Exhibit 10.36
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January 2, 2002 (this "Agreement"),
by and between Manufacturers' Services Limited, a Delaware corporation (the
"Company"), and Xxxxx X. Xxxxx ("Executive").
WHEREAS, Executive is currently serving as Chairman of the Board and
Chief Executive Officer of the Company pursuant to an Employment Agreement,
dated as of January 20, 1995 (the "Existing Employment Agreement"), by and
between the Company and Executive;
WHEREAS, the Company and Executive desire to terminate the Existing
Employment Agreement and replace it with this Agreement; and
WHEREAS, the Company and Executive are also parties to a Change in
Control Agreement dated October 19, 2000 (the "Change in Control Agreement");
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:
1. Definitions. As used herein, the following terms shall have the
meanings set forth below:
"Agreement" has the meaning set forth in the preamble hereof.
"Base Salary" has the meaning set forth in Section 4.1 hereof.
"Board" means the Board of Directors of the Company.
"Cause" means (a) Executive's Willful and continued failure
substantially to perform his duties as described herein (other than (i) as a
result of total or partial incapacity due to physical or mental illness, (ii)
for Good Reason or (iii) as a result of the Company's material breach of this
Agreement) following the notice and cure period provided for in Section 5.1
hereof, (b) Executive's dishonesty in the performance of his duties or (c) the
conviction of Executive of, or the entry of a plea of guilty or NOLO CONTENDRE
by Executive to, any felony involving the Executive's personal conduct which has
a material adverse impact on the Company's reputation or financial condition.
"Change in Control" has the meaning set forth in the Change in Control
Agreement referenced in the preamble hereof.
"Change in Control Agreement" has the meaning set forth in the
preamble.
"Change in Control Protection Period" means either or both of the
following (i) the Potential Change in Control Period, or (ii) up to 36 months
after a Change in Control has occurred, each as defined in the Change in
Control Agreement.
"Common Stock" means the common stock, par value $.001 per share, of
the Company.
"Company" has the meaning set forth in the preamble hereof.
"Confidential Information" means all information or material relating
to the Company not generally known by non-Company personnel which (i) is marked
"Confidential Information", "Proprietary Information" or other similar marking,
(ii) is known by Executive to be considered confidential and proprietary by the
Company or (iii) derives value by virtue of the fact that it is not generally
known; PROVIDED that the term "Confidential Information" does not include
information that was or becomes generally available publicly other than through
disclosure by Executive in violation of this Agreement.
"Disability" means physical or mental incapacity resulting in
Executive being unable to perform his duties for a period of six (6) consecutive
months. Any question as to the existence of the Disability of Executive as to
which Executive and the Company cannot agree shall be determined in writing by a
qualified independent physician mutually acceptable to Executive and the
Company. If Executive and the Company cannot agree as to a qualified independent
physician, each shall appoint such a physician and those two physicians shall
select a third who shall make such determination in writing. The determination
of Disability made in writing to the Company and Executive shall be final and
conclusive for all purposes of this Agreement.
"Effective Date" means January 2, 2002.
"Employment Term" has the meaning set forth in Section 2 hereof.
"Executive" has the meaning set forth in the preamble hereof.
"Good Reason" means:
(a) Executive is removed from the positions described in
Section 3 hereof for any reason other than for Cause or by reason of
Executive's death or Disability;
(b) Executive is assigned duties and responsibilities that
represent a diminution of, or are inconsistent, in any material
respect, with the scope of duties and responsibilities associated with
Executive's position as described in Section 3 hereof;
(c) the Company employs or otherwise retains any person who is
afforded executive responsibilities equal to or greater than those of
Executive;
(d) the Company reduces Executive's Base Salary or Target
Bonus levels (other than in connection with an across-the-Board
percentage basis reduction applicable to all other senior executives of
the Company);
(e) the Company relocates Executive's principal place of
employment to a location more than 40 miles from Executive's current
principal place of employment; or
(f) the material breach of this Agreement by the Company.
(g) the mutual agreement by the Executive and the Board of
Directors to terminate this Agreement by giving written notice to the
Company between July 1, 2002 and July 31, 2002
(h) either the Company or the Executive provides notice to the
other pursuant to Section 2 hereof, that it or he does not wish to have
the Employment Term extended.
2
"Initial Term" has the meaning set forth in Section 2 hereof.
"Notice of Termination" means a written notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of employment under the provision so indicated.
"Options" means options to purchase Common Stock of the Company
granted to Executive pursuant to any stock option plan of the Company.
"Permitted Transferee" means a person to whom Common Stock, or options
to purchase Common Stock, are transferred from the Executive (i) by will or the
laws of descent and distribution or (ii) by gift without consideration of any
kind; provided that, in the case of clause (ii) such transferee is the issue or
spouse of the Executive or a trust that is for the exclusive benefit of the
Executive or his Permitted Transferees.
"Retirement" means Executive's voluntary termination of employment
with the Company after reaching 65 years of age, or such earlier date as may be
determined by the Board in its sole discretion.
"Target Bonus" has the meaning set forth in Section 4.2.
"Willful" means, when applied to any action or omission of Executive,
that Executive, in acting or omitting to act, did so without a good faith
belief that such action or omission was in, or was not contrary to, the best
interests of the Company.
2. TERM OF EMPLOYMENT. Subject to Section 5 hereof, Executive shall be
employed by the Company hereunder for a period commencing on the Effective Date
and ending on the first anniversary thereof (the "Initial Term"); provided that
on the anniversary of the Effective Date and each anniversary thereafter, the
Initial Term shall automatically be extended by one year unless, not less than
ninety days prior to any such anniversary, the Company or Executive gives notice
to the other that it or he does not wish to have the Initial Term automatically
extended (the Initial Term, together with any extensions thereof, if any, is
hereinafter referred to as the "Employment Term", subject to termination in
accordance with Section 5 hereof).
3. POSITION.
(a) During the Employment Term, Executive shall serve as
Chairman of the Board of the Company and in the performance of such duties shall
report solely and directly to the Board. Subject to applicable law and the
overall policy directives of the Board, Executive shall have all executive
powers and authority which are necessary to enable him to discharge his duties
as Chairman of the Board of the Company.
(b) During the Employment Term, the Company shall not employ
or otherwise retain any other person who is afforded executive responsibilities
equal to or greater than those of Executive.
(c) During the Employment Term, Executive shall in good faith
and consistent with his ability, experience and talent perform the duties set
forth in this Section 3 and shall devote all of his productive time and efforts
to the performance of such duties.
3
4. COMPENSATION.
4.1 BASE SALARY. The Company shall pay Executive an annual
base salary of $350,000 (the "Base Salary"). The Base Salary shall be paid in
regular installments in accordance with the Company's usual payment practices
(but not less frequently than semi-monthly). The Base Salary shall be reviewed
at least annually on an ongoing basis, provided that such Base Salary shall not
be subject to reduction unless such reduction is part of an across-the-board
percentage reduction applicable to all other senior executives.
4.2 BONUS. With respect to each fiscal year, all or part of
which is contained in the Employment Term, Executive shall be eligible to
receive, in addition to his Base Salary, a cash bonus equal to no less than 50%
of Executive's Base Salary (the "Target Bonus") in accordance with the terms of
the Company's Cash Incentive Compensation Plan.
4.3 Executive shall be paid a 2001 bonus in the amount of
$100,000 not later than February 1, 2002.
4.4 All restrictions set forth in the Amended and Restated
Stockholders' Agreement dated June 22, 2000 regarding Executive's sale of
company stock will be removed as of January 7, 2002.
4.5 BENEFITS. Executive shall be entitled to participate in
all of the Company's incentive and benefit plans and arrangements, including,
without limitation, all employee incentive and benefit plans or arrangements
currently available or made available in the future by the Company to its senior
executives, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements, but on a basis no less
favorable than that afforded to any other senior executives of the Company. The
Company shall also provide to Executive all health, major medical,
hospitalization and disability insurance on the same terms as such benefits are
provided to other senior executives of the Company. Executive will be entitled
to four (4) weeks paid vacation for each twelve (12) month period following the
Effective Date. Unused vacation from any year may be utilized only in the next
succeeding year in accordance with Company policies then in effect.
4.6 BUSINESS EXPENSES. Reasonable travel, entertainment and
other business expenses incurred by Executive in the performance of his duties
hereunder shall be reimbursed by the Company in accordance with Company
policies.
5. TERMINATION.
5.1 GENERAL. Executive's employment may be terminated by
either party at any time by Notice of Termination given to the other and the
rights and obligations of the parties with respect to any such termination shall
be as set forth in this Section 5. If the Company proposes to terminate
Executive's employment for Cause pursuant to clause (a) of the definition of
Cause and the event or circumstance constituting Cause is curable, the Company
shall give Executive notice of such event or circumstance and thirty (30) days
from the date of such notice to cure such event or circumstance, prior to giving
a Notice of Termination with respect thereto. If Executive proposes to terminate
his employment for Good Reason and the event or circumstance constituting Good
Reason is curable, Executive shall give the Company notice of such event or
circumstance and thirty (30) days from the date of such notice to cure such
event or circumstance, prior to giving Notice of Termination with respect
thereto.
4
5.2 TERMINATION FOR CAUSE BY THE COMPANY.
(a) If Executive's employment is terminated by the
Company for Cause,
(i) the Company shall pay Executive his Base
Salary through the date of termination. All other benefits due Executive
following termination of Executive's employment for Cause shall be determined
in accordance with the plans, policies and practices of the Company, and
(ii) all Options (whether vested or unvested) and
restricted stock then held by Executive, any Permitted Transferee or any trust
for the benefit thereof at the time of termination will be immediately forfeited
upon termination of Executive's employment.
5.3 EXECUTIVE'S DISABILITY OR DEATH.
(a) If Executive's employment is terminated by reason
of Executive's Disability or death, the Company shall pay Executive (or his
estate), a lump sum amount equal to (i) two times the sum of the Base Salary
then in effect and (ii) two times the current fiscal year's Target Bonus reduced
in the case of termination by reason of the Executive's Disability by any
disability benefits paid in lieu of Base Salary under the Company's employee
benefit plans as then in effect. All other benefits due Executive following
termination of Executive's employment for Disability or death shall be
determined in accordance with the plans, policies and practices of the Company.
(b) If Executive's employment is terminated by reason
of Executive's Disability or death, (i) all unvested Options held at the time of
termination by Executive, any Permitted Transferee of Executive or, any trust
for the benefit thereof shall become immediately vested and exercisable upon
termination of Executive's employment and shall remain outstanding and
exercisable in accordance with their terms, and (ii) any restricted stock held
at the time of termination by Executive, any Permitted Transferee of Executive
or, any trust for the benefit thereof shall no longer be subject to such
restrictions.
5.4. TERMINATION WITHOUT CAUSE BY THE COMPANY OR FOR GOOD
REASON BY EXECUTIVE.
(a) If, other than during a Change in Control
Protection Period, Executive's employment is terminated by the Company
without Cause (other than by reason of Disability or death) or by Executive
for Good Reason, the Company shall pay Executive, in equal installments (net of
statutory withholdings) in accordance with the Company's payroll practices and
procedures for the 12 month period commencing upon the date of termination, an
amount equal to the sum of (i) two times the Base Salary then in effect and
(ii) two times the Target Bonus available to Executive for the fiscal year in
which the termination occurs, such payment to be made upon execution of a
separation agreement.
(b) If, other than during a Change in Control
Protection Period, Executive's employment is terminated by the Company without
Cause or by Executive for Good Reason, during the 24 month period commencing on
the date of termination the Company will pay the Executive's associated COBRA
costs for a period of 18 months, and reimburse Executive for costs associated
with Executive's family health, dental and vision insurance for an additional
period of 6 months. All other benefits due Executive following such termination
of
5
employment by the Company without Cause or by Executive for Good Reason shall be
determined in accordance with the plans, policies and practices of the Company.
(c) If, other than during a Change in Control
Protection Period, Executive's employment is terminated by the Company without
Cause or by Executive for Good Reason, (i) all Options held by Executive, any
Permitted Transferee of Executive or any trust for the benefit thereof at the
time of such termination shall, to the extent not then vested, become
immediately vested and exercisable upon termination of Executive's employment
and shall remain outstanding and exercisable for a period of twelve (12) months
from such date of termination, and (ii) any restrictions shall be removed from
any restricted stock held by Executive, any Permitted Transferee of Executive or
any trust for the benefit thereof.
5.5 TERMINATION BY EXECUTIVE FOR RETIREMENT. If Executive
terminates his employment for Retirement, Executive shall be entitled to receive
any and all benefits in accordance with the Company's applicable plans, policies
and practices including without limitation settlement of any deferred
compensation arrangements in accordance with Executive's written election forms.
5.6 VOLUNTARY TERMINATION BY EXECUTIVE.
(a) If Executive terminates his employment for any
reason (other than for death, Disability, Good Reason or Retirement as provided
in Sections 5.3, 5.4 or 5.5 hereof), Executive shall be entitled to the same
payments he would have received if his employment had been terminated by the
Company for Cause.
(b) Notwithstanding Section 5.6(a), if Executive
terminates his employment for any reason (other than death, Disability, Good
Reason or Retirement as provided in Sections 5.3, 5.4 or 5.5 hereof), (i) vested
Options held by Executive, any Permitted Transferee of Executive or any trust
for the benefit thereof at the time of such termination will remain outstanding
in accordance with the terms of the relevant Company stock option plan and (ii)
all other Options will terminate.
5.7 MITIGATION. Anything in this Agreement to the contrary
notwithstanding, if Executive provides services for pay to anyone other than the
Company or any of its affiliates or subsidiaries from the date of termination of
Executive's employment hereunder until the date Executive ceases receiving
payments pursuant to this Section 5, any medical or other welfare benefits to
which Executive is entitled from the Company during such period pursuant to this
Agreement shall be subject to offset in the event that Executive becomes
eligible to receive similar benefits during such period as a result of
Executive's performing such services.
6. NON-COMPETITION: NON-SOLICITATION.
6.1 NON-COMPETITION. Executive acknowledges and recognizes the
highly competitive nature of the businesses of the Company and accordingly
agrees that during the Employment Term and for a period of two years after the
date of termination of Executive's employment, Executive will not enter into
competitive endeavors and will not undertake any commercial activity which is
contrary to the best interests of the Company or its affiliates, including
becoming an employee, officer, director, agent or owner of any outstanding
shares of, or any other equity interest in, any company, firm, business, person
or other entity which competes, directly or indirectly, with the electronic
contract manufacturing business conducted by the Company; PROVIDED, that
Executive may own up to five percent (5%) of the stock of any
6
such company whose stock is registered for public trading. This Section 6.1
shall not apply in the event that Executive's employment is terminated by the
Company without Cause or by Executive for Good Reason.
6.2 NON-SOLICITATION. In the event of a termination of
Executive's employment for any reason, Executive shall refrain from directly or
indirectly soliciting or hiring employees of the Company, directly or indirectly
inducing any such employees to terminate their employment by the Company, or
seeking to employ any such employees, in each case, for two years after
Executive's termination; PROVIDED that in the event that Executive's employment
is terminated by the Company without Cause or by Executive for Good Reason, the
restrictions in this Section 6.2 shall lapse on the first anniversary of the
date of such termination. For purposes of this Section 6.2, "employee" shall
mean anyone employed by the Company on or within the three-month period
immediately prior to Executive's date of termination.
7. CONFIDENTIALITY. Executive acknowledges that the nature of
Executive's engagement by the Company is such that Executive will have access to
Confidential Information which has value to the Company. During and after his
employment by the Company, Executive shall keep all of the Confidential
Information in confidence and shall not disclose any of the same to any other
person, except the Company's personnel, agents and representatives and other
persons designated in writing by the Company or except as otherwise required by
law.
8. SPECIFIC PERFORMANCE. Executive acknowledges and agrees that the
Company's remedies at law for a breach or threatened breach of any of the
provisions of Sections 6.1, 6.2 or 7 hereof would be inadequate and, in
recognition of this fact, Executive agrees that, in the event of such a breach
or threatened breach, in addition to any remedies at law, the Company, without
posting any bond, shall be entitled to obtain equitable relief in the form of
specific performance, temporary restraining order, temporary or permanent
injunction or any other equitable remedy which may then be available.
9. ENFORCEABILITY. It is expressly understood and agreed that although
Executive and the Company consider the restrictions contained in Sections 6.1,
6.2 and 7 hereof to be reasonable, if a final judicial determination is made by
a court of competent jurisdiction that the time or territory or any other
restriction contained in this Agreement is an unenforceable restriction against
Executive, the provisions of this Agreement shall not be rendered void but shall
be deemed amended to apply as to such maximum time and territory and to such
maximum extent as such court may judicially determine or indicate to be
enforceable. Alternatively, if any court of competent jurisdiction finds that
any restriction contained in this Agreement is unenforceable, and such
restriction cannot be amended so as to make it enforceable, such finding shall
not affect the enforceability of any of the other restrictions contained herein.
10. MISCELLANEOUS.
10.1 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.
10.2 ENTIRE AGREEMENT, AMENDMENTS. This Agreement contains the
entire understanding of the parties with respect to the employment of Executive
by the Company and supercedes the Existing Employment Agreement which is hereby
terminated by the parties effective as of the Effective Date; PROVIDED that this
Agreement shall not supersede the [Securities Purchase Agreement, the
Stockholders Agreement] the Change in Control
7
Agreement or indemnification agreement between Executive and the Company, which
agreements shall be interpreted in accordance with their terms. This Agreement
may not be altered, modified, or amended except by written instrument signed by
the parties hereto.
10.3 NO WAIVER. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver of such party's rights or deprive such party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.
10.4 SEVERABILITY. In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality, and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.
10.5 ASSIGNMENT. This Agreement shall not be assignable by
Executive, except that Executive may assign payments due hereunder to a trust
established for the exclusive benefit of any Permitted Transferee of Executive.
10.6 SUCCESSORS, BINDING AGREEMENT. This Agreement shall inure
to the benefit of and be binding upon personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees of Executive and successors and assigns of the Company.
10.7 NOTICE. For the purpose of this Agreement, notices and
all other communications provided for in this Agreement shall be in writing and
shall be given to the respective address or telecopy number set forth below each
party's name on the signature page of this Agreement or to such other address or
telecopy number as either party may have furnished to the other in writing in
accordance herewith. Each such notice or other communication shall be effective
(a) if given by telecopy, when such telecopy is transmitted if a copy of such
notice or other communication is sent by certified mail, return receipt
requested, and is posted within one business day, or is personally delivered,
whether by courier or otherwise, within two business days, after the date of
such telecopy, (b) if given by prepaid overnight courier, one business day after
deposit with such courier or (c) if given by United States mail, postage
prepaid, three business days after deposit with the United States postal
service; PROVIDED that notice of change of address shall be effective only upon
receipt.
10.8 WITHHOLDING TAXES. The Company may withhold from any
amounts payable under this Agreement such Federal, state and local taxes as
may be required to be withheld pursuant to any applicable law or regulation.
10.9 COUNTERPARTS. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
8
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
/s/ Xxxxx X. Xxxxx
------------------------------------------
Xxxxx X. Xxxxx
00 Xxxxxxxxxxx Xxxx
Xxxxx, Xxxxxxxxxxxxx 00000
MANUFACTURERS' SERVICES LIMITED
By: /s/ Xxxxxxx X. Weyond
---------------------------------------
Name: Xxxxxxx X. Weyond
Title: Chairman of the Compensation
Committee of the Board of Directors
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
9
