EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of November 27, 2000, between SEMX, a Delaware
corporation ("SEMX" or the "Corporation"), and Xxxxxxx Xxxx (the "Executive"),
an individual residing at Xxx Xxxxx, XX 00000.
WITNESSETH
WHEREAS, the Corporation wishes to employ the Executive as its Vice President
and Chief Financial Officer, an executive who should have influence in the
direct management of the business and should contribute, in part, to the
Corporation's commercial success.
WHEREAS, the Executive is willing to accept such employment for the inducements
and upon the terms and conditions hereinafter set forth; and
WHEREAS, the Executive has signed the Corporation's Intellectual Property
Agreement or the Corporation has also bargained for the Executive simultaneously
to execute the Corporation's Intellectual Property Agreement, a copy of which is
annexed hereto as Exhibit A.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Corporation and the Executive agree as
follows:
SECTION 1. EMPLOYMENT:
(A) TERM OF EMPLOYMENT. Upon the terms and subject to the conditions
set forth in this Agreement, the Corporation hereby employs the
Executive, and the Executive agrees to be employed as the Corporation's
Vice President and Chief Financial Officer. Subject to earlier
termination as provided in Section 4 hereof, the term of the
Executive's employment by the Corporation under this Employment
Agreement (the "Employment Term"), shall commence as of the date
hereof, and shall continue for an initial term of two (2) years, up to
and including November 27, 2002 (the "Initial Term"). The Employment
Term may continue beyond the Initial Term on a year-to-year basis,
which enables the
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Corporation and the Executive to avoid renegotiations as the terms of
this Employment Agreement are automatically extended until modified in
writing or one of the parties hereto terminates this Employment
Agreement as provided in section 4, or unless either party gives
written notice of termination to the other of not less than sixty (60)
days prior to the expiration of the Employment Agreement then in
effect. Any extension shall be upon the same terms and conditions as
set forth herein for the Employment Agreement hereunder except that the
Base Salary as hereinafter defined for any extensions shall be the
amount in effect at the end of the previous term.
(B) DUTIES. The Executive will serve as the Corporation's Vice
President and Chief Financial Officer and will perform the services and
duties for the Corporation designated by the Corporation's President
and Chief Executive Officer or his designee (the "Supervisor"),
provided that such duties are reasonably consistent with Executive's
responsibilities and status as the Corporation's Vice President and
Chief Financial Officer. The Executive shall also, if elected in
accordance with the By-Laws of the Corporation, serve as an Officer
and/or Director of the Corporation or its affiliates without additional
compensation and the Corporation shall indemnify Executive to the
maximum extent allowable under law for his services as an Officer
and/or Director.
(C) EXTENT OF SERVICES. During the Employment Term, Executive agrees
to: (i) devote all of his/her business time, energy and skill to the
business of the Corporation; (ii) use his best efforts to promote the
interests of the Corporation; and (iii) discharge such executive and
administrative duties consistent with his position as may be assigned
to him by the Supervisor. Executive agrees that he will not work for
any other profit making organization in a direct or indirect manner
without the written consent of his Supervisor and the Chief Executive
Officer of the Corporation.
SECTION 2. COMPENSATION All compensation due Executive under this Employment
Agreement shall be payable by the Corporation, whether the services rendered are
for the Corporation or one of its affiliates.
(A) BASE SALARY. For services rendered by the Executive under the
Employment Agreement, the Company shall pay the Executive an annual
salary of Two Hundred Fifteen Thousand Eight Hundred Dollars ($215,800)
(the "Base Salary"). The Base Salary shall be earned and shall be
payable in accordance with the Corporation's normal accounting and
payroll practices and the Corporation may
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increase, but not decrease, the Base Salary at any time.
(B) BONUS.
(i) In addition to Executive's Base Salary, Executive may be
paid an annual bonus by the Corporation for a calendar year
period (the "Bonus Period") in such amount (the "Bonus
Amount") as may be determined by the Board of Directors of the
Corporation (see schedule A). This amount is estimated to be
approximately Twenty (20%) percent of Executive's base salary.
(ii) The Bonus Amount, if any, shall be paid to Executive no
later than fifteen (15) days after the completion of the audit
of the Corporation's financial statements for the Bonus
Period.
(iii) The Bonus Amount is due and payable to Executive if, and
only if, Executive is in the employ of the Corporation on the
last day of the Bonus Period; provided, however, that the
Executive (or his estate) shall be entitled to a pro rated
portion of the Bonus Amount (based on time elapsed) if
executive: (a) dies, (b) is terminated without Cause (defined
below) after satisfactorily completing the probationary period
by the Corporation, or (c) exercises the Change of Control
provision of Section 4(E) prior to the end of the Bonus
Period. Executive shall not be entitled to any Bonus Amount
for a calendar year in which Executive did not perform
services for the Corporation or any affiliate regardless of
the reason therefore or if the Board of Directors of the
Corporation determines within its sole discretion, that
performance targets established by Schedule A, (subject to a
test of reasonableness), were not accomplished for the period
in question.
SECTION 3. OTHER BENEFITS. During the Employment Term, the Executive shall be
entitled to the following benefits:
(A) vacation time, three (3) weeks annually in accordance with the
Corporation's policy for executives in effect as determined by
the Corporation and consistent with the Executive completing his
responsibilities;
(B) participation in all employee group life, group health and other
fringe benefit programs, including, but not limited to, any 401K
plan, incentive compensation,
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performance unit bonus, stock purchase or stock appreciation
plans now or hereafter initiated or maintained by the Corporation
for executive officers of the Corporation for which Executive is
eligible subject to the right of the Corporation to amend or
terminate such plans;
(C) reimbursement for all reasonable and properly documented expenses
incurred or paid by Executive in connection with the performance
of his duties hereunder and in accordance with the general
expense reimbursement policy of the Corporation then in effect;
and
(D) Five Hundred dollars ($500.00) per month car allowance.
(E) Seven Thousand Dollars ($7,000) annually for the payment of
unreimbursed, documented medical expenses.
(F) Twenty Thousand (20,000) Non-Qualified Stock Options (hereinafter
referred to as NQSO) with a strike price of Four Dollars ($4.00)
per share and a vesting period of one (1) year, subject to
Section 5. This option is conditional upon your successful
completion of the Six-(6) month probationary period. Should you
end the employment relationship, or the Corporation terminates
you for Cause, subject to Section 4 (C) prior to the completion
of your Six (6) month probationary period, this option will be
void ab initio. If the Corporation terminates the employment
relationship prior to the successful completion of the six (6)
month probationary period, and is not for cause as set forth in
Section 4 (C), this option will vest immediately.
(G) Upon the successful completion of your six (6) month probationary
period you will be granted an additional Twenty Thousand (20,000)
NQSO at a Four Dollar ($4.00) strike price (for a total of Forty
Thousand (40,000) NQSO), which will vest at your one (1) year
anniversary date. You will be recommended for a Twenty Thousand
(20,000) to Forty Thousand (40,000) Non-Qualified Stock Option
grant during the second year of this Employment Agreement at a
strike price of Eight Dollars ($8.00) per share or market price,
which ever is less. Any additional future grants of stock options
whether NQSO or Employee Incentive Stock Option (EISO), over the
initial Forty Thousand (40,000) NQSO, are subject to the complete
discretion of the SEMX Corporation Stock Option Committee and
further subject to SEMX's Employee Stock Option Plan and Amended
Stock Option Agreement (attached hereto). In the event of a
change of control as outlined in Section 4
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(E), all Forty Thousand (40,000) NQSO from year one and Twenty
Thousand (20,000) NQSO from year two (2) will be awarded and vest
immediately.
SECTION 4. TERMINATION Subject to the terms and conditions contained herein,
this Employment Agreement shall terminate upon any of the following occurrences.
(A) VOLUNTARY TERMINATION BY THE EXECUTIVE. Notwithstanding anything
contained in Section 3 (F) and except as set forth in Section 4
(D) below, if the Executive voluntarily ceases to be employed by
the Corporation on or before the first anniversary date of the
Employment Agreement, with or without the consent of the
Corporation, then the Employment Agreement shall end without
further action by either party hereto and all rights and
obligations of the parties under this Employment Agreement,
including any and all rights to exercise NQSO, except those set
forth in the Intellectual Property Protection Agreement, shall
terminate as of such date.
(B) TERMINATION WITHOUT CAUSE BY THE CORPORATION. The Corporation may
terminate this Employment Agreement at any time within the Six
(6) month probationary period subject to Section 3 (F). In that
event, the Executive shall be entitled to receive Severance
Payment of eight (8) weeks base salary if within the six (6)
month probationary period and twenty-six (26) weeks thereafter
and other employee benefits as they shall have accrued and vested
through the date of termination for services rendered.
(C) TERMINATION FOR CAUSE. The Corporation may terminate this
Employment Agreement at any time for Cause. The Employment
Agreement shall end without further action by either party hereto
and all rights and obligations of the parties under this
Employment Agreement, except those set forth in the Intellectual
Property Protection Agreement and Section 3 (F) shall terminate
as of such date. For the purposes of this Agreement, "Cause"
shall mean;
(i) The failure of Executive to perform his duties in all
material respects, provided that prior to termination
Executive has been given an opportunity to remedy such failure
within sixty (60) days following written notice of such
failure or, if such failure is not subject to cure, the
repetition of the act or omission that constitutes such
failure is repeated by Executive after Executive received such
notice. Executive shall not be deemed to have failed to
perform his duties in any material respect if [the
Corporation] has not provided Executive with adequate
resources (including
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financial resources, personnel, and time) to perform his
duties.
(ii) conviction of (a) any serious crime or serious offense
involving misappropriation of money or other property of the
Corporation, or (b) any felony; or
(iii) Executive's use of narcotics, illegal drugs or
controlled substances other than as prescribed by a licensed
physician.
(D) TERMINATION AFTER CHANGE IN CONTROL. The Executive may terminate
this Agreement, if there is a Change in Control as defined in
Section 4 (E). If, after a Change in Control, the Executive
terminates this Agreement, the Executive will be entitled to the
Severance Benefits as defined herein.
(E) "CHANGE IN CONTROL" is defined as the occurrence of any of the
following events:
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14 (d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")
(collectively, a "person) of beneficial ownership (as such
term is defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of more than fifty (50%) percent
of the then outstanding shares of common stock of SEMX
(collectively, the "Outstanding Common Stock") or a transfer
or sale of more than fifty (50%) percent of the book value of
the gross assets of SEMX measured at the time of such transfer
or sale in one or more transactions; provided, however, that
the following shall not constitute a Change in Control:
(i) Any acquisition by an underwriter (as such term
is defined in Section 2 (11) of the Securities Act of
1934, as amended) for the purpose of making a public
offering;
(ii) Any acquisition by SEMX or by any entity
controlled by SEMX;
(iii) Any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by SEMX or
by any entity controlled by SEMX; or
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(iv) Any transfer of assets to SEMX or any entity
controlled by SEMX.
(b) When individuals who are members of the Board of Directors
of SEMX ("SEMX's Board") at any one time shall immediately
thereafter cease to constitute a majority of SEMX's Board, or
when a majority of SEMX's Board shall not consist of persons
who were elected or nominated for election as directors with
the approval of a majority of the present members of SEMX's
Board in either case within two (2) years of:
(i) The completion of a tender offer or exchange
offer for the voting stock of SEMX (other than a
tender off or exchange offer by SEMX) or a proxy
contest in connection with the election of members of
the SEMX's Board; or
(ii) A merger or consolidation of SEMX (other than
with SEMX or an entity controlled by SEMX).
(F) SEVERANCE BENEFITS. If, subsequent to a Change in Control, this
Employment Agreement is terminated by the Corporation without
Cause (and not for Disability), or by the Executive, for any
reason, then the Executive shall be entitled to the following
Severance Benefits in lieu of any other rights or alleged damages
Subject to the terms and conditions contained herein:
(a) The Corporation shall pay the Executive his full base
salary through the date of termination at the rate in effect
at the time notice of termination is given (or at the date of
termination, if higher) and any bonus for a past calendar year
that has not been awarded or paid to the executive under any
Incentive Plan;
(b) the Corporation shall pay the Executive an amount equal to
the annual incentive award earned by the Executive under any
Incentive Plans in the calendar year ending as of the December
31st immediately preceding the date of termination, pro rated
to the Date of Termination.
(c) In lieu of any further salary payments to the Executive
for periods
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subsequent to the Date of Termination, the Corporation shall
pay as severance to the Executive a lump sum amount equal to
the Executive Base Salary as of the date of the Change in
Control (or at the date of termination, if higher) for a
period of one (1) year; in addition, all Forty Thousand
(40,000) NSQO from year one of the Employment Agreement and
Twenty Thousand (20,000) NQSO from year two (2) will vest
immediately.
(d) Except as otherwise provided herein, any Severance
Benefits payable under this paragraph shall be paid in full in
a lump sum not more than sixty (60) days following the date of
termination. If the Corporation shall default in the payment
of any such sum when due, the interest shall accrue on the
balance of the payments due hereunder at the rate of fifteen
(15%) percent per annum and the Corporation shall reimburse
Executive for all costs and expenses incurred by him,
including legal fees, in enforcing his rights under this
Section 4(d).
(i) If this Agreement is terminated on a date that is
not at the end of a calendar year and if the
Executive is entitled to incentive compensation, the
Corporation will not be obligated to pay the
incentive compensation which may be due until thirty
(30) days after the computation by the Corporation of
the amount which may be due.
(ii) The Executive shall not be required to mitigate
the amount of any payment contemplated herein
(whether by seeking new employment or in any other
manner), nor shall any such payment be reduced by
earning that the Executive may receive from any other
source.
(iii) The provisions of this Agreement, and any
payments provided for hereunder, shall not reduce any
amounts otherwise payable, or in any way diminish the
Executive's existing rights, or rights which would
accrue solely as a result of the passage of time,
under any Incentive Plan, Benefit Plan, employment
agreement or other contract, plan or arrangement.
(iv) Notwithstanding anything contained elsewhere in
this agreement.
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SECTION 5. NON-COMPETITION. As, and for the initial grant of Twenty Thousand
(20,000) NQSO, Executive and the Corporation hereby acknowledge said initial
grant of Twenty Thousand (20,000) NQSO's as full and adequate consideration for
this Non-Competition section of the Employment Agreement. During the Employment
Term and for a period of one (1) year thereafter (the "Non-Compete Period"), the
Executive shall not, directly or indirectly, engage in, own, manage, operate,
join or control, or participate in the ownership, management, operation or
control of any Restricted Enterprise or associate with any entity, incorporated
or otherwise (other than the Company or its affiliates), which engages or plans
to engage in a Restricted Enterprise anywhere in the United States, whether as a
director, officer, employee, agent, consultant, shareholder, partner, owner,
independent contractor or otherwise. As used herein, a "Restricted Enterprise"
shall be any activity that competes with the business of the Company as
constituted or as realistically contemplated during the Employment term in the
United States.
SECTION 6. GENERAL
(A) This Agreement shall be binding upon and inure to the benefit of
the Corporation and its successors and assigns and shall be binding
upon and inure to the benefit of the Executive and his heirs, executors
and administrators. If the Corporation assigns this Agreement, the
assignee shall be required to expressly assume all obligations of the
Corporation under this Agreement.
(B) The waiver by the Corporation or the Executive of a breach of any
provision of this Agreement by the other party shall not be construed
as a waiver of any subsequent breach of the same provision or of any
other provision of this Agreement.
(C) All notices, requests, demands and other communications submitted
hereunder shall be in writing and shall be deemed to have been duly
given if delivered by hand or by commercial overnight delivery service
or if mailed by first class, registered mail, return receipt requested,
postage and registry fees prepaid; and addressed; if to the Executive,
to the address set forth in the first paragraph hereof, and if to the
Corporation, to 00000 Xxxxxxx Xxxxxx Xxxx, Xxx Xxxxx, XX 00000,
attention President.
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(D) This Agreement shall be construed and enforced in accordance with,
and governed by, the laws of the State of Delaware without regard to
the conflict of laws principles thereof.
(E) This Agreement together with the Intellectual Property Protection
Agreement, Employee Handbook and the Employees' Stock Option Plan
Agreement incorporates the entire understanding of the parties hereto
with respect to the subject matter hereof and supersedes all prior
agreements relating to such subject matter. The invalidity of any
section, provision or portion of this Agreement shall not affect the
validity of any other section, provision or portion of this Agreement,
and each such section, provision or portion shall be enforced to the
full extent permitted by law. This Agreement may not be modified or
amended, or any term or provision hereof waived or discharged, except
by a written instrument signed by the party against whom such
amendment, modification, waiver, or discharge is sought to be enforced.
The headings of this Agreement are for the purposes of reference only
and shall not limit or otherwise affect the meaning hereof. This
Agreement may be executed in several counterparts, all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have dully executed this Agreement as of
the day and year first above written.
Dated: SEMX Corporation
----------------------
By
--------------------------------- ------------------------------
Executive Xxxxx Xxxxxx, Vice Chairman
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SCHEDULE A
The performance objectives of the CFO cannot be separated from the overall
performance of the Company. The Company's performance in the final analysis is a
function of increasing shareholder value. Increased earnings ultimately increase
shareholder's value. Therefore, If the Company has a good year Bonuses will be
granted accordingly. If the Company does not have a good year, even though
individual goals are achieved the bonuses will not meet the upside of the target
numbers.
The following is a review of objectives we have discussed during the interview
process.
1. Meet with department managers to review their budgets and forecasts.
Determine with the managers a program through which they will be held
accountable for reaching certain performance and sales goals. In parallel
with developing Company-wide benefits and incentive programs, seek input
from operating managers. Develop an incentive program based partly, but not
solely, on financial results within each area. Have operating managers
recommend certain non-financial criteria on which to be judged and
formalize the review process for all employees.
2. Determine with senior managers the competitive advantages of the Company
vis-a-vis competition, then implement plan to exploit those advantages.
3. Develop and update a current PPM/business plan to be kept updated
quarterly.
4. Discuss with senior management the identification of strategic partners
with respect to acquisitions, mergers, and exclusive sales.
5. Develop department to produce and deploy road show, analyst, and web site
presentation material.
6. After determining true cost of capital, perform cost cutting analysis to
include both product lines and employee numbers.
7. Develop and delineate communications channels between financial department
and marketing/production/management.
8. Develop and organize five-year plans for budget analysis.
9. Analyze capital costs and determine financial needs for capital
expenditures over the next two years; later extend to five-year plan.
10. Review current financial arrangements with bank, lenders and corporate
investors. Take over reporting responsibility with PNC. Review and optimize
our current banking relationships.
11. Meet and refine NY accounting practices such that all procedures in
California and NY match, and determine reporting functions and financial
disclosure regulations for outside agencies including the SEC.
12. Review employee benefits programs, payroll methods, and employee stock
purchase plan.
13. Analysis of all material fixed and variable costs, generating exact per
unit cost for each department and product (with Cost Accountant).
14. Analysis of current control and internal reporting systems. Upgrade.
15. Establish corporate "Mission", "Vision", and "Implementation" statements
that include financial milestones and state these at the onset. Make
statements on quarterly basis that reference these goals.
16. Seek endorsement/testimonials from top customers and strategic partners.
17. Determine method of dissemination for financial information to all online
services. begin thorough "Comparative Analysis" and keep updated
periodically.
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