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Exhibit 10.16
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of June 6, 2000, between INTERFACE ELECTRONICS CORP.,
a Massachusetts corporation ("Employer"), and XXXXXX X. XXXXXXX ("Executive").
RECITALS:
WHEREAS, pursuant to a Stock Purchase Agreement, dated as of May 4, 2000,
as amended (the "Purchase Agreement"), among Jaco Electronics, Inc., a New York
corporation (the "Purchaser"), and all of the stockholders of the Employer,
including Executive (collectively, the "Sellers"), the Purchaser has purchased
100% of the capital stock of Employer from the Sellers; and
WHEREAS, Executive possesses valuable experience, skills and know-how
with respect to various aspects of Employer's business and Employer desires to
employ Executive on the terms and conditions hereinafter set forth and Executive
is willing to accept such employment on such terms and conditions, and Executive
has agreed to refrain from competing with Employer as hereinafter provided; and
WHEREAS, as an inducement to Purchaser purchasing Employer's capital
stock, Executive has agreed to enter into this Agreement.
NOW, THEREFORE, Employer and Executive hereby agree as follows:
1. Employment.
1.1 General. Employer hereby employs Executive in the capacity of
President of Employer. Executive hereby accepts such employment, upon the terms
and subject to the conditions herein contained.
1.2 Duties. During Executive's employment with Employer, Executive
will report directly to the Chairman of Employer, and will be responsible for
performing those duties consistent with the duties heretofore performed by
Executive for Employer and consistent with the position of President and
performing such other duties as may from time to time be assigned to or
requested of Executive by Employer's Chairman and/or Board of Directors (the
"Board") and/or the Purchaser's Chairman and/or Board of Directors, consistent
with the foregoing, with primary responsibility for managing all aspects of the
Employer's CM Division (as such term is defined in the Purchase Agreement).
Executive shall use reasonable efforts to perform faithfully and effectively
such responsibilities. Executive shall conduct all of Executive's activities in
a manner
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so as to maintain and promote the business and reputation of the Employer.
Executive shall serve on the Board and will, if elected by the stockholders of
Purchaser, serve on the Board of Directors of Purchaser and as Vice Chairman of
the Board of Directors of Purchaser if so elected by such Board, for no
additional consideration. Executive, during employment with Employer, will
devote such of Executive's business time, attention and skills to the business
and affairs of Employer as is required to manage the CM Division and otherwise
perform his duties and responsibilities hereunder.
1.3 Location of Employment. Executive's place of employment during
employment with Employer shall be in the Boston, Massachusetts metropolitan
area.
2. Compensation and Benefits.
2.1 Salary. Employer will pay to Executive, and Executive will
accept, as full compensation for any and all services rendered and to be
rendered by him to Employer in all capacities during employment with Employer,
(i) a base salary at the annual rate of $300,000 ("Base Salary"), payable in
accordance with the regular payroll practices of Employer, and (ii) an amount
equal to 2% of Employer's Gross Profit (as defined in the Purchase Agreement)
during each twelve (12) month period beginning June 1, 2000, June 1, 2001 and
June 1, 2002, which amount (the "Bonus") shall be payable within 15 days
following the end of each three (3) month period included in such three (3) year
term.
2.2 Executive Benefits.
2.2.1 Expenses. Employer will reimburse Executive for
expenses reasonably incurred by Executive in connection with the performance of
Executive's duties (including business travel and entertainment expenses), all
in accordance with Employer's policies with respect thereto. Employer shall
provide Executive with such credit cards as it provides to other senior
executives.
2.2.2 Employer Plans. Executive will be entitled to
participate in such employee benefit plans and programs as Employer may from
time to time offer or provide to employees of Employer, including, but not
limited to, participation in life insurance, health and accident and medical
plans and programs and 401(k) programs.
3. Termination of Employment.
3.1 Employment Period. For purposes of this Agreement, Executive's
employment by Employer commenced on the date hereof, and will continue until May
30, 2003 (the "Initial Term"). After the Initial Term, Executive's employment by
Employer will continue for successive one-year periods; provided, however, that
either party may elect not to so extend this Agreement by written notice to such
effect delivered to the other party at least 90 days prior to the expiration of
the then term (the Initial Term and the then current term, the "Employment
Period").
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3.2 Events of Termination. Executive's employment with Employer
will terminate upon the occurrence of any one or more of the following events:
3.2.1 Death. In the event of the Executive's death,
Executive's employment will terminate on the date of death.
3.2.2 Disability. In the event of Executive's Disability
(as hereinafter defined), Employer will have the option to terminate Executive's
employment by giving a Notice of Termination to Executive. The Notice of
Termination shall specify the date of termination, which date shall not be
earlier than 30 days after the Notice of Termination is given. For purposes of
this Agreement, "Disability" means the inability of Executive to substantially
perform Executive's duties hereunder for 90 days out of 180 consecutive days as
a result of a physical or mental illness, all as determined in good faith by the
Board.
3.2.3 Termination by Employer for Cause. Employer may, at
its option, terminate Executive's employment for "Cause" based on objective
factors determined in good faith by a majority of the Board by giving a Notice
of Termination to Executive specifying the reasons for termination, and if
Executive shall fail to cure same within 15 days of receiving the Notice of
Termination Executive's Employment shall terminate at the end of such 15 day
period; provided, that in the event the Board in good faith determines that the
underlying reasons giving rise to such determination cannot be cured, then said
cure period shall not apply and Executive's employment shall terminate on the
date of Executive's receipt of the Notice of Termination. "Cause" shall mean (i)
Executive's conviction of, guilty plea to, or confession of guilt of, a felony,
(ii) dishonest or illegal conduct or misconduct or malfeasance by Executive in
the performance of services for or on behalf of the Employer, or other conduct
detrimental to the business, operations or reputation of the Employer,
regardless of whether such conduct is within the scope of Executive's duties,
(iii) failure by Executive to perform Executive's duties, as reasonably assigned
to him by the Chairman or the Board from time to time, (iv) violation by
Executive of the covenants set forth in this Agreement, (v) the filing by or
against Executive of any bankruptcy, insolvency or reorganization proceeding,
and (vi) except as may be permitted herein, disclosure of Confidential Material
(as defined in Section 4.2 hereof) without the prior written consent of
Employer.
3.2.4 Without Cause By Employer. Employer may, at its
option, terminate Executive's employment for any reason whatsoever (other than
for the reasons set forth above in this Section 3.2) by giving a Notice of
Termination to Executive, and Executive's employment shall terminate on the
later of the date the Notice of Termination is given or the date set forth in
such Notice of Termination.
3.2.5 Employer's Material Breach. Executive may, at
Executive's option, terminate the Executive's employment upon Employer's
material breach of this Agreement by giving Employer written notice of such
breach (which notice will identify the manner in which Employer has materially
breached this Agreement) and if such breach is not cured within 15 days of
Employer receiving such written notice, the Executive's employment shall
terminate at the end
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of such 15 day period. Employer's "Material Breach" of this Agreement shall mean
(i) the failure of Employer to pay Base Salary or Bonus hereunder in accordance
with the terms of this Agreement, which failure is not cured within 10 days
following notice thereof, or (ii) the assignment to Executive without
Executive's consent of duties substantially inconsistent with Executive's duties
as set forth in Section 1.2 hereof.
3.3 Certain Obligations of Employer Following Termination of
the Executive's Employment. Following the termination of the Executive's
employment under the circumstances described below, Employer will pay to
Executive in accordance with its regular payroll practices the following
compensation and provide the following benefits in full satisfaction and final
settlement of any and all claims and demands that Executive now has or hereafter
may have hereunder against Employer:
3.3.1 Death; Disability. In the event that the Executive's
employment is terminated by reason of Executive's death or for Disability,
Executive or Executive's estate, as the case may be, shall be entitled to the
following payments:
(i) Base Salary through the date of death or, in the event
of Disability, the date of termination as specified in the Notice of
Termination;
(ii) A pro-rated portion of the Bonus, if any, earned on or
prior to the date of death or, in the event of Disability, the date of
termination as specified in the Notice of Termination but not yet paid to
Executive; and
(iii) Employer shall pay to Executive or Executive's
estate, as the case may be, the amounts and shall provide all benefits generally
available under the employee benefit plans, and the policies and practices of
Employer, determined in accordance with the applicable terms and provisions of
such plans, policies and practices, in each case as accrued to the date of
termination as specified in the Notice of Termination in the event of Disability
or otherwise payable as a consequence of Executive's death or Disability.
3.3.2 Termination by Employer for Cause. In the event the
Executive's employment is terminated by Employer pursuant to Section 3.2.3
hereof, Executive shall be entitled to no further compensation or other benefits
under this Agreement except as to that portion of any unpaid Base Salary or
Bonus earned on or prior to the date of termination but not yet paid to
Executive.
3.3.3 Without Cause by Employer; Material Breach by
Employer. In the event that the Executive's employment is terminated by Employer
pursuant to Section 3.2.4 or by Executive pursuant to Section 3.2.5, Executive
shall be entitled to the following payments:
(i) Base Salary earned but not paid through the date the
Executive's employment is terminated;
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(ii) A pro-rated portion of the Bonus, if any, earned on or
prior to such termination date but not yet paid to Executive; and
(iii) continuing payments of Base Salary and of Bonus until
the expiration of the Employment Period, and for this purpose, the Bonus shall
be calculated based on the higher of (a) the actual Gross Profit during the
remainder of the Term, or (b) the Gross Profit during the 12 months immediately
preceding the date of termination.
3.4 Nature of Payments. All amounts to be paid by Employer to
Executive pursuant to this Section 3 are considered by the parties to be
severance payments. In the event such payments are treated as damages, it is
expressly acknowledged by the parties that damages to Executive for termination
of employment would be difficult to ascertain and the above amounts are
reasonable estimates thereof. Upon termination of Executive's employment with
Employer pursuant to this Section 3, Executive will be released from any duties
hereunder (except as set forth in Sections 4, 5.11. and 5.12 hereof) and the
only obligations of Employer to Executive will be as set forth in Section 3.3
hereof.
3.5 Change of Control.
3.5.1 Event. In the event a Change of Control (as defined
in the Purchase Agreement) shall occur at any time during the Initial Term,
there shall be paid to Executive, in lieu of any other amounts payable
hereunder, an amount equal to (i) three (3) times Executive's Base Salary and
Bonus earned during the 12 months immediately preceding the date of the Change
of Control, if such Change of Control occurs on or prior to May 30, 2001, or
(ii) two (2) times Executive's Base Salary and Bonus earned during the 12 months
immediately preceding the date of the Change of Control if such Change of
Control occurs on or after June 1, 2001 and on or prior to May 30, 2002, or
(iii) an amount equal to Executive's Base Salary and Bonus earned during the 12
months immediately preceding the date of such Change of Control if such Change
of Control occurs on or after June 1, 2002 and on or prior to May 30, 2003.
4. Non-Competition; Non-Disclosure; Non-Solicitation.
4.1 Non-Competition. For the duration of the Initial Term,
for so long as Executive remains employed by Employer subsequent to the Initial
Term, and for a period of two years after the termination of Executive's
employment or the expiration of this Agreement (the "Termination Date"),
Executive shall not individually or jointly with others, directly or indirectly,
own, manage, operate, join, control, participate in, invest in, or otherwise be
connected with, in any manner, whether as an officer, director, employee,
partner, investor or otherwise, any business entity that is engaged or otherwise
involved in any business which is the same as or similar to the business of
Employer or Purchaser as currently conducted, whether through ownership, leasing
or other operations, within the United States and Canada; provided, however,
nothing contained herein shall be deemed to prohibit (i) Executive from holding
securities of an issuer if the securities of such issuer are listed for trading
on a national securities exchange or are traded in the over-the-counter
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market and Executive's holdings therein represent less than 5% of the total
number of shares or principal amount of the securities of such issuer
outstanding or (ii) from engaging in any activities involving the design,
development, production and distribution of software.
4.2 Nondisclosure of Confidential Material. In the course of
operation of the business of Employer, Executive has received, and will continue
to receive information that gives Employer an advantage over its competitors,
and which is confidential and proprietary, relating to names and preferences of
customers, the costs and profits of particular lines, products and markets,
technological data, computer programs, know-how, potential acquisitions, sources
of financing, corporate operating and financing strategies, expansion plans and
similar related information (together, the "Confidential Material"). At no time
shall Executive individually or jointly with others, publish, disclose, use, or
authorize anyone else to publish, disclose or use any Confidential Material.
Executive acknowledges that any disclosure of the Confidential Material would
cause material and irreparable harm to Employer. Confidential Material does not
include information which (i) becomes generally available to the public other
than as a result of a disclosure by Executive or Executive's affiliates, or (ii)
becomes available to Executive on a non-confidential basis from a source who has
the right to provide such information.
4.3 Non-Solicitation; Non-Compete. At no time prior to the
Termination Date shall Executive, for Executive or on behalf of any other
person, firm, corporation or other entity, directly or indirectly, through an
agent or otherwise, (i) contact any present employee, or person who was an
employee within the year prior to such contact, of the Purchaser or Employer for
the purpose of hiring, diverting or otherwise soliciting such employee; or (ii)
contact any present or former customer, client or business partner of the
Purchaser or Employer for the purpose of soliciting, diverting or taking away
any customer, client or business partner from Employer.
4.4 Injunctive Relief. Executive acknowledges and agrees that
Employer would be irreparably harmed by Executive's violation of this Section 4
and that Employer's remedy at law for any breach of any of Executive's
obligations under this Section 4 would be inadequate, and agrees and consents
that temporary and permanent injunctive relief may be granted in a proceeding
which may be brought to enforce any provision of this Section 4 without the
necessity of proof of actual damage.
4.5 Reasonable Restrictions. Executive has carefully considered
the nature and extent of the restrictions upon him and the rights and remedies
conferred upon Employer under this Section 4, and hereby acknowledges and agrees
that the same are reasonable in time and territory, are designed to eliminate
competition which otherwise would be unfair to Employer, do not stifle the
inherent skill and experience of Executive, would not operate as a bar to
Executive's sole means of support, are fully required to protect the legitimate
interests of Employer and do not confer a benefit upon Employer disproportionate
to the detriment to Executive, taking into account the amount payable directly
or indirectly to Executive pursuant to the Purchase Agreement and the
transactions described therein. If, however, the provisions of this Section 4
are found by a court of competent jurisdiction to contain unreasonable or
unnecessary limitations as to time, geographic area
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or scope of activity, then such court is hereby directed to reform such
provisions to the minimum extent necessary to cause the limitations contained
therein as to time, geographical area and scope activity to be reasonable and
enforceable.
4.6 Limitation. If this Agreement is terminated pursuant to
Section 3.2.4 or 3.2.5 then Sections 4.1 and 4.3(ii) shall not apply following
the expiration of the Employment Period.
5. Miscellaneous Provisions.
5.1 Severability. If in any jurisdiction any term or provision
hereof is determined to be invalid or unenforceable, (a) the remaining terms and
provisions hereof shall be unimpaired, (b) any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction, and (c) the invalid or
unenforceable term or provision shall, for purposes of such jurisdiction, be
deemed replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term
or provision.
5.2 Execution in Counterparts. This Agreement may be executed
in one or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement (and all signatures
need not appear on any one counterpart), and this Agreement shall become
effective when one or more counterparts has been signed by each of the parties
hereto and delivered to each of the other parties hereto.
5.3 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly given when
delivered by hand, or when delivered if mailed by registered or certified mail
or private courier service, postage prepaid, return receipt requested or via
facsimile (with confirmation of receipt) as follows:
If to Employer, to:
Jaco Electronics, Inc.
X.X. Xxx 00000
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: President
Telecopier No.: (000) 000-0000
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Copy to:
Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000
If to Executive, to:
Xxxxxx X. Xxxxxxx
00 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Copy to:
Posternak, Xxxxxxxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx, P.C.
Telecopier No.: (000) 000-0000
or to such other address(es) as a party hereto shall have designated by like
notice to the other parties hereto.
5.4 Amendment. No provision of this Agreement may be modified,
amended, waived or discharged in any manner except by a written instrument
executed by Employer and Executive.
5.5 Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings of the parties hereto, oral
or written, with respect to the subject matter hereof.
5.6 Applicable Law. This Agreement shall be governed by,
construed in accordance with, and enforced under, the laws of the Commonwealth
of Massachusetts applicable to contracts made and to be performed entirely
therein.
5.7 Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.
5.8 Binding Effect; Successors and Assigns. Executive may not
delegate Executive's duties or assign Executive's rights hereunder. This
Agreement will inure to the benefit of, and be binding upon, the parties hereto
and their respective heirs, legal representatives, successors and permitted
assigns.
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5.9 Waiver, etc. The failure of either of the parties hereto to
at any time enforce any of the provisions of this Agreement shall not be deemed
or construed to be a waiver of any such provision, nor to in any way affect the
validity of this Agreement or any provision hereof or the right of either of the
parties hereto to thereafter enforce each and every provision of this Agreement.
No waiver of any breach of any of the provisions of this Agreement shall be
effective unless set forth in a written instrument executed by the party against
whom or which enforcement of such waiver is sought, and no waiver of any such
breach shall be construed or deemed to be a waiver of any other or subsequent
breach.
5.10 Capacity, etc. Each of Executive and Employer hereby
represents and warrants to the other that: (a) such party has full power,
authority and capacity to execute and deliver this Agreement, and to perform its
obligations hereunder; (b) such execution, delivery and performance will not
(and with the giving of notice or lapse of time or both would not) result in the
breach of any agreements or other obligations to which such party is a party or
is otherwise bound; and (c) this Agreement is such party's valid and binding
obligation in accordance with its terms.
5.11 Enforcement. If any party institutes legal action to
enforce or interpret the terms and conditions of this Agreement, the prevailing
party shall be awarded reasonable attorneys' fees at all trial and appellate
levels, and the expenses and costs incurred by such prevailing party in
connection therewith.
5.12 Continuing Effect. Where the context of this Agreement
requires, the respective rights and obligations of the parties shall survive any
termination or expiration of the term of this Agreement.
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IN WITNESS WHEREOF, this Employment and Non-Competition Agreement has
been executed and delivered by the parties hereto as of the date first above
written.
INTERFACE ELECTRONICS CORP.
By:/s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: President
/s/ Xxxxxx X. Xxxxxxx
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XXXXXX X. XXXXXXX
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