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Southwest Industries, Inc. is a corporation that provides technical services. Suppose Mike Youngblood is the President of TDI Technical Services (“TDI”). The company is privately owned by Shareholders. Southwest wants to buy TDI Technical Services. Southwest is owned solely by Peter Schwimmer however he has a line of credit from a Bank. The Bank will not lend him any funds to buy Southwest without collateral against all assets of TDI. The Bank is also concerned about new competition from former employees of TDI post sale. Peter Schwimmer, Southwest's owner and president has assurances from TDI they would like to sell however Schwimmer wants to make sure Youngblood is going to stay on after the sale and become Vice President after the purchase of TDI. TDI is also a little concerned because there may be taxes due when the sale takes place from a capital gain. Youngblood has been under contract with TDI since 1999 and has a clause in his current contract which states he can leave the company if there is ever a sale of TDI to another company. His contract further states when he leaves TDI he is allowed to take all accounts he developed during his employment at TDI as his “book of business.” TDI in 2007 established a new corporate policy that every employee agreed not to compete against TDI or and successor in interest to TDI in the future for at least two years after leaving the company. All employees of TDI executed a Non competition agreement except for Youngblood. At the time Youngblood indicated he refused to execute the agreement because of his “Book of Business” clause and stated, “as far as I am concerned since 1999 all accounts of the company are mine…” From the perspective of your Group please describe what terms would you offer to the respective parties to get this Contract finalized. What Terms are of importance to you? What types of clauses are needed to protect your interests?

Operation Management, Management Studies

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