Exhibit 10.20
EMPLOYMENT AGREEMENT
This Employment Agreement is dated as of October 23, 2001 (the
"Agreement"), and is by and among Xxxxxxxx X. Xxxxx ("Executive"), PRI
Automation, Inc., a Massachusetts corporation ("PRI,") and Xxxxxx Automation,
Inc., a Delaware corporation ("Xxxxxx").
WHEREAS, Executive presently serves as President and Chief Executive
Officer of PRI, and Executive and PRI have entered into a Retention Agreement
dated as of October 23, 2000 (the "Retention Agreement"), a Confidentiality,
Non-Competition and Assignment of Inventions Agreement dated as of May 6, 1996
(the "Non-Competition Agreement") and an Indemnification Agreement dated as of
November 30, 2000 (the "Indemnification Agreement");
WHEREAS, pursuant to an Agreement and Plan of Merger (the "Merger
Agreement") dated of even date herewith by and among PRI, Xxxxxx and PRI
Acquisition Corp. ("Xxxxxx Merger Sub"), PRI will be merged into Xxxxxx Merger
Sub (the "Merger") and become a wholly-owned subsidiary of Xxxxxx (the
"Company");
WHEREAS, the Company wishes to retain the services of Executive during the
six-month period following the Merger (the "Transition Period") and to confer
other benefits to Executive as set forth herein;
WHEREAS, the Executive wishes to accept such employment with the Company
during the Transition Period pursuant to the terms of the Agreement and, in
connection therewith, agrees to release all rights and benefits he is entitled
to under the terms of the Retention Agreement and Non-Competition Agreement;
WHEREAS, Executive, as a director and chief executive officer of PRI, has
highly valuable and confidential knowledge of the business and affairs of PRI
and has developed relationships with PRI's customers, suppliers and others upon
whom the business conducted by PRI is dependent; and
WHEREAS, Executive is willing to refrain from competing with the Company
on the terms and conditions hereof;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. EFFECTIVENESS OF THIS AGREEMENT. This Agreement shall become effective
as of the "Effective Time," as defined in the Merger Agreement (such date
referred to herein as the "Effective Date"). When this Agreement becomes
effective pursuant to this Section 1, this Agreement shall supersede each of the
Retention Agreement and the Non-Competition Agreement but not the
Indemnification Agreement or any stock option agreements between the Executive
and PRI.
2. EMPLOYMENT. Executive shall serve as Special Assistant to the Chief
Executive Officer of Xxxxxx, advising said President regarding strategic
opportunities available to Xxxxxx
and otherwise engaging in such activities as are assigned by the President and
are otherwise compatible with the duties and responsibilities ordinarily
attendant to a senior executive position, or in such other capacity and under
such other title as the parties may agree, to serve in such capacity through the
Transition Period. It is further understood and agreed that Executive shall not
be required to perform such services at any location that is more than 25 miles
from PRI's existing offices in Billerica, Massachusetts.
3. COMPENSATION AND BENEFITS
3.1 Base Salary. Executive shall be paid a base salary of $182,000
during the Transition Period, payable in accordance with the payroll practices
of the Company for its executives generally.
3.2 Benefits. Executive shall retain all current fringe benefits and
perquisites during the Transition Period, including without limitation vacation
and participation in 401(k) and employee stock purchase plans, and shall be
eligible to participate in all insurance or other benefit programs for the
Company's employees, on the same basis as other employees of similar status and
compensation but in any case on terms at least as favorable to Executive as the
terms of his present benefits package.
3.3 Retention Bonus. Executive shall be paid a bonus in the amount
of $364,000 (the "Retention Bonus") if employed on the last day of the
Transition Period or if Executive's employment terminates in accordance with
Section 6.1 herein; provided, however, no Retention Bonus shall be paid if the
Executive's employment terminates in accordance with Section 6.2 or 6.3 herein.
3.4 Business Expenses. The Company shall pay or reimburse Executive
during the Transition Period for all reasonable business expenses incurred or
paid by him in the performance of his services, subject to reasonable
substantiation and documentation.
3.5 Executive Assistant. Executive's current executive assistant
shall continue to be assigned in such capacity during the Transition Period, and
shall not be terminated by the Company during the Transition Period except for
cause in accordance with the Company's employment policies.
4. ACCELERATION OF OPTIONS. On the Effective Date the terms of each option
granted on or prior to October 8, 2001 shall be modified so that (a) it shall
thereafter be exercisable in full regardless of any vesting provisions in any
agreement relating to such option; (b) such option shall be exercisable for a
period ending on the earlier of (i) three years from the Effective Date, or (ii)
its originally scheduled expiration date.
5. SECTION 280G GROSS-UP. In the event that any payment or benefit
received or to be received by Executive, whether in connection with Executive's
employment or the termination of Executive's employment and whether pursuant to
the terms of this Agreement or any other plan, arrangement or agreement with the
Company or any affiliate, parent or subsidiary of the Company (all such payments
and/or benefits, including the payments and benefits, if any, under this
Agreement, being hereinafter referred to as the "Payments") would be subject to
the
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excise tax imposed by Section 4999 of the Internal Revenue Code or any interest
or penalties are incurred by Executive with respect to such Section 4999 excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Company
shall pay to Executive an additional payment (a "Gross-Up Payment") in an amount
such that, after payment by Executive of all taxes, including without
limitation, any federal or state income, employment and excise taxes imposed
upon the Gross-Up Payment (including any interest or penalties imposed with
respect to such taxes), Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. In the event of any
controversy with the Internal Revenue Service (or other taxing authority) with
regard to the Excise Tax, the Executive shall permit the Company to control
issues related to the Excise Tax.
6. TERM AND TERMINATION OF EMPLOYMENT. The term of Executive's employment
under this Agreement shall begin on the Effective Date and shall continue until
and terminate at the end of the Transition Period, unless earlier terminated in
accordance with the provisions of this Section 6. Executive's employment may be
terminated in accordance with this Section 6 by (a) Executive's death or
Disability, (b) the Company, for Cause, or (c) Executive, as set forth below.
6.1 Termination for Death or Disability. Executive's employment
hereunder shall terminate upon Executive's death automatically or upon his
Disability (as defined below) as provided herein. If Executive (or any personal
representative of Executive) determines in good faith that the Disability of
Executive has occurred, Executive (or such representative) may terminate his
employment with the Company immediately by giving written notice of such
termination to the Company. If the Board of Directors of the Company determines
in good faith that the Disability of Executive has occurred, the Company may
give Executive written notice of its intention to terminate Executive's
employment hereunder. In such event, Executive's employment with the Company
shall terminate as of the 30th day after the date on which Executive shall
receive such written notice from the Company, but only if Executive shall not
have returned to full-time performance of his duties hereunder within such
thirty (30) day period. Until such termination for Disability, Executive shall
continue to receive his salary and benefits as provided herein. For purposes of
this Agreement, "Disability" shall mean that Executive has been unable to
perform his duties as a full-time employee of the Company as the result of
incapacity due to physical or mental illness, and, at least 26 weeks after its
commencement, such inability is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to Executive or
his legal representative (such agreement as to acceptability not to be
unreasonably withheld).
6.2 Termination by the Company for Cause. The Company may terminate
Executive's employment hereunder for Cause at any time upon written notice to
Executive setting forth in reasonable detail the nature of such Cause. For
purposes hereof, "Cause" shall mean (i) the conviction of Executive of a felony
involving moral turpitude, (ii) conduct of Executive involving any immoral acts
which would impair the reputation of Executive or the Company, (iii) fraud or
embezzlement committed by Executive against the Company, or (iv) habitual
neglect by Executive of his duties assigned to him hereunder, which has not been
remedied after there has been delivered to him at least thirty (30) days prior
thereto a written
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demand for performance from the Company which describes the basis for the belief
by the Company that Executive has not performed his duties.
6.3 Termination by Executive. Executive may terminate his employment
hereunder at any time upon thirty (30) days written notice to the Company in
accordance with Section 14 herein.
7. EFFECTS OF TERMINATION. In the event of termination of Executive's
employment for any reason, Executive shall be entitled to receive any and all
salary, bonus, expenses, perquisites or fringe benefits, earned but not yet
paid, provided, however, that regardless of the foregoing clause any payment of
the Retention Bonus shall be solely as provided in Section 3.3. With respect to
any amount payable periodically, Executive shall be deemed to have earned a
portion of such amount equal to the portion of the period that shall have
elapsed at the date of termination, and such amount shall be paid at the time it
would be normally paid. In addition, neither the Company nor Executive shall
make any public statement pertaining to the termination of Executive's
employment other than a statement agreed upon by the Company and Executive;
provided, however, that Xxxxxx may make public statements as are necessary to
comply with the law.
8. PROPRIETARY RIGHTS AND NONCOMPETITION. Executive acknowledges that the
Company is engaged in a continuous program of research, development and
production in connection with its business, present and future, and hereby
covenants as follows:
8.1. Confidentiality. Executive will maintain in confidence and will
not disclose or use, either during or after the term of this Agreement, any
proprietary or confidential information, trade secrets or know-how belonging to
the Company ("Proprietary Information"), whether or not in written form, except
to the extent required to perform duties on behalf of the Company. For purposes
of this Agreement, "Proprietary Information" shall mean any information, not
generally known in the relevant trade or industry, which was obtained from the
Company, or which was learned, discovered, developed, conceived, originated or
prepared by Executive in connection with this Agreement. Such Proprietary
Information includes, without limitation, software, technical and business
information relating to the Company's inventions or products, research and
development, production processes, manufacturing and engineering processes,
machines and equipment, finances, customer lists and potential customer lists,
marketing and production and future business plans, information belonging to
customers or suppliers of the Company disclosed incidental to Executive's
performance under this Agreement, and any other information which is identified
as confidential by the Company, but only so long as the same is not generally
known in the relevant trade or industry.
8.2. Inventions. For purposes of this Agreement, "Inventions" shall
mean any new or useful art, discovery, contribution, finding or improvement,
whether or not patentable, and all related know-how. Inventions shall include,
without limitation, all designs, discoveries, formulae, processes, manufacturing
techniques, semiconductor designs, computer software, inventions, improvements
and ideas.
Executive will promptly disclose and describe to the Company all
Inventions which he may solely or jointly conceive, develop or reduce to
practice during the term of his employment
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(i) which relate at the time of conception, development, or reduction to
practice of the Invention to the Company's current business or actual or
demonstrably anticipated research or development, (ii) which were developed, in
whole or in part, on the Company's time or with the use of any of the Company's
equipment, supplies, facilities or trade secret information, or (iii) which
resulted from any work performed by Executive for the Company (collectively, the
"the Company Inventions"). Executive hereby assigns all of his right, title and
interest worldwide in the Company Inventions and in all intellectual property
rights based upon the Company Inventions.
8.3. Documents and Materials. Upon termination of this Agreement or
at any other time upon the Company's request, Executive will promptly deliver to
the Company, without retaining any copies, all documents and other materials
furnished to him by the Company, prepared by him for the Company or otherwise
relating to the Company's business, including, without limitation, all written
and tangible material in his possession incorporating any Proprietary
Information.
8.4. Competitive Employment. For a period of two (2) years beginning
on the date on which Executive's employment with the Company is terminated for
any reason (the "Non-Competition Term"), Executive agrees that Executive,
directly or indirectly, shall not, whether as an employee, owner, partner,
shareholder, investor, director, consultant, agent, lender, guarantor, surety or
otherwise, or through any person or third party: (x) engage or attempt to engage
in any employment, consulting or other activity or otherwise aid or assist,
directly or indirectly, any person or entity, anywhere in the world, which
competes with the Company's (for purposes of Section 8, "Company" shall include
Xxxxxx Automation, Inc. and all of its current subsidiaries and affiliates and
including PRI and its affiliates as of the Effective Date and after giving
effect to the Merger) Product Line (as defined below); or (y) engage or attempt
to engage in any employment, consulting or other activity or otherwise aid or
assist, directly or indirectly, any person or entity, anywhere in the world,
which competes with the Company's business as of the Effective Date after giving
effect to the Merger. For purposes of this Agreement, the term: (A) "employment"
shall include the retention or engagement of Executive as an employee,
consultant, agent, independent contractor or otherwise; and (B) "Product Line"
shall mean all of the Company's products developed or under development as of
the date of the termination of Executive's employment (together with all
technology, "know-how" and proprietary information related thereto) regardless
of whether such products are manufactured, operated, distributed or used by the
Company or a successor business unit of the Company or any other business unit
of the Company. Executive acknowledges that Executive's participation in the
conduct of any such business alone or with any person other than the Company
will materially impair the business and prospects of the Company. Nothing in
this Section 8 shall preclude Executive from (i) making investments as a passive
investor of less than three percent (3%) of the capital stock or publicly traded
notes or debentures of a publicly held company or (ii) making passive
investments in the securities of any business enterprise that is not competitive
with the Company or, if the proposed investment is in a business enterprise that
is competitive with the Company, then after written disclosure to and approval
by the Board of Directors of the Company.
8.5. Nonsolicitation. During the Non-Competition Term, Executive
agrees that he shall not knowingly attempt to or assist any other person,
directly or indirectly, in attempting to do any of the following: (i) encourage
any customer, client, supplier or other business
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relationship of the Company or any subsidiary or affiliate to terminate or alter
such relationship, whether contractual or otherwise, to the disadvantage of the
Company or any subsidiary or affiliate; as the case may be; (ii) encourage any
prospective customer or supplier not to enter into a business relationship with
the Company or any subsidiary or affiliate; (iii) impair or attempt to impair
any relationship, contractual or otherwise, written or oral, between the Company
or any subsidiary or affiliate and any customer, supplier or other business
relationship of the Company or any subsidiary or affiliate; or (iv) attempt to
or assist any other person in attempting to solicit any director, officer,
employee, or agent of the Company or any subsidiary or affiliate, or encourage
any such person to terminate such relationship with the Company from the date of
this Agreement until the end of the Non-Competition Term; provided, however,
that this restriction shall not apply to, and Executive shall be entitled to
offer employment to and to employ, Executive's current executive assistant;
provided further, that all references in this Section 8.5 to the Company shall
refer to the Company and all affiliates as defined in Section 8.4.
8.6. Acts to Secure Proprietary Rights
8.6.1 Further Acts. Executive agrees to perform, during and
after the term hereof, all acts deemed necessary or desirable by the Company to
permit and assist it, at its expense, in perfecting and enforcing the full
benefits, enjoyment, rights and title throughout the world in the Company
Inventions. Such acts may include, without limitation, execution of documents
and assistance or cooperation in the registration and enforcement of applicable
patents and copyrights or other legal proceedings.
8.7 Consideration for Non-Competition, etc.
8.7.2. Payment. As consideration for Executive's agreements
contained in this Section 8, during the Non-Competition Term the Company shall
pay to Executive $546,000 each year, paid in equal monthly installments of
$45,500, in arrears.
8.7.2. Benefits. During the Non-Competition Term, Executive
shall be eligible, to the fullest extent possible, to participate in all
insurance or other benefit programs for employees on the same basis as other
employees of similar status and compensation, and in any case on the same basis
as he was eligible to participate during his employment. Notwithstanding the
foregoing, if Executive is ineligible to participate in any insurance or other
benefit program to the extent provided herein by reason of his age or employment
status or for any other reason, then Employer shall instead promptly pay
Executive such amounts in cash as are sufficient (after payment of federal,
state and local income taxes, if any) to enable him to procure substantially
equivalent benefits on an individual basis. Notwithstanding the foregoing,
Executive shall not be eligible to receive benefits as provided in this Section
8.7.2 if Executive's employment is terminated for "Cause" as defined in Section
6.2 above.
8.8. No Conflicting Obligations. Executive's performance of
this Agreement does not breach and will not breach any agreement to keep in
confidence proprietary information, knowledge or data acquired by him.
8.9. Specific Performance. Executive acknowledges and agrees
that the provisions set forth in this Section 8 are reasonable to protect the
Company's legitimate business
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interests. Executive further agrees that a breach of any of the promises or
agreements contained in this Section 8 could result in irreparable and
continuing damage to the Company for which it would have no adequate remedy at
law. Executive therefore agrees that the Company shall be entitled to seek
injunctive relief and/or a decree for specific performance, and such other
equitable relief as may be proper. The prevailing party in such legal action
will also be entitled to monetary damages and reasonable costs and attorney
fees.
9. WITHHOLDING. All payments made by the Company under this Agreement
shall be reduced by any tax or other amounts required to be withheld by the
Company under applicable law.
10. ASSIGNMENT. Neither the Company nor Executive may assign this
Agreement or any interest herein, by operation of law or otherwise, without the
prior written consent of the other party; provided, however, that the Company
may assign its rights and obligations under this Agreement without the consent
of Executive to any Successor of the Company. A "Successor" of the Company shall
mean any entity with which the Company may merge, consolidate or otherwise
combine or to which the Company may sell or otherwise transfer all or
substantially all of its assets. This Agreement shall inure to the benefit of
and be binding upon the Company , Executive and their respective successors,
executors, administrators, heirs and permitted assigns.
11. INDEMNIFICATION. To the maximum extent permitted under Delaware law,
as from time to time in effect, the Company hereby agrees to indemnify Executive
and hold him harmless from, against and in respect of any and all damages,
deficiencies, actions, suits, proceedings, demands, assessments, judgments,
claims, losses, costs, expenses, obligations and liabilities arising from or
related to the performance by Executive of his duties hereunder. The Company
agrees that Executive also shall be entitled to the benefit of the
Indemnification Agreement and any provision of its by-laws or certificate of
incorporation as now in effect, notwithstanding any subsequent modification
thereof, to the extent that any such benefit is superior to the first sentence
hereof.
12. WAIVER. The waiver by any party hereto of a breach of any provision of
this Agreement by any other party will not operate or be construed as a waiver
of any other or subsequent breach by such other party.
13. SEVERABILITY. If any part of this Agreement is found invalid or
unenforceable, that part will be deemed amended to achieve as nearly as possible
the same economic effect as the original provision, and the remainder of this
Agreement will remain in full force.
14. NOTICES. Any notice or other communication in connection with this
Agreement shall be deemed to be delivered if in writing, addressed as provided
below and actually delivered at said address:
If to Executive, to him at the following address:
Xxxxxxxx X. Xxxxx
c/o PRI Automation, Inc.
000 Xxxxxxxxx Xxxxxxxx
Xxxxxxxxx, XX 00000
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With a copy to:
Goulston & Storrs
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxxxx, Esq.
If to Xxxxxx, to it at the following address:
Xxxxxx Automation, Inc.
00 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: President
With a copy to:
Xxxxx, Xxxxxxx Xxxxx & Gesmer
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxxx, Esq.
If to PRI, to it at the following address:
PRI Automation, Inc.
000 Xxxxxxxxx Xxxxxxxx
Xxxxxxxxx, XX 00000
Attention: President
With a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
or to such other person or address as to which any party may notify the
other in accordance with this Section 14.
15. ARBITRATION. In the event of a dispute between the parties as to the
meaning or interpretation of this Agreement, or the performance of either party
hereunder, either party may submit the dispute for arbitration in Boston,
Massachusetts, to the American Arbitration Association, which is expressly
permitted and required hereby, to include the reasonable costs of arbitration,
including attorneys' fees, of the prevailing party, in its decision. If the
nonprevailing
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party should then fail to comply with such decision, the nonprevailing party
shall then pay the reasonable coats of enforcement, including attorneys' fees,
to the prevailing party. Such costs shall specifically include any judicial
proceeding to confirm such decision.
16. FAILURE OF CONDITION. If for any reason the Merger does not become
effective on or before July 31, 2002, then this Agreement shall not become
effective pursuant to Section 1 above, but instead shall become void and shall
be of no further force or effect whatsoever.
17. MISCELLANEOUS. Subject to Section 1 above, this Agreement constitutes
the entire understanding of the parties with respect to the subject matter
hereof and supersedes all prior and current understandings and agreements,
whether written or oral. This Agreement may be amended or modified only by a
written instrument signed by Executive and a duly authorized representative of
each of PRI and Buick. This Agreement may be executed in any number of
counterparts, which together shall constitute one instrument and shall be
governed by and construed and enforced in accordance with the laws (other than
the conflicts of law rules) of The Commonwealth of Massachusetts. If any part of
this Agreement is found invalid or unenforceable, that part will be amended to
achieve as nearly as possible the same economic effect as the original
provision, and the remainder of this Agreement will remain in full force.
* * *
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Execution Copy
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands, as
of the date first above written.
/s/ Xxxxxxxx X. Xxxxx
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XXXXXXXX X. XXXXX
PRI AUTOMATION, INC.
By: /s/ PRI Automation, Inc.
-------------------------------------
Name:
Title:
XXXXXX AUTOMATION, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Senior Vice President,
Finance & Administration
Chief Financial Officer
