EMPLOYMENT AGREEMENT
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Exhibit 10.9
THIS AGREEMENT is made and entered into this 23rd day of June, 2000, by and between Xxxxx Xxxx ("Executive") and EFTC Corporation, a Colorado corporation (the "Company").
WITNESSETH:
WHEREAS, Executive and the Company deem it to be in their respective best interests to enter into an agreement providing for the Company's employment of Executive pursuant to the terms herein stated;
NOW, THEREFORE, in consideration of the premises and the mutual promises and agreements contained herein, it is hereby agreed as follows:
1. Effective Date. This Agreement shall be effective as of July 17, 2000, which date shall be referred to herein as the "Effective Date."
2. Position and Duties.
(a) The Company hereby agrees to employ Executive and Executive hereby agrees to accept his employment as Chief Executive Officer of the Company for the "Term of Employment" (as defined in Section 5). In this capacity, Executive shall devote his reasonable best efforts to the performance of the services customarily incident to such office and position and to such other services of an executive nature as may be reasonably requested by the Board of Directors (the "Board") of the Company, which may include services for one or more subsidiaries or affiliates of the Company. Executive shall in his capacity as an employee and officer of the Company be directly responsible to and obey the reasonable and lawful directives of the Board.
(b) Executive shall use his reasonable best efforts during the Term of Employment to protect, encourage, and promote the interests of the Company.
3. Compensation.
(a) Base Salary. The Company shall pay to Executive during the Term of Employment a minimum salary at the rate of three hundred thousand dollars ($300,000) per calendar year. Such salary shall be payable in accordance with the Company's normal payroll procedures. Executive's annual salary, as set forth above or as it may be increased from time to time by the Board in its sole discretion, shall be referred to hereinafter as "Base Salary."
(b) Bonus Compensation. Upon execution and delivery of this Agreement by both parties, the Company shall pay Executive a signing bonus of $50,000 which shall be paid on July 17, 2000 but otherwise in accordance with the Company's normal payroll procedures. In addition to the Base Salary, for each fiscal year of the Company, or portion thereof, during the Term of Employment, Executive shall be eligible to participate in an incentive-based bonus compensation program (the "Bonus Compensation") in an amount determined by the Compensation Committee of the Board (the "Compensation Committee"), and consistent with other comparable executives of the Company and its affiliated companies. The amount, if any, of such Bonus Compensation for each such fiscal year shall be determined based upon the Company's attainment of performance goals presented to the Board of Directors or the Compensation Committee of the Board of Directors by Executive and the Company's Chief Financial Officer and approved by the Board of Directors or the Compensation Committee. Performance goals shall be based on the Company's earnings before interest expenses, taxes, and amortization costs (adjusted to reflect working capital carrying costs and capital spending) and on targets for returns on invested capital to be determined by the Board of Directors. Without limiting the foregoing, the amount of Bonus Compensation to be paid in respect of any such fiscal year shall be up to an amount of not less than $250,000 for meeting agreed upon performance amounts with additional amounts payable for exceeding such performance goals by set threshold amounts.
4. Benefits. During the Term of Employment:
(a) Executive shall be eligible to participate in any life, health, dental and long-term disability insurance programs, pension and retirement programs, leave of absence and other fringe benefit programs made available to senior executive employees of the Company from time to time, and Executive shall be entitled to receive such other fringe benefits as may be granted to him from time to time by the Compensation Committee.
(b) Executive shall be entitled to four weeks paid vacation per each full year during the Term of Employment; provided that Executive may be provided with additional paid vacation as provided by the Board (or its designee) in its sole discretion.
(c) Executive shall be eligible to participate in the 2000 Equity Stock Option Plan and such other equity based or incentive compensation plans or programs as may be adopted by the Company from time to time (collectively, the "Equity Plan") for its senior executives, at such level and in such amounts as may be determined by the Board in its sole discretion, subject to the terms and conditions of the Equity Plan and any applicable award agreements; provided that Executive shall receive an initial award of options to purchase shares of common stock of the Company substantially on the terms set forth on Exhibit A hereto.
(d) The Company shall reimburse Executive for reasonable business expenses incurred in performing Executive's duties and promoting the business of the Company, including, but not limited to, reasonable entertainment expenses, travel and lodging expenses, following presentation of documentation in accordance with the Company's business expense reimbursement policies.
(e) The Company shall reimburse Executive for reasonable moving expenses incurred by Executive as a result of his move to the Phoenix, Arizona area in connection with his employment by the Company following presentation of documentation thereof; provided, that such expenses shall not exceed $60,000 in the aggregate; and, provided further, that the reimbursement of any non-deductible expenses for state or federal income tax purposes shall be "grossed up" in sufficient amount to cause Executive to be fully reimbursed even after payment of all applicable income taxes. In addition, the Company shall advance to Executive a relocation bridge loan (the "Bridge Loan") in an amount not to exceed Two Hundred Thousand Dollars ($200,000) to be applied by Executive to the purchase of a new home in the Phoenix metropolitan area. The Bridge Loan shall be for a term not to exceed one year and shall accrue interest at the rate of eight percent (8.0%) per annum.
5. Term; Termination of Employment. As used herein, the phrase "Term of Employment" shall mean the period commencing on the Effective Date and, except as otherwise specifically provided below, ending on December 31, 2003 which shall automatically renew for periods of one year unless one party gives written notice to the other at least 90 days prior to the end of the then current term that the Agreement shall not be further extended. Notwithstanding the foregoing, the Term of Employment shall expire on the first to occur of the following:
(a) Termination by the Company without Cause or Resignation for Good Reason. Notwithstanding anything to the contrary in this Agreement, whether express or implied, (i) the Company may, at any time, terminate Executive's employment for any reason other than Cause (as defined below) by giving Executive at least 60 days' prior written notice of the effective date of termination and (ii) the Executive may resign for Good Reason (as defined below) by giving the Company at least 60 days' prior written notice of the effective date of termination. In the event Executive's employment hereunder is terminated by the Company other than for Cause or Executive resigns for Good Reason, the Company shall, in accordance with the Company's customary payroll practices, continue to pay to Executive:
- x.
- Base Salary and
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- y.
- a pro-rated Bonus Compensation for the year in which such termination occurs, based on performance to the date of termination during the period commencing on the effective date of such termination and ending on the first anniversary of the effective date of such termination; provided, that notwithstanding the foregoing Executive shall not be eligible to receive any Bonus Compensation pursuant to this Section 5(a) for a termination occurring in any calendar year unless the date of termination occurs on or after June 30 of such calendar year.
(b) Termination for Cause. The Company shall have the right to terminate Executive's employment at any time for Cause by giving Executive written notice of the effective date of termination (which effective date may, except as otherwise provided below, be the date of such notice). If the Company terminates Executive's employment for Cause, Executive shall be paid his unpaid Base Salary through the date of termination and the Company shall have no further obligation hereunder from and after the effective date of such termination.
(c) Certain Definitions. For purposes of this Agreement:
(i) "Cause" shall mean:
(A) Fraud, misappropriation, embezzlement, or other act of material misconduct by Executive against the Company or any of its affiliates;
(B) Executive's conviction of or plea of guilty or nolo contendere to a felony;
(C) Executive's breach of any material term of this Agreement including without limitation Section 6 which, if such breach is curable without material harm to the Company, remains uncured for a period of thirty (30) days following written notice by the Company to Executive of such breach; or
(D) Executive's willful refusal or failure to act on any reasonable and lawful directive or order from the Board which is material to the business of the Company and which remains uncured for a period of thirty (30) days following written notice by the Company to Executive describing such refusal or failure to act.
(ii) "Good Reason" shall mean:
(A) A material breach of a material term of this Agreement by the Company;
(B) Any material adverse change in Executive's job title, duties, responsibilities or authority;
(C) Failure of the Company to pay Base Salary or Bonus Compensation when due under this Agreement; or
(D) Executive shall, without his consent, not be a member of the Board; provided, however, that none of the events described in this Section 5(c)(ii) shall constitute Good Reason unless Executive shall have notified the Company in writing describing the events which constitute Good Reason and then only if the Company shall have failed to cure such event within ten (10) days after the Company's receipt of such written notice.
(d) Termination on Account of Death. In the event of Executive's death while in the employ of the Company, his employment hereunder shall terminate on the date of his death and Executive shall be paid (x) his unpaid Base Salary through the date of termination and (y) any unpaid Bonus Compensation for the prior year. In addition, any other benefits payable on behalf of Executive shall be determined under the Company's insurance and other compensation and benefit plans and programs then in effect in accordance with the terms of such programs.
(e) Resignation by Executive without Good Reason. In the event that Executive's employment with the Company is voluntarily terminated by Executive for any reason other than for Good Reason, Executive shall be paid (x) his unpaid Base Salary through the date of termination and (y) any unpaid Bonus Compensation for the prior year, and the Company shall have no further obligation hereunder
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from and after the effective date of termination. Executive shall give the Company at least 60 days' advance written notice of his intention to terminate his employment hereunder.
(f) Termination on Account of Disability. To the extent not prohibited by The Americans With Disabilities Act of 1990 or other applicable law, if, as a result of Executive's incapacity due to physical or mental illness (as determined in good faith by a physician acceptable to the Company and Executive), Executive shall have been absent from the full-time performance of his duties with the Company for 120 consecutive days during any twelve (12) month period or if a physician acceptable to the Company advises the Company that it is likely that Executive will be unable to return to the full-time performance of his duties for 120 consecutive days during the succeeding twelve (12) month period, his employment may be terminated for "Disability." During any period that Executive fails to perform his full-time duties with the Company as a result of incapacity due to physical or mental illness, he shall continue to receive his Base Salary, Bonus Compensation and other benefits provided hereunder, together with all compensation payable to him under the Company's disability plan or program or other similar plan during such period, until Executive's employment hereunder is terminated pursuant to this Section 5(f). In the event of a Disability, Executive's benefits shall be determined under the Company's retirement, insurance, and other compensation and benefit plans and programs then in effect, in accordance with the terms of such programs and to the extent permitted by applicable law.
(g) No Mitigation of Damages. In the event of any termination of Executive's employment hereunder, Executive shall not be required to seek other employment to mitigate damages, and any income earned from Executive from other employment or self-employment shall not be offset against any obligations of the Company under this Agreement.
6. Confidential Information, Non-Solicitation and Non-Competition.
(a) During the Term of Employment and for a period of eighteen months following the date Executive ceases to be employed by the Company for any reason (the "Non- Compete Period"), Executive shall not, directly or indirectly, engage in, work for, consult or provide advice or assistance to any Named Competitor (as defined below) within the United States and its territories and protectorates. "Named Competitor" shall mean any company that derives more than 50% of its annual revenues from the provision of high mix electronic manufacturing services to original equipment manufacturers in the computer peripherals, medical equipment, industrial controls, telecommunications equipment and electronic instrumentation industries. Executive further agrees that during the Non-Compete Period he will not give material assistance or encouragement to any other person in carrying out any activity that would be prohibited by the provisions of this Section 6 if such activity were carried out by Executive, or give any assistance or encouragement to any other person in carrying out any such activity for the purpose of competing against the Company, and, in particular, Executive agrees that he will not induce any employee of the Company to carry out any such activity; provided, however, that the "beneficial ownership" by Executive, either individually or as a member of a "group," as such terms are used in Rule 13d of the General Rules and Regulations under the Exchange Act, of not more than five percent (5%) of the voting stock of any publicly held corporation shall not be a violation of this Agreement. Notwithstanding the foregoing, this Section 6(a) shall not apply if Executive is terminated by the Company prior to January 17, 2001, for any reason other than for Cause.
(b) Executive agrees that, during the Term of Employment, and for a period of eighteen months thereafter, he will not, directly or indirectly, solicit or contact any customer or supplier of the Company on behalf of any Named Competitor or in any way interfere with the Company's relationship with any customer or supplier of the Company.
(c) Executive agrees that, during the Term of Employment, and for a period of eighteen months thereafter, he will not, directly or indirectly, solicit or recruit any employee of the Company for the purpose of being employed by him or by any Named Competitor.
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(d) Executive and the Company expressly agree that the Company will or would suffer irreparable injury if Executive were to violate any provision of this Section 6 and that the Company would by reason of such violation be entitled to injunctive relief in a court of appropriate jurisdiction.
(e) If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 6 is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.
7. Taxes. All payments to be made to Executive under this Agreement will be subject to any applicable withholding of federal, state and local income and employment taxes.
8. Miscellaneous. This Agreement shall also be subject to the following miscellaneous considerations:
(a) Executive and the Company each represent and warrant to the other that he or it has the authorization, power and right to deliver, execute, and fully perform his or its obligations under this Agreement in accordance with its terms.
(b) This Agreement contains a complete statement of all the arrangements between the parties with respect to Executive's employment by the Company, this Agreement supersedes all prior and existing negotiations and agreements between the parties concerning Executive's employment, and this Agreement can only be changed or modified pursuant to a written instrument duly executed by each of the parties hereto.
(c) If any provision of this Agreement or any portion thereof is declared invalid, illegal, or incapable of being enforced by any court of competent jurisdiction, the remainder of such provisions and all of the remaining provisions of this Agreement shall continue in full force and effect.
(d) This Agreement shall be governed by and construed in accordance with the internal laws of the State of Arizona, except to the extent preempted by federal law or to the extent federal law is expressly made applicable under this Agreement.
(e) The Company may assign this Agreement to any direct or indirect subsidiary or parent of the Company or joint venture in which the Company has an interest, or any successor (whether by merger, consolidation, spin-off, purchase or otherwise) to all or substantially all of the stock, assets or business of the Company or any subsidiary or parent of the Company, and this Agreement shall be binding upon and inure to the benefit of such successors and assigns. Except as expressly provided herein, Executive may not sell, transfer, assign, or pledge any of his rights or interests pursuant to this Agreement.
(f) Any rights of Executive hereunder shall be in addition to any rights Executive may otherwise have under benefit plans, agreements, or arrangements of the Company to which he is a party or in which he is a participant, including, but not limited to, any Company-sponsored employee benefit plans.
(g) For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid. All notices to Executive shall be addressed to Executive at the address contained in the Company's records concerning the Executive. All notices to the Company shall be directed to the attention of the Board with a copy to the Secretary of the Company.
(h) Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.
(i) Failure to insist upon strict compliance with any of the terms, covenants, or conditions hereof shall not be deemed a waiver of such term, covenant, or condition, nor shall any waiver or relinquishment
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of, or failure to insist upon strict compliance with, any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such right or power at any other time or times.
(j) This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
(k) The Company shall indemnify Executive to the fullest extent permitted by the laws of the State of Arizona, as in effect at the time of the subject act or omission, and he will be entitled to the protection of any insurance policies that the Company may elect to maintain generally for the benefit of its directors and officers against all liabilities, damages, costs, charges and expenses, including reasonable attorneys' fees, incurred or sustained by him in connection with any action, suit or proceeding to which he may be made a party by reason of his being or having been a director, officer or employee of the Company or any of its affiliates or his having served any other enterprise, plan or trust as director, officer, employee or fiduciary at the request of the Company. The provisions of this Section 8(k) shall survive any termination of Executive's employment or any termination of this Agreement.
9. Resolution of Disputes. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted in Phoenix, Arizona in accordance with the rules of the American Arbitration Association governing employment disputes as then in effect. The Company and Executive hereby agree that the arbitrator will not have the authority to award punitive damages, damages for emotional distress or any other damages that are not contractual in nature. Judgment may be entered on the arbitrator's award in any court having jurisdiction. The fees and expenses of the American Arbitration Association and the arbitrator shall be borne by the Company. Notwithstanding the foregoing, the Company shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction, even if the arbitrator shall not yet have made any findings or awards, to prevent any continuation of any violation of the provisions of Section 6, and Executive consents that such restraining order or injunction may be granted without the necessity of the Company's posting any bond except to the extent otherwise required by applicable law.
10. Attorneys' Fees.
(a) Upon invoice in conformity with the Company's customary practices, the Company shall pay Executive the amount of all reasonable legal fees incurred by Executive in connection with the negotiation of this Agreement; provided, that such expenses shall not exceed $4,000 in the aggregate.
(b) If any suit or action is filed by any party to enforce this Agreement or otherwise with respect to the subject matter of this Agreement, each party shall be responsible to pay the attorneys fees and costs incurred by such party in preparation or in prosecution or defense of such suit or action; provided, however, that the court or adjudicator may in its sole discretion allocate attorneys fees and costs to Executive.
[signature page follows]
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* * * * * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
| EXECUTIVE: | EFTC CORPORATION | |
| /s/ Xxxxx Xxxx | By: /s/ Xxxx Xxxxxxxx | |
Xxxxx Xxxx |
Title: Chairman |
| Address: | 000 Xxxxxx Xxxxx | |
| Xxxxxxx, XX 00000 |
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EXHIBIT A
Shares:
900,000 shares at an exercise price of $2.63 per share. This award is to be made pursuant to the Company's 2000 Stock Option Plan.
Vesting:
Time based:
450,000 options will time vest over 5 years, with 90,000 vesting immediately upon execution and delivery of the Employment Agreement and the commencement of Executive's employment in Phoenix on July 17, 2000 and 72,000 vesting on each anniversary thereof.
Performance based:
450,000 options will vest on a sliding, linear scale based on the following benchmark internal rates of return in the Company, as determined by Xxxxxx-XXXX Funding, L.L.C., which the Company and the Executive believe represent an accurate measure of the Company's performance:
100% vest with IRR greater than or equal to 40%.
50% vest with IRR greater than or equal to 30%.
0% vest with IRR less than or equal to 20%.
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EMPLOYMENT AGREEMENT
Option Award Term Sheet
