent or any of its Subsidiaries.


 


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8.                                       Enforcement.  If, at the time of enforcement of Sections
5, 6 or 7 of this Agreement, a court holds that the restrictions stated herein
are unreasonable under circumstances then existing, the parties hereto agree
that the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and
that the court shall be allowed to revise the restrictions contained herein to
cover the maximum period, scope and area permitted by law.  Because Executive’s services are unique and
because Executive has access to Confidential Information and Work Product, the
parties hereto agree that Parent and the Company would suffer irreparable harm
from a breach of Sections 5, 6 or 7 by Executive and that
money damages would not be an adequate remedy for any such breach of this
Agreement.  Therefore, in the event of a
breach or threatened breach of this Agreement, the Company or its successors or
assigns, in addition to other rights and remedies existing in their favor,
shall be entitled to specific performance and/or injunctive or other equitable
relief from a court of competent jurisdiction in order to enforce, or prevent
any violations of, the provisions hereof (without posting a bond or other
security).  Executive acknowledges (i)
that the restrictions contained in Section 7 are reasonable, (ii) that
Executive has reviewed the provisions of this Agreement with his legal counsel
and (iii) that Executive is entering into this Agreement upon Executive’s
initial employment of the Executive with the Company and its Subsidiaries.


 


9.                                       Executive’s
Representations.  Executive hereby
represents and warrants to the Company that (i) the execution, delivery and
performance of this Agreement by Executive do not and shall not conflict with,
breach, violate or cause a default under any contract, agreement, instrument,
order, judgment or decree to which Executive is a party or by which he is
bound, (ii) Executive is not a party to or bound by any employment agreement,
noncompete agreement or confidentiality agreement with any other person or
entity and (iii) upon the execution and delivery of this Agreement by the
Company, this Agreement shall be the valid and binding obligation of Executive,
enforceable in accordance with its terms. 
Executive hereby acknowledges and represents that he has consulted with
independent legal counsel regarding his rights and obligations under this
Agreement and that he fully understands the terms and conditions contained
herein.


 


10.                                 Survival.  Sections 4 through 22,
inclusive, shall survive and continue in full force in accordance with their
terms notwithstanding the expiration or termination of the Employment Period.


 


11.                                 Notices.  Any notice or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given (i) when personally
delivered or sent by telecopy (with hard copy to follow), (ii) one business day
after being sent by reputable overnight express courier (charges prepaid), or
(iii) five days following mailing by certified or registered mail, postage
prepaid and return receipt requested. 
Unless another address is specified in writing, notices and
communications to Executive and the Company shall be sent to the addresses
indicated below:


 


Notices to
Executive:


 


Jeffrey B.
Baker

402 Ashdown Circle

West Linn, OR 97068


 


With a copy
to:


 


Kurt W. Ruttum

Tonkon Torp LLP

1600 Pioneer Tower

888 SW Fifth Avenue

Portland, Oregon 97204

Fax No. (503) 972-3743


 


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Notices to the
Company:


 


Poorman-Douglas
Corporation

Attention: Board of Directors

10300 SW Allen Blvd.

Beaverton, OR 97005


 


 


With a copy
to:


 


EPIQ Systems,
Inc.

Attention: Chief Financial Officer

501 Kansas Avenue

Kansas City, KS 66105


 


12.                                 Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement or any action in any other
jurisdiction, but this Agreement shall be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.


 


13.                                 Complete
Agreement.  This Agreement, the
Merger Agreement, those documents expressly referred to herein or in the Merger
Agreement and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way
(including, without limitation, (x) the Executive Compensation, Benefits and
Contingent Severance Agreement between Jeffrey B. Baker and Poorman-Douglas
Corporation, dated March 1, 2001, and (y) the Employee Nondisclosure,
Developments and Nonsolicitation Agreement between Jeffrey B. Baker and
Poorman-Douglas Corporation, dated March 1, 2001, each of which shall be
terminated and of no further force or effect as of the date of the execution
and delivery of this Agreement), but excluding any breaches thereof by either
party prior to the date hereof).


 


14.                                 No
Strict Construction.  The language
used in this Agreement shall be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict construction shall
be applied against any party.


 


15.                                 Counterparts.  This Agreement may be executed in separate counterparts
(including by means of telecopier signature pages), each of which is deemed to
be an original and all of which taken together constitute one and the same
agreement.


 


16.                                 Successors
and Assigns.  This Agreement is
intended to bind and inure to the benefit of and be enforceable by Executive,
the Company and their respective heirs, successors and assigns, except that
Executive may not assign his rights or delegate his duties or obligations
hereunder without the prior written consent of the Company.


 


17.                                 Choice
of Law.  All issues and questions
concerning the construction, validity, enforcement and interpretation of this
Agreement and the exhibits and schedules hereto shall be governed by, and
construed in accordance with, the laws of the State of Oregon, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of Oregon or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Oregon.


 


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18.                                 Amendment
and Waiver.  The provisions of this
Agreement may be amended or waived only with the prior written consent of the
Company and Executive, and no course of conduct or course of dealing or failure
or delay by any party hereto in enforcing or exercising any of the provisions
of this Agreement (including, without limitation, the Company’s right to
terminate the Employment Period for Cause) shall affect the validity, binding
effect or enforceability of this Agreement or be deemed to be an implied waiver
of any provision of this Agreement.


 


19.                                 Insurance.  The Company may, at its discretion, apply
for and procure in its own name and for its own benefit life and/or disability
insurance on Executive in any amount or amounts considered advisable.  Executive agrees to cooperate in any medical
or other examination, supply any information and execute and deliver any
applications or other instruments in writing as may be reasonably necessary to
obtain and constitute such insurance. 
Executive hereby represents that he has no reason to believe that his
life is not insurable at rates now prevailing for healthy men of his age.


 


20.                                 Indemnification
and Reimbursement of Payments on Behalf of Executive.  The Company and its Subsidiaries shall be
entitled to deduct or withhold from any amounts owing from the Company or any
of its Subsidiaries to Executive any federal, state, local or foreign
withholding taxes, excise tax, or employment taxes (“Taxes”) imposed
with respect to Executive’s compensation or other payments from the Company or
any of its Subsidiaries or Executive’s ownership interest in the Company
(including, without limitation, wages, bonuses, dividends, the receipt or
exercise of equity options and/or the receipt or vesting of restricted
equity).  In the event the Company or
any of its Subsidiaries does not make such deductions or withholdings,
Executive shall indemnify the Company and its Subsidiaries for any amounts paid
by the Company with respect to any such Taxes.


 


21.                                 Dispute
Resolution.


 


(a)                                  Except
as otherwise expressly provided in this Agreement, the parties agree that the
arbitration procedure set forth below shall be the sole and exclusive method
for resolving and remedying any and all disputes, controversies or claims that
arise out of or in connection with, or relate in any manner to, the rights and
liabilities of the parties hereunder or any provision of this Agreement or the
interpretation, enforceability, performance, breach, termination or validity hereof,
including this Section 21 relating to the resolution of disputes (the “Disputes”)
and questions concerning arbitrability and including any claim under any state
or federal statute or common law theory governing or relating to the employment
relationship (except claims for workers compensation or unemployment benefits);
provided that nothing in this Section 21 shall prohibit a party
hereto from instituting litigation to enforce any Final Determination (as
defined below).  The parties hereby
acknowledge and agree that, except as otherwise provided in this Section 21
or in the applicable rules for arbitration of business disputes (the “Rules”)
promulgated by the Arbitration Service of Portland, Inc. (the “Arbitration
Service”) as in effect from time to time, the arbitration procedures and
any Final Determination hereunder shall be governed by, and shall be enforced
pursuant to, the United States Arbitration Act, 9 U.S.C. §1 et. seq.


 


(b)                                 Except
as provided elsewhere herein, in the event that any party asserts that there
exists a Dispute, such party shall deliver a written notice to each other party
involved therein specifying the nature of the asserted Dispute and requesting a
meeting to attempt to resolve the same. 
If no such resolution is reached within ten business days after the
delivery of such notice, the party delivering such notice of Dispute (the
“Disputing Person”) may thereafter commence arbitration hereunder by delivering
to each other party involved therein a notice of arbitration (a “Notice of Arbitration”).  Such Notice of Arbitration shall specify the
nature of any Dispute and any other matters required by the Rules as in effect
from time to time to be included therein. 
The Arbitrator shall permit and facilitate such discovery as the parties
shall reasonably request.  The Company
and Executive shall mutually agree upon one arbitrator to resolve any Dispute
pursuant to the procedures set forth in this Section 21 and the Rules.  If the Company and Executive cannot mutually
agree to an arbitrator within 15 days from receipt of the Notice of
Arbitration, the arbitrator shall be appointed by the


 


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Arbitration
Service within 15 days of being notified in writing of the Arbitration
Service’s need to make such appointment or as soon thereafter as may be
practicable.


 


(c)                                  Except
as otherwise provided by applicable law, the Company will pay all costs of the
Arbitration Service and the arbitrator, less those amounts Executive would
otherwise be required to pay if the claims were litigated in a court of law; provided
that at the conclusion of the arbitration, the arbitrator shall award costs and
expenses (including the costs of the arbitration previously advanced and the
fees and expenses of attorneys, accountants and other experts) and reasonable
interest to the prevailing party.


 


(d)                                 The
arbitration shall be conducted in Portland, Oregon under the Rules as in effect from time to time.  The parties shall use their reasonable best
efforts to cause the arbitrator to conduct the arbitration so that a final
result, determination, finding, judgment and/or award (the “Final
Determination”) is made or rendered as soon as practicable, but in no event
later than 90 business days after the delivery of the Notice of Arbitration nor
later than 30 days following completion of the arbitration.  Notwithstanding any Oregon law to the
contrary, the Final Determination shall be final and binding on all parties and
there shall be no appeal from or reexamination of the Final Determination,
except for fraud, perjury, evident partiality or misconduct by an arbitrator
prejudicing the rights of any party and to correct manifest clerical errors.


 


(e)                                  Notwithstanding
anything to the contrary, nothing in this Section 21 shall be construed
to impair the right of any person or entity to seek injunctive or other
equitable relief in any court of competent jurisdiction.


 


22.                                 Executive’s
Cooperation.  During the Employment
Period and thereafter, Executive shall cooperate with Parent and its Subsidiaries
in any internal investigation, any administrative, regulatory or judicial
proceeding or any dispute with a third party as reasonably requested by the
Company (including, without limitation, Executive being available to the
Company upon reasonable notice for interviews and factual investigations,
appearing at the Company’s request to give testimony without requiring service
of a subpoena or other legal process, volunteering to the Company all pertinent
information and turning over to the Company all relevant documents which are or
may come into Executive’s possession, all at times and on schedules that are
reasonably consistent with Executive’s other activities and commitments). In
the event the Company requires Executive’s cooperation in accordance with this Section
22, the Company shall (i) reimburse Executive solely for reasonable travel
expenses (including lodging and meals) upon submission of receipts; and (ii) if
Executive is no longer employed by the Company, pay Executive a per diem
consulting charge of $750.00 and pay the reasonable fees and expenses of
attorneys, accountants and other professionals retained by Employee with
respect to such matter or matters.


 


*   *   *   *   *


 


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IN WITNESS WHEREOF,
the parties hereto have executed this Employment and Non-Competition Agreement
as of the date first written above.


 


	
   

  	
  POORMAN-DOUGLAS
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/   Elizabeth
  Braham

  	
   

  
	
   

  	
  Name:

  	
  Elizabeth M.
  Braham

  
	
   

  	
  Its:

  	
  Chief
  Financial Officer, Secretary and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
     /s/   Jeffrey
  B. Baker

  	
   

  
	
   

  	
  Jeffrey B.
  Baker

  



 


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