Appeal from the Circuit Court of Cook County. No. 98 CH 5615 The Honorable Dorthy Kirie Kinnaird, Presiding Judge.
The opinion of the court was delivered by: Justice Buckley
This action arises from an employment contract dispute. In October 1990, Richard Mandel, acting on behalf of defendant, Mandel Metals, Inc. (MMI), entered into a contract with plaintiff William Kipnis. The contract gave Kipnis a 25% interest in the sale of one or more of MMI's divisions, should such division(s) be sold. Alternatively, the contract gave Kipnis the right to make a bona fide offer to purchase such division(s). MMI would then have the option to accept or reject Kipnis' offer. In the latter case, MMI would pay Kipnis an amount equal to 25% of the gain MMI would have realized had it accepted Kipnis' offer. In March 1998, MMI rejected Kipnis' offer, concluding that it was not a "bona fide offer" pursuant to the employment agreement. In April 1998, Kipnis filed a complaint for declaratory judgment and specific performance against MMI. The complaint sought a declaration that Kipnis' offer constituted a bona fide offer pursuant to the employment agreement. Alternatively, the complaint sought a declaration that MMI breached the employment agreement by refusing to provide Kipnis with appropriate financial information necessary to formulate a bona fide offer. In June 1999, the trial court granted summary judgment in MMI's favor, rejecting both of Kipnis' arguments. Kipnis raises the same arguments on appeal. We reverse.
In 1982, MMI hired Kipnis to work in its scrap metal business. While employed at MMI, Kipnis helped MMI develop an aluminum distribution business known as the Service Center Group (SCG). By 1997, SCG constituted one of MMI's two components, while the scrap metal division constituted the second component. SCG consisted of three subcomponents: (1) the Service Center Division, which distributes primary aluminum; (2) Lednam (also called the "Subsidiary"), which manufactures blank signs for the traffic industry; and (3) American Aerospace Materials, which sold aluminum to the aerospace industry. Kipnis operated SCG since its inception and eventually expressed an interest in buying it.
On October 31, 1990, Kipnis, MMI, and the Subsidiary entered into an employment agreement. The employment agreement, drafted by MMI, covered a 10-year term (ending November 1, 2000) and established Kipnis' salary, bonus, and severance package. Additionally, paragraph 4 of the employment agreement provided in pertinent part:
"(a) In the event that Service Center Division and/or the Subsidiary shall be sold, Kipnis shall be paid a sum equal to 25% of the gain from the sale of such division(s), computed as the difference between (a) the agreed value of the Service Center Division and/or the Subsidiary as of November 1, 1990, and (b) the sale price of the Service Center Division and/or subsidiary ***. The agreed value of the Service Center Division and the Subsidiary as of November 1, 1990, shall be determined by the Corporation's independent accountant and approved by Mandel and Kipnis, and said amounts shall be stated in an [e]xhibit attached hereto.
(b) Subparagraph (a) shall not apply to any such sale unless Kipnis is a salaried employee of the Corporation at the time of such sale; provided that, (i) if Kipnis' employment shall be terminated by the Corporation without 'cause,' as defined in Paragraph 6, and (ii) Kipnis shall not have violated the Non-competition Agreement in Exhibit A, then this Paragraph 4 shall apply to any such sale made within 24 months after the termination of his employment."
Additionally, paragraph 5 provided in pertinent part:
(a) "This [p]aragraph 5 shall apply only if (i) the Service Center Division or the Subsidiary, or both, has not been sold on or before November 1, 2000; (ii) Kipnis (representing himself alone or an investor group) submits a bona fide offer in writing to the Corporation, to purchase, at a cash price pay-able in a lump sum at the closing, the Service Center Division and/or Subsidiary; and such purchase price is either agreed by the Corporation, or is determined, in the manner hereinafter provided, to be equal to or greater than the fair market value of the Service Center Division and/or Subsidiary; (iii) the Corporation rejects such offer. In such event, Kipnis shall be entitled to receive 25% of the gain which the Corporation would have realized if such sale had been consummated as provided in Paragraph 4. A bona fide offer must include evidence of the availability of funds to pay the purchase price.
(d) This paragraph 5 shall not apply to any offer submitted by Kipnis unless he is a salaried employee of the Corporation; provided that, (i) if Kipnis' employment shall be terminated by the Corporation without 'cause,' as defined in paragraph 6, and (ii) Kipnis shall not have violated the Non-competition Agreement in Exhibit A, then this Paragraph 5 shall apply to an offer submitted by Kipnis within 12 months after the termination of his employment."
In sum, paragraphs 4 and 5 collectively provided that, if MMI sold the Service Center Division and/or the Subsidiary within the contractual period, it would pay Kipnis 25% of the gain. If it did not sell the Service Center Division and/or the Subsidiary, Kipnis could make an offer for it. MMI then had the option to accept Kipnis' offer or, alternatively, reject Kipnis' offer and pay him an amount equal to 25% of the gain it would have realized had it accepted. The foregoing was subject to Kipnis' continued employment at MMI. If Kipnis no longer worked for MMI, he could retain his rights under the employment agreement for only 12 months from the termination date, and only if he was terminated without cause.
On March 25, 1997, MMI terminated Kipnis without cause. On May 17, 1997, the parties entered into a termination agreement. The termination agreement acknowledged that MMI terminated Kipnis without cause and preserved his rights under paragraphs 4 and 5 of the employment agreement. The termination agreement also provided that Kipnis could retain copies of certain financial records, already in his possession, for purposes of exercising his rights under the employment agreement. The termination agreement did not require MMI to provide other records nor did it expressly limit Kipnis' access to those records in his possession.
In June 1997, Kipnis began requesting information regarding the Service Center Division, advising MMI that such information was necessary to formulate his offer and to obtain financing. MMI forwarded several balance sheets, reports, and other financial statements to Kipnis. Kipnis continued to request financial information and, in September 1997, Mandel informed Kipnis that MMI would not release any other documents until Kipnis made a "bona fide offer." Over the next several months, Kipnis continued to request financial information. Kipnis also advised Mandel that both Kipnis' investor and lender requested audits and tours of the plant before they would ...