EXHIBIT 10.17
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and between
Stellex Microwave Systems, Inc. (the "Company") and Xxxxx Xxxxxxx ("Employee"),
as of the 1st day of November 1997.
I. EMPLOYMENT.
The Company hereby employs Employee and Employee hereby accepts such
employment, upon the terms and conditions hereinafter set forth, from November
1, 1997, to and including December 31, 2000.
II. DUTIES.
A. Employee shall serve during the course of his employment as President
and Chief Executive Officer of the Company, and shall have such other duties and
responsibilities as the Board of Directors of the Company shall determine from
time to time. In the event that at any time during the term of this Agreement
Employee serves as a Director of the Company, Employee shall not participate as
a Director in any actions taken, determinations made, or instructions given by
the Board of Directors that relate to Employee's employment with the Company or
any aspect of this Agreement.
B. Employee shall perform all duties incident to the position of President
and Chief Executive Officer as may from time to time be requested by the Board
of Directors. At all times, Employee shall devote his full time and best
efforts, knowledge and experience
to performing his duties hereunder, shall perform such duties in a diligent and
competent manner and shall act in conformity with the written and oral policies
of the Company and within the limits, budgets and business plans set by the
Company. Employee will at all times during the term of his employment with the
Company strictly adhere to and obey all of the rules and regulations in effect
from time to time relating to the conduct of employees of the Company. Employee
further agrees that to the best of his ability and experience he will at all
times loyally and conscientiously perform all duties and obligations whether
expressly or implicitly required of him by the terms of this Agreement.
C. For the term of this Agreement, Employee shall report to the Board of
Directors of the Company.
III. COMPENSATION.
A. The Company will pay to Employee a base salary at the rate of
$250,000.00 per year. Such salary shall be earned monthly and shall be payable
in periodic installments no less frequently than bi-weekly in accordance with
the Company's customary payroll practices. Amounts payable shall be reduced by
standard withholding and other authorized deductions. The Board of Directors
will review Employee's base salary annually and, in their sole discretion, may
increase such base salary.
B. Annual Incentive Bonus. Employee shall be eligible for an annual
incentive bonus, beginning with the Company's 1998 fiscal year, pursuant to the
terms set forth on Exhibit A hereto.
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C. Incentive, Deferred Compensation, Savings and Retirement Plans. During
the term of this Agreement, Employee shall be entitled to participate in all
incentive, deferred compensation, savings and retirement plans, practices,
policies and programs applicable generally to other peer executives of the
Company.
D. Welfare Benefit Plans. Employee and/or his family, as the case may be,
shall be eligible for participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of the Company.
E. Expenses. Employee shall be entitled to receive prompt reimbursement for
all reasonable employment expenses incurred by him in accordance with the
policies, practices and procedures as in effect generally with respect to other
peer executives of the Company.
F. Fringe Benefits. Employee shall be entitled to fringe benefits in
accordance with the plans, practices, programs and policies as in effect
generally with respect to other peer executives of the Company.
G. Vacation. Employee shall be entitled to four (4) weeks paid vacation per
year, subject to a maximum vacation accrual at any time of four (4) weeks.
H. The Company reserves the right to modify, suspend or discontinue any and
all of the plans, practices, policies and programs referred to in Sections C - F
above at any
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time without recourse by Employee so long as such action is taken generally with
respect to other similarly situated peer executives and does not single out
Employee.
IV. TERMINATION.
A. Death or Disability. Employee's employment shall terminate automatically
upon Employee's death. If the Company determines that the Disability of Employee
has occurred (pursuant to the definition of Disability set forth below), it may
terminate Employee's employment by giving written notice in accordance with
Section XIX. For purposes of this Agreement, "Disability" shall mean a physical
or mental impairment which substantially limits a major life activity of
Employee and which renders Employee unable to perform the essential functions of
his position, with or without reasonable accommodation, for a period of 120
days. The Company reserves the right to make the determination of disability
under this Agreement based upon information supplied by Employee and/or his
medical personnel, as well as information from medical personnel (or others)
selected by the Company or its insurers.
B. Cause. The Company may terminate Employee's employment for Cause. For
purposes of this Agreement, "Cause" shall be determined by the Board of
Directors based upon the information then known to the Company, and shall mean
any of the following: (i) Employee's material breach of any provision of this
Agreement; (ii) Employee's material or repeated failure or neglect to perform
the duties of his position with the Company including, but not limited to,
failure to implement or achieve the Company's business plan; (iii) Employee's
development or pursuit of interests adverse to the
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Company or any of its direct or indirect subsidiaries or parent companies or
their affiliates; (iv) Employee's insubordination; (v) Employee's willful
misconduct, dishonesty, gross negligence, theft, fraud or other illegal conduct;
(vi) Employee's conduct which reflects adversely upon, or remarks disparaging
of, the Company, its Board, officers, directors, advisors or employees or its
affiliates or subsidiaries; (vii) Employee's violation of any fiduciary duty or
duty of loyalty to the Company; or (viii) any other material reason which would
justify a reasonably prudent employer in terminating an employee's employment in
similar circumstances.
C. Other than Cause or Death or Disability. The Company may terminate
Employee's employment at any time, with or without cause, upon 120 days' written
notice.
D. Obligations of the Company Upon Termination.
1. Death or Disability. If Employee's employment is terminated by reason of
Employee's Death or Disability, this Agreement shall terminate without further
obligations to Employee or his legal representatives under this Agreement, other
than for (a) payment of the sum of (i) Employee's annual base salary through the
date of termination to the extent not theretofore paid and (ii) any compensation
previously deferred by Employee (together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each case to the extent not
theretofore paid (the sum of the amounts described in clauses (i) and (ii) shall
be hereinafter referred to as the "Accrued Obligations"), which shall be paid to
Employee or his estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the date of
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termination; and (b) payment to Employee or his estate or beneficiary, as
applicable, any amounts due pursuant to the terms of any applicable welfare
benefit plans.
2. Cause. If Employee's employment is terminated by the Company for Cause,
this Agreement shall terminate without further obligations to Employee other
than for the timely payment of Accrued Obligations. If it is subsequently
determined that the Company did not have Cause for termination under this
Section IV-D-2, then the Company's decision to terminate shall be deemed to have
been made under Section IV-D-3 and the amounts payable thereunder shall be the
only amounts Employee may receive for his termination.
3. Other than Cause or Death or Disability. If the Company terminates
Employee's employment other than for Cause or for Death or Disability, this
Agreement shall terminate without further obligations to Employee other than (a)
the timely payment of Accrued Obligations and (b) continuation of Employee's
base salary for the lesser of (i) the remainder of the term of this Agreement or
(ii) one (1) year. The Company shall make any salary continuation payments to
Employee in the Company's normal payroll cycles and shall deduct standard
withholdings and other authorized deductions.
4. Termination By Employee. If Employee's employment is terminated by
Employee, this Agreement shall terminate without further obligations to Employee
other than for the timely payment of Accrued Obligations.
5. Exclusive Remedy. Employee agrees that the payments contemplated by this
Agreement shall constitute the exclusive and sole remedy for
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any termination of his employment and Employee covenants not to assert or pursue
any other remedies, at law or in equity, with respect to any termination of
employment.
V. CONFIDENTIAL AND PROPRIETARY INFORMATION.
A. Employee, in the performance of Employee's duties on behalf of the
Company, shall have access to, receive and be entrusted with confidential,
proprietary information, including but in no way limited to inventions,
improvements, technical developments, trademarks, designs, formulae, processes,
computer programs, know-how, techniques, data, trade secrets, discoveries,
copyrightable works, financial data, and other information or documents
regarding the business or technology of the Company, including but not limited
to drawings, computer programs or portions thereof, computer data, blueprints,
process specifications, customer lists, price data, relationships with
employees, manner of operations, business plans, and other Company documents
owned or at any time in the future developed, by the Company or its agents or
consultants, or used presently or at any time in the future in the course of its
business that is not otherwise part of the public domain (collectively, the
"Proprietary Information"). All such Proprietary Information is considered
secret and will be available to Employee in confidence. Except in the
performance of duties on behalf of the Company, Employee shall not, directly or
indirectly for any reason whatsoever, disclose or use any such Proprietary
Information, unless such Proprietary Information ceases (through no fault of
Employee's) to be confidential because it has become part of the public domain.
All records, files, drawings, documents, equipment
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and other tangible items, wherever located, relating in any way to the
Proprietary Information or otherwise to the Company's business, which Employee
prepares, uses or encounters, shall be and remain the Company's sole and
exclusive property and shall be included in the Proprietary Information. Upon
termination of this Agreement by any means, or whenever requested by the
Company, Employee shall promptly deliver to the Company any and all of the
Proprietary Information, not previously delivered to the Company, that may be or
at any previous time has been in Employee's possession or under Employee's
control.
B. Employee hereby acknowledges that the sale or unauthorized use or
disclosure of any of the Company's Proprietary Information by any means
whatsoever and any time before, during or after Employee's employment with the
Company shall constitute Unfair Competition. Employee agrees that Employee shall
not engage in Unfair Competition either during the time employed by the Company
or any time thereafter.
VI. OWNERSHIP AND ASSIGNMENT OF PROPRIETARY INFORMATION.
A. Employee shall disclose to the Company all Proprietary Information which
he may conceive or make during his employment, either solely, jointly, or in
common with others, and which (1) are developed, either in whole or in part, by
use of the Company's equipment, supplies, facilities or Proprietary Information,
or (2) are related to the Company's business at the time of conception or
reduction to practice, or (3) are related to the Company's actual or
demonstrably anticipated research or development at the time of
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conception or reduction to practice, or (4) result from any work Employee
performs for the Company.
B. Employee agrees to assign to the Company complete ownership of all
Proprietary Information which he conceives under the circumstances listed in
Section VI(A) above, and as well as complete ownership of all patent
applications, patents, trademarks, and copyrights (United States and foreign)
which the Company may desire to secure with respect to such Proprietary
Information. Employee further agrees, both during his employment and thereafter,
to cooperate with the Company in procuring such patents, trademarks, and
copyrights, including execution of all documents necessary or incidental to such
processes.
C. Employee acknowledges that he has read the California Xxxxxx Act
attached hereto as Exhibit B and understands that under its provisions Employee
may retain ownership of inventions that he may make entirely on his own time and
in a manner not described in Section VI(A) above. Employee agrees, however, to
disclose to the Company all inventions that he conceives during his employment,
including any invention which he desires to retain as his own property, so that
the Company may determine if such invention qualifies under the law for
retention as Employee's property. The Company will treat any such disclosed
information as confidential unless such information (1) was previously known to
the Company, (2) is disclosed in patents or other publications, (3) has been
imparted to the Company by third parties, or (4) is well known to the trade to
which it relates. Employee understands that this paragraph applies even if he
works outside of California.
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D. Employee agrees, during his employment and thereafter, to maintain and
make available to the Company, upon its request, complete and up-to-date written
records (including computer files, photographs, or drawings, where appropriate)
of all Proprietary Information which, during the course of his employment with
the Company, he has conceived or created, either in whole or in part.
VII. NON-COMPETITION.
Employee agrees that, during the term of this Agreement, he will not,
directly or indirectly, without the prior written consent of the Board of
Directors of the Company, provide consultative service with or without pay, own,
manage, operate, join, control, participate in, or be connected as a
stockholder, partner, or otherwise with, any business, individual, partner,
firm, corporation, or other entity which is then in competition with the
business of the Company or any present affiliate of the Company. Employee
further acknowledges and agrees that by virtue of his position and duties with
the Company, including his access to the Proprietary Information of the Company
in discharging such duties, Employee's employment or participation with any
entity in competition with the Company for a period of two (2) years after
termination of this Agreement would inevitably require Employee to use or
disclose the Company's Proprietary Information in violation of this Agreement.
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VIII. ANTISOLICITATION.
Employee promises and agrees that during the term of this Agreement, and
for a period of two (2) years after the termination of this Agreement, he will
not solicit or attempt to solicit customers of the Company or any of its present
or future subsidiaries or affiliates, either directly or indirectly, to divert
their business to any individual, partnership, firm, corporation or other entity
then in competition with the business of the Company, or any subsidiary or
affiliate of the Company.
IX. JOINING FORMER COMPANY EMPLOYEES.
Employee promises and agrees that for two (2) years following his
termination of employment other than pursuant to Section IV-C above or
Disability above or expiration of this Agreement, he will not enter business or
work with any person who was employed with the Company, and who earned annually
$25,000 or more as a Company employee during the last six months of his or her
own employment, in any business, partnership, firm, corporation or other entity
then in competition with the business of the Company or any subsidiary or
affiliate of the Company.
X. SOLICITING EMPLOYEES.
Employee promises and agrees that he will not, for a period of two (2)
years following termination of his employment or the expiration of this
Agreement, directly or indirectly solicit any of the Company employees who
earned annually $25,000 or more as a Company employee during the last six months
of his or her own employment to work for
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any business, individual, partnership, firm, corporation, or other entity then
in competition with the business of the Company or any subsidiary or affiliate
of the Company.
XI. REMEDIES.
It is expressly agreed that the Company will or would suffer irreparable
injury if Employee were to engage in any conduct or commit any act in violation
of Sections V - X above, and the Company would by reason of such violation be
entitled to injunctive relief in a court of appropriate jurisdiction. Employee
consents and stipulates to the entry of such injunctive relief in such a court
prohibiting him from engaging in any action in violation of this Agreement,
which relief shall be cumulative to other remedies at law or in equity and shall
not be construed as an exclusive remedy.
XII. SUCCESSORS.
A. This Agreement is personal to Employee and shall not, without the prior
written consent of the Company, be assignable by Employee.
B. This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns and any such successor or assignee shall
be deemed substituted for the Company under the terms of this Agreement for all
purposes. As used herein, "successor" and "assignee" shall include any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires the stock of the
Company or to which the Company assigns this Agreement by operation of law or
otherwise.
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XIII. WAIVER.
No waiver of any breach of any term or provision of this Agreement shall be
construed to be, nor shall be, a waiver of any other breach of this Agreement.
No waiver shall be binding unless in writing and signed by the party waiving the
breach.
XIV. MODIFICATION.
This Agreement may not be amended or modified other than by a written
agreement executed by Employee and the Board of Directors.
XV. SAVINGS CLAUSE.
If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not affect other provisions or applications of the
Agreement which can be given effect without the invalid provisions or
applications and to this end the provisions of this Agreement are declared to be
severable. In the event that a court of competent jurisdiction determines that
any provision or portion of this Agreement is unreasonable, arbitrary, against
public policy or otherwise unenforceable, such court shall enforce such
provision to the extent the court determines reasonable or in accordance with
public policy and to the maximum extent enforceable by law.
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XVI. COMPLETE AGREEMENT.
This Agreement constitutes and contains the entire agreement and final
understanding concerning Employee's employment with the Company and the other
subject matters addressed herein between the parties. It is intended by the
parties as a complete and exclusive statement of the terms of their agreement.
It supersedes and replaces all prior negotiations and all agreements proposed or
otherwise, whether written or oral, concerning the subject matter hereof. Any
representation, promise or agreement not specifically included in this Agreement
shall not be binding upon or enforceable against either party. This is a fully
integrated agreement.
XVII. GOVERNING LAW.
This Agreement shall be deemed to have been executed and delivered within
the State of California, and the rights and obligations of the parties hereunder
shall be construed and enforced in accordance with, and governed by, by the laws
of the State of California without regard to principles of conflict of laws.
XVIII. CONSTRUCTION.
Each party has cooperated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement, the same
shall not be construed against any party on the basis that the party was the
drafter. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect.
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XIX. COMMUNICATIONS.
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered or if mailed
by registered or certified mail, postage prepaid, addressed to Employee at
Stellex Microwave Systems, Inc, Stanford Research Park, 0000 Xxxxxxxx Xxxxxx,
Xxxx Xxxx, XX 00000 or addressed to the Company at Stellex Microwave Systems,
Inc., c/o Stellex Industries, Inc., 0000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, XX
00000. Either party may change the address at which notice shall be given by
written notice given in the above manner.
XX. EXECUTION.
This Agreement is being executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. Photographic copies of such signed counterparts may be used
in lieu of the originals for any purpose.
In witness whereof, the parties hereto have executed this Agreement as of
the date first above written.
"COMPANY" "EMPLOYEE"
STELLEX MICROWAVE SYSTEMS, INC.
/s/Xxxxx X. Xxxxxxx
----------------------------
By /s/Xxxxxxx X. Xxxxxx
----------------------------------
Its Chairman
------------------------
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A-1
EXHIBIT A
ANNUAL INCENTIVE BONUS
Employee shall be eligible for an annual incentive bonus, beginning with
fiscal year 1998, based upon the Company's attainment of targeted annual EBITDA
pursuant to the following schedule:
Actual EBITDA Bonus as a
divided by Targeted Percentage of
EBITDA Base Salary
Less than 95% 0.0%
95% 25.0%
100% 50.0%
125% or greater 75.0%
[Interpolate between levels]
The target EBITDA shall be established annually by the Board of Directors no
later than January 1 of each fiscal year. As used herein, "EBITDA" shall mean,
for any period, determined for the Company in conformity with generally accepted
accounting principles consistently applied (i) the sum of the amounts for such
period of (A) net income (i.e., the net earnings or loss after taxes), (B)
depreciation and amortization expense, (C) interest expense, and (D) federal,
state, local, and foreign income taxes, minus (ii) extraordinary or
non-recurring gains. The Board of Directors may, in its sole discretion,
consider other appropriate adjustments to EBITDA. Within thirty (30) days after
completion of the Company's audited financial statements for the fiscal year,
the Board of Directors shall determine the eligibility and amount of any
Incentive Bonus and shall pay such bonus to Employee in a lump sum, less
standard withholdings and authorized deductions.
X-0
X-0
EXHIBIT B
THE XXXXXX ACT
Sections 2870, 2871 and 2872 of the California Labor Code
2870. (a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either: (1) Relate at the time of conception or reduction to
practice of the invention to the employer's business, or actual or demonstrably
anticipated research or development of the employer; or (2) Result from any work
performed by the employee for the employer;
(b) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable.
2871. No employer shall require a provision made void and unenforceable by
Section 2870 as a condition of employment or continued employment. Nothing in
this article shall be construed to forbid or restrict the right of an employer
to provide in contracts of employment
B-1
for disclosure, provided that any such disclosures be received in confidence, of
all of the employee's inventions made solely or jointly with others during the
term of his or her employment, a review process by the employer to determine
such issues as may arise, and for full title to certain patents and inventions
to be in the United States, as required by contracts between the employer and
the United States or any of its agencies.
2872. If an employment agreement entered into after January 1, 1980, contains a
provision requiring the employee to assign or offer to assign any of his or her
rights in any invention to his or her employer, the employer must also, at the
time the agreement is made, provide a written notification to the employee that
the agreement does not apply to an invention which qualifies fully under the
provisions of Section 2870. In any suit or action arising thereunder, the burden
of proof shall be on the employee claiming the benefits of its provisions.
B-2
