EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and between
KAYNAR TECHNOLOGIES INC., a Delaware corporation, (the "Company") and
("Employee"), as of the day of February 1997.
I. EMPLOYMENT.
The Company hereby employs Employee and Employee hereby accepts such
employment, upon the terms and conditions hereinafter set forth.
II. TERMS.
This Agreement shall be effective from the date hereof to December 31,
1998; provided, however, that on June 30, 1997, eighteen months before
expiration and every six months thereafter ("Renewal Date"), this Agreement
shall be extended for two additional years unless, at least 30 days prior to the
Renewal Date (which shall be either June 30 or December 31), the Company shall
have delivered to Employee or Employee shall have delivered to the Company
written notice that the Agreement shall not be so extended.
III. DUTIES.
A. Employee shall serve during the course of his employment as
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.
B. Employee agrees to devote substantially all of his time, energy and
ability to the business of the Company. Nothing herein shall prevent Employee,
upon approval of the Board of Directors of the Company, from serving as a
director or trustee of other corporations or businesses which are not in
competition with the business of the Company or in competition with any present
or future affiliate of the Company.
IV. COMPENSATION.
A. The Company will pay to Employee a base salary at the rate of
$ per year. Such salary shall be earned monthly and shall be payable
in periodic installments no less frequently than monthly in accordance with the
Company's customary practices. Amounts payable shall be reduced by standard
withholding and other authorized deductions. The Company will review Employee's
salary at least annually. The Company may in its discretion increase Employee's
salary but it may not reduce it during the term of this Agreement.
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B. ANNUAL BONUS, INCENTIVE, SAVINGS AND RETIREMENT PLANS. Employee
shall be entitled to participate in all annual bonus, incentive, stock
incentive, savings and retirement plans, defined contribution plans,
practices, policies and programs applicable generally to other executives of
the Company.
C. 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 executives of the Company.
D. 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
executives of the Company.
E. 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 executives of the Company.
F. VACATION. Employee shall be entitled to paid vacation time in
accordance with the plans, policies, programs and practices as in effect with
respect to other employees of the Company.
G. PLAN AMENDMENTS. The Company reserves the right to modify, suspend or
discontinue any and all of its employee plans, practices, policies and programs
at any time without recourse by Employee so long as such action is taken
generally with respect to other similarly situated executives and does not
single out Employee.
V. TERMINATION.
A. DEATH OR DISABILITY. Employee's employment shall terminate
automatically upon Employee's death. If the Company determines in good faith
that a Disability of Employee has occurred (as Disability is defined below), it
may give to Employee written notice in accordance with Section XX of its
intention to terminate Employee's employment. In such event, Employee's
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by Employee, provided that, within the 30 days after such
receipt, Employee shall not have returned to full-time performance of his
duties. For purposes of this Agreement,
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"Disability" shall mean the absence of Employee from his duties with the
Company on a full-time basis for a period of two consecutive months as a
result of incapacity due to mental or physical illness which is determined to
be total and permanent by a physician selected by the Company or its insurers
and acceptable to Employee or his legal representative (such agreement as to
acceptability not to be withheld unreasonably). "Incapacity" as used herein
shall be limited only to such Disability which substantially prevents the
Company from availing itself of the services of Employee or substantially
impairs the Employee's ability to perform services to the standard reasonably
expected by the Company for Employee's office.
B. CAUSE, ETC.. Following a Change in Control, as defined in Section VI
below, during the term of this Agreement remaining after such Change in Control,
the parties agree that the Company may terminate Employee's employment only for
Cause, as "Cause" is defined below. Prior to the occurrence of a Change in
Control (and so long as such termination is not made in connection therewith)
the Company may terminate Employee's employment, at any time, with or without
Cause. The Company also may terminate such employment, at any time, for
Employee's breach of the provisions of Sections VIII (Noncompetition), IX
(Antisolicitation) or XII (Confidential Information) or as set forth in
paragraph A above. For purposes of this Agreement, "Cause" shall mean that the
Company, acting in good faith based upon the information then known to the
Company, determines that Employee has: (1) failed to perform in a material
respect his obligations under this Agreement without proper reason, (2) been
convicted of a felony, or (3) committed a material act of fraud, dishonesty or
gross misconduct which is materially injurious to the Company.
C. 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 not be
subject to any further extension pursuant to Section II hereof.
2. CAUSE, ETC. If Employee's employment is terminated by the
Company pursuant to Section V-B, this Agreement shall terminate without
further obligations to Employee other than for (a) payment of the sum of
Employee's annual base salary through the date of termination and any
accrued vacation pay to the extent not theretofore paid, 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 termination; (b) payment of any
compensation previously deferred by Employee (together with any accrued
interest or earnings
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thereon), which shall be paid to Employee or his estate or beneficiary
pursuant to terms of the plan or agreement under which such compensation
was deferred; and (c) payment to Employee or his estate or beneficiary,
as applicable, any amounts due pursuant to the terms of any applicable
welfare benefit plans. The payments described in clauses (a) and (b)
shall hereinafter be referred to as the "Accrued Obligations." If it is
subsequently determined that the Company did not have the right to
terminate Employee under Section V-B, then the Company's decision to
terminate shall be deemed to have been made under Section V-C-3 and the
amounts payable thereunder shall be the only amounts Employee may
receive for his termination.
3. OTHER. If the Company breaches this Agreement by terminating
Employee's employment other than pursuant to Sections V-A or V-B, the
Company (a) shall immediately pay to Employee a lump sum equal to two times
Employee's base salary for one year at the rate in effect immediately prior
to Employee's termination of employment, less standard withholdings and
other authorized deductions, and (b) shall timely pay to Employee the
Accrued Obligations. Employee shall have no duty to mitigate damages and
none of the payments provided in this Section V-C-3 shall be reduced by any
amounts earned or received by Employee from a third party at any time.
4. EXCLUSIVE REMEDY. Employee agrees that the payments contemplated
by this Agreement shall constitute the exclusive and sole remedy for 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.
VI. CHANGE IN CONTROL.
A. Notwithstanding anything to the contrary in this Agreement, if a
Change in Control (as defined below) of the Company occurs during the term of
this Agreement, and if within two years following such Change in Control either
the Company terminates Employee's employment, or if employee terminates his
employment for Good Reason (as defined below), the Company shall pay to Employee
by cashier's check immediately upon Employee's termination of employment with
the Company an amount equal to two times the sum of (1) the amount of the
highest annual base salary paid to Employee during the three most recent
calendar years ending prior to the year in which the Change in Control occurs
and (2) the amount of the highest bonus (or bonuses) paid to Employee for any
calendar year ending prior to the year in which the Change in Control occurs.
This payment shall be in lieu of the lump sum payment
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otherwise payable under Section V-C-3(a), but shall be in addition to the
timely payment of the Accrued Obligations. Employee shall have no duty to
mitigate damages and none of the payments provided in this Section VI-A shall
be reduced by any amounts earned or received by Employee from a third party
at any time.
B. Notwithstanding anything in this Agreement to the contrary, any
"parachute payments" to be made to or for Employee's benefit, whether pursuant
to this Agreement or otherwise, shall be modified to the extent necessary so
that the requirements of one of the two subparagraphs below are satisfied:
1. The aggregate "present value" of all "parachute payments" payable
to Employee or for Employee's benefit, whether pursuant to this Agreement
or otherwise, shall be less than three (3) times Employee's "base amount";
or
2. Each "parachute payment" payable to Employee or for Employee's
benefit, whether pursuant to this Agreement or otherwise, shall be in an
amount which does not exceed the "reasonable compensation" allocable to
such "parachute payment."
C. For purposes of this Section VI:
1. A "Change in Control" of the Company means any of the following:
(1) Approval by the shareholders of the Company of the dissolution or
liquidation of the Company;
(2) Approval by the shareholders of the Company of an agreement to
merge or consolidate, or otherwise reorganize, with or into one or more entities
that are not subsidiaries or other affiliates, as a result of which less than
60% of the outstanding voting securities of the surviving or resulting entity
immediately after the reorganization are, or will be, owned, directly or
indirectly, by shareholders or other affiliates of the Company immediately
before such reorganization (assuming for purposes of such determination that
there is no change in the record ownership of the Company's securities from the
record date for such approval until such reorganization but including in such
determination any securities of the other parties to such reorganization held by
affiliates of the Company);
(3) Approval by the shareholders of the Company of the sale of
substantially all of the Company's business and/or assets to a person or entity
which is not a subsidiary or other affiliate; or
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(4) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934 (the "Exchange Act")) becomes the
"beneficial owner") (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing more than 20% of the
combined voting power of the Company's then outstanding securities entitled to
then vote generally in the election of directors of the Company. For purposes
of this Section VI-C-(4), "voting power" shall not include any voting power to
the extent such entity (or its members) held the securities giving such voting
power on the third business day after the effective time of the Company's first
registration of such class of securities under the Exchange Act.
2. "Good Reason" shall mean (a) an adverse and significant change in
Employee's position, duties, responsibilities, or status with the Company, (b) a
change in Employee's office location to a point more than 50 miles from
Employee's office immediately prior to a Change in Control, (c) the taking of
any action by the Company to eliminate benefit plans without providing
substitutes therefore, to reduce benefits thereunder or to substantially
diminish the aggregate value of incentive awards or other fringe benefits, (d)
any reduction in Employee's base salary, or (e) breach of this Agreement by the
Company.
3. The term "base amount" shall have the meaning ascribed to it
under Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the
"Code");
4. The term "parachute payment" shall have the meaning ascribed in
Section 280G(b)(2)(A) of the Code, without regard to Section 280G(b)(2)(A)(ii)
of the Code but with regard to Section 280G(b)(4)(A);
5. "Present value" shall be determined in accordance with Section
280G(d)(4) of the Code;
6. The term "reasonable compensation" shall have the meaning
ascribed to it under Section 280G(b)(4)(B) of the Code (for personal services
actually rendered before the date of the Change in Control of the Company); and
7. The portion of the "base amount" and the amount of "reasonable
compensation" allocable to any "parachute payment" shall be determined in
accordance with Section 280G(b)(3) of the Code and Section 280G(b)(4)(B) of the
Code, respectively.
D. In the event the amount of any of "parachute payments" which would be
payable to Employee or for Employee's benefit without regard to this Section
must be modified to comply with this Section VI, Employee shall direct which
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"parachute payments" are to be a waived or modified; provided, however, that
no change in timing of the payments shall be made without the consent of the
Company.
E. All determinations required by this Section VI, including without
limitation the determination of whether any benefit or payment would constitute
a parachute payment, the calculation of the value of any parachute and whether
any benefit or payment constitutes reasonable compensation, shall be made by an
independent accounting firm (other than the Company's outside auditing firm)
having nationally recognized expertise in such matters selected by the
Compensation Committee of the Board of Directors of the Company. Any such
determination by such accounting firm shall be binding on the Company and
Employee.
F. Payment of amounts pursuant to this Agreement shall not, unless
directed by Employee, be delayed pending determination of the status of a
payment as a "parachute payments" by the Internal Revenue Service, court or
similar body of competent jurisdiction.
VII. ARBITRATION.
Any controversy or claim arising out of or relating to this Agreement,
its enforcement or interpretation, or because of an alleged breach, default,
or misrepresentation in connection with any of its provisions, shall be
submitted to arbitration, to be held in Orange County, California in
accordance with the Voluntary Labor Arbitration Rules of the American
Arbitration Association. Judgment upon the award rendered by the arbitration
may be entered in any court in the State of California, or in any other court
of competent jurisdiction. In the event either party institutes arbitration
under this Agreement arising prior to a Change in Control of the Company, the
party prevailing in any such litigation shall be entitled, in addition to all
other relief, the reasonable attorneys' fees relating to such arbitration,
and the nonprevailing party shall be responsible for all costs of the
arbitration, including but not limited to, the arbitration fees, court
reporter fees, etc. In the case of any arbitration or subsequent judicial
proceedings arising after a Change in Control of the Company, Employee shall
be awarded his costs, including attorneys' fees.
VIII. NONCOMPETITION.
A. Employee agrees that, during the term of this Agreement, and for a
period of six months thereafter, 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,
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partner, or otherwise with, any business, individual, partner, firm,
corporation, or other entity which is then in the business of producing metal
fasteners (or related products) for the aerospace industry anywhere
(including both in the United States and abroad). However, this Section
VIII-A will not apply if Employee's only relationship to such business is by
ownership of less than 4% of the outstanding voting securities of a
publicly-traded company.
B. It is expressly agreed that the Company will or would suffer
irreparable injury if Employee were to compete with the business of the Company
or any subsidiary or affiliate of the Company in violation of this Agreement and
that the Company would by reason of such competition 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
competing with the Company or any subsidiary or affiliate of the Company in
violation of this Agreement.
IX. ANTISOLICITATION.
Employee promises and agrees that during the term of this Agreement he will
not influence or attempt to influence 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.
X. JOINING FORMER COMPANY EMPLOYEES.
Employee promises and agrees that for six months following his termination
of employment other than pursuant to Section V-C or VI 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 $80,000 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.
XI. SOLICITING EMPLOYEES.
Employee promises and agrees that he will not, for a period of one year
following termination of his employment or the expiration of this Agreement,
directly or indirectly solicit any of the Company employees who earned annually
$80,000 or more as a Company employee during the last six months of his or her
own employment to work for any business, individual, partnership, firm,
corporation, or other entity
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then in competition with the business of the Company or any subsidiary or
affiliate of the Company.
XII. CONFIDENTIAL INFORMATION.
A. Employee shall hold in a fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their respective businesses,
which shall have been obtained by Employee during his employment by the Company
or any of its affiliated companies and which shall not be or become public
knowledge (other than by acts by Employee or his representatives in violation of
this Agreement). After termination of Employee's employment with the Company,
he shall not, without the prior written consent of the Company, or as may
otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it.
B. Employee agrees that all lists, materials, books, files, reports,
correspondence, records, and other documents ("Company material") used,
prepared, or made available to Employee, shall be and shall remain the property
of the Company. Upon the termination of employment or the expiration of this
Agreement, all Company materials shall be returned immediately to the Company,
and Employee shall not make or retain any copies thereof.
XIII. 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.
XIV. 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.
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XV. MODIFICATION.
This Agreement may not be amended or modified other than by a written
agreement executed by the Employee and the Company.
XVI. 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.
XVII. COMPLETE AGREEMENT.
This instrument constitutes and contains the entire agreement and
understanding concerning Employee's employment and other subject matters
addressed herein between the parties, and supersedes and replaces all prior
negotiations and all agreements proposed or otherwise, whether written or oral,
concerning the subject matter hereof. This is an integrated agreement.
XVIII. 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.
XIX. CONSTRUCTION.
The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect.
XX. COMMUNICATIONS.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered
in person, by telecopy, telex or equivalent form of written telecommunication
or if sent by registered or certified mail, return receipt requested,
postage prepaid, as follows:
To Company: Kaynar Technologies Inc.
000 Xxxxx Xxxxx Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention:
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With copy to: O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: C. Xxxxx Xxxxx, Esq.
To Employee:
Either party may change the address at which notice shall be given by written
notice given in the above manner. All notices required or permitted hereunder
shall be deemed duly given and received on the date of delivery, if delivered in
person or by telex, telecopy or other written telecommunication on a regular
business day and within normal business hours or on the fifth day next
succeeding the date of mailing, if sent by certified or registered mail.
XXI. 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.
XXII. LEGAL COUNSEL.
The Employee and the Company recognize that this is a legally binding
contract and acknowledge and agree that they have had the opportunity to
consult with legal counsel of their choice.
XXIII. SURVIVAL.
The provisions of this Agreement shall survive the term of this Agreement
to the extent necessary to accommodate full performance of all such terms.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
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KAYNAR TECHNOLOGIES INC.
By
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Its
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