EMPLOYMENT AGREEMENT
This is an Employment Agreement (the "Agreement") made effective as of
April 1, 1995, between ASSEMBLY & MANUFACTURING SYSTEMS INC. (fka "Automation
Tooling Systems Corp."), a California corporation having its principal place
of business located at 0000 Xxxxxx Xxx, Xxxx Xxxxxx, Xxxxxxxxxx 00000
("EMPLOYER") and XXXXXXXX XXXX ("EMPLOYEE"),
Section 1.0 - Recitals
1.1 EMPLOYEE has rendered services to EMPLOYER over a period of
many months in various capacities, e.g. just prior to the recent sale of
EMPLOYER, EMPLOYEE was general manager of EMPLOYER.
l.2 EMPLOYEE represents that he has extensive experience and
comprehensive knowledge of the business of EMPLOYER, Based upon EMPLOYEE'S
representation regarding his experience and abilities, EMPLOYER has a
compelling need for his continued association as executive, officer and
director of EMPLOYER. To assure the continued association and services of
EMPLOYEE, to retain and utilize his experience, skills, abilities,
background and knowledge, and to facilitate long-range planning and growth
of the business of EMPLOYER in an orderly and efficient manner, EMPLOYER is
willing to continue to employ EMPLOYEE upon the terms and conditions set
forth hereinafter.
l.3 EMPLOYEE is willing to continue rendering services to EMPLOYER
upon the terms and conditions set forth hereinafter.
l.4 NOW, THEREFORE, in consideration of the foregoing recitals and
of the promises aid conditions herein contained, the parties agree as set
forth below.
Section 2.0 - Employment
2.1 Powers and Duties. EMPLOYEE shall be employed by EMPLOYER
with the following titles: president, chief executive officer and member of
the board of directors of EMPLOYER. EMPLOYEE shall have powers and duties
consistent with such positions including, but not limited to, those related
to or involving the sales and marketing of all products of EMPLOYER within
and without the United States, compliance with any strategic plan and
approved budgetary allocations for EMPLOYER and the hiring and firing all
employees of EMPLOYER.
2.2 Term of Employment. The term of this Agreement and
EMPLOYEE'S employment shall be two (2) years, unless sooner terminated as
a result of the following: (i) retirement of the EMPLOYEE; (ii) death of
EMPLOYEE; (iii) an Involuntary Termination pursuant to a Disabling Event
under Section 6.1; (iv) an Employer Termination For Cause pursuant to
Section 6.2; (v) an Employer Termination For Cause pursuant to Section 6.3;
(vi) an Employer Termination Without Cause pursuant to Section 6.4 or (vii)
a Voluntary Termination pursuant to Section 6.5. The initial and any
subsequent term of this Agreement shall be automatically renewed for a
period of one year unless EMPLOYEE notifies EMPLOYER, or EMPLOYER notifies
EMPLOYEE, in writing at least 30 days prior' to expiration of the then
current term of this Agreement that the Agreement shall not be renewed.
2.3 Time to be Devoted to Employment. Except for annual vacations
taken pursuant to Section 4.1 and absences due to temporary illness as
contemplated by Section 4.2 during the employment term EMPLOYEE shall devote
his full time and energy to the business of EMPLOYER. EMPLOYEE shall not be
engaged in any other business activity which, in the reasonable judgment of
the Board of Directors of EMPLOYER, conflicts with the duties of EMPLOYEE
hereunder, whether or not such activity is pursued for gain, profit or other
pecuniary advantage; provided, however, that EMPLOYEE may, without violating
the provisions of this Section 2.3 own less than 5% of the outstanding
capital stock of a company whose shares are actively traded on a public
securities exchange or a public over-the-counter market.
Section 3.0 - Compensation of EMPLOYEE
3.1 Annual Salary. As compensation for the services to be
performed hereunder, EMPLOYEE shall receive a salary at the rate of One
Hundred Twenty Thousand Dollars ($120,,000) per annum, payable in equal
weekly installments ("Regular Compensation") which shall be adjusted semi
annually for any change upward from the preceding semi-annual period in the
cost-of-living index for the Los Angeles/Long Beach region as compiled by the
United States Department of Labor (the "semi-annual COLA").
3.2 Salary Reviews. In addition to the adjustments provided for
in Section 3.1 EMPLOYEE shall receive annual merit reviews and such salary
increases, if any, as may be determined by the non-employee members of the
Board of Directors of EMPLOYER at its annual meeting.
3.3 Salary Continuation During Disability. - If EMPLOYEE for any
reason whatsoever suffers a Disabling Event (defined in Section 6.1) during
the term of his employment, EMPLOYER agrees that, if EMPLOYEE is
involuntarily terminated pursuant to Section 6.11 it will pay EMPLOYEE an
amount equal to seventy percent (70%) of the Regular Compensation he is
receiving at the time of occurrence of the Disabling Event, payable as set
forth above. Such payment shall be increased semi-annually by COLA and shall
continue for so long as EMPLOYEE is disabled and thereafter until the earlier
of the following events occurs: (i) EMPLOYEE is rehired by EMPLOYER for a
salary and executive position at least equal to his executive position and his
Regular Compensation at the time of occurrence of the Disabling Event plus
accrued semi-annual COLA, or (ii) the second anniversary date of the Disabling
Event.
3.4 Tax Withholding. EMPLOYER shall have the right to deduct or
withhold, from any amounts of money due EMPLOYEE and/or his spouse, any and
all sums required for federal income and Social Security taxes, together
with all state and local taxes now applicable or that may be enacted and
become applicable in the future.
3.5 Incentive Compensation.
3.5.1 In addition to Regular Compensation, EMPLOYEE shall be
entitled to incentive compensation ("Incentive Compensation") from EMPLOYER,
payable in a lump sum on or before thirty days (30) following each
anniversary date of this Agreement, including its expiration date. EMPLOYER'S
obligation to pay Incentive Compensation shall survive expiration of this
Agreement.
3.5.2 The amount of Incentive Compensation payable to EMPLOYEE
shall be based on the following percentages of the Pretax Earnings (defined
below) of EMPLOYER, determined as of each anniversary date of this Agreement,
for the immediately preceding 12-month period:
3.5.2.1 If Pretax Earnings for the applicable 12-month
period equal or exceed the Projected Pretax Earnings (defined below) for such
12-month period, EMPLOYEE shall receive Incentive Compensation equal to 20% of
EMPLOYEE'S then current annual Regular Compensation, payable as aforesaid.
3.5.2.2 If Pretax Earnings for the applicable 12-month
period exceed the Projected Pretax Earnings (defined below) for such 12-month
period by 20% or more, EMPLOYEE shall receive additional Incentive Compensation
(in addition to the Incentive Compensation payable under Section 3.5.2.1 above)]
equal to 20% of EMPLOYEE'S then current annual Regular Compensation, payable
as aforesaid.
3.5.3 "Pretax Earnings" means the pretax earnings of the EMPLOYER
in whatever form the businesses of EMPLOYER may be conducted [including, without
limitation, as a subsidiary or subsidiaries, as a division or divisions, or as
part of a subsidiary or division of any current or future parent of EMPLOYER, or
any subsidiary or affiliate thereof (collectively, "Parent Company")],
determined in accordance with generally accepted accounting principles
consistently applied, except that solely for the purpose of such definition (i)
no deduction shall be made for federal, state or local income or excise taxes;
(ii) no deduction shall be made for Parent Company head office or corporate
charges, other than charges for specific necessary services supplied at fair
market value; (iii) no deduction shall be made for amortization of goodwill;
(iv) no deduction for interest on funds advanced by the Parent Company shall be
made for any fiscal period, other than interest (at not greater than the then
fair market rate) on funds advanced by the Parent Company at the request of
EMPLOYEE for operating capital; (v) a net loss incurred for any fiscal period
shall not be carried back to offset earnings for any prior fiscal period, but
it shall be carried forward to offset pretax earnings for subsequent fiscal
periods until such net loss is depleted; (vi) no deduction shall be made for
management fees paid by EMPLOYER to the Parent Company, provided that this
clause shall not be deemed to prevent the deduction of head office or corporate
charges subject to the limitation specified in clause (ii); and (vii) no
deduction shall be made for any dividend or redemption payments.
3.5.4 "Projected Pretax Earnings" means the Pretax Earnings projected
in a EMPLOYER budget approved by EMPLOYEE and EMPLOYER.
3.5.5 Past due Incentive Compensation shall earn interest at the
rate of 10% per annum, compounded daily, until paid.
Section 4.0 - Employee Benefits
4.1 Annual Vacation. EMPLOYEE shall be entitled to three (3) weeks
vacation time each year without loss of compensation. If EMPLOYEE is unable for
any reason to take the total amount of vacation time authorized herein during
any year, he may elect to do either or both of the following: (i) accrue the
unused time and add it to vacation time for the following year provided the
number of vacation days accrued may not result in EMPLOYEE being entitled to
more than four (4) weeks vacation time for that following year and/or (ii)
receive a cash payment for all or such part thereof not accrued as aforesaid in
an amount equal to the amount of Regular Compensation attributable to that
period of time. If EMPLOYEE fails to make an election by notice to EMPLOYER
prior to the end of such following year, he shall be deemed to have elected a
cash payment as provided in clause (ii) above for all unused time, and EMPLOYER
shall deliver the payment to EMPLOYEE within thirty (30) days following the end
of such following year.
4.2 Illness. EMPLOYEE shall be entitled to sick leave of one (1)
day per month during the employment term. Sick leave may be accumulated or
EMPLOYEE may receive a cash payment therefor in an amount equal to the amount
of Regular Compensationa attributable to that period of time, such payment to
be made according to the procedure for annual vacation time provided in
Section 4.1.
4.3 Automobile Allowance. Within ten (10) days following the
beginning of each month during the term of this Agreement, EMPLOYER shall pay
EMPLOYEE the sum of Seven Hundred Dollars ($700.00) as an automobile allowance.
Such sum shall be increased within thirty (30) days following the January 1 of
each fourth calendar year during the term of EMPLOYEE'S employment to reflect
the semi-annual COLA.
4.4 Contributory Savings Plan. EMPLOYEE shall continue to be
entitled to be a participant in any EMPLOYER savings plan established under
Section 401(k) of the Internal Revenue Code.
4.5 Medical, Etc., Insurance Coverage. EMPLOYER agrees to include
EMPLOYEE, and those of his children who qualify as EMPLOYEE'S dependents
under Section 152 of the Internal Revenue Code, in the coverage of all of
EMPLOYER'S medical, hospital, surgical, dental and other group health and
accident insurance plan(s).
4.6 Death Benefits. If EMPLOYEE should die during the employment
term, EMPLOYER agrees to pay the premiums upon the health and dental
insurance of EMPLOYER to which EMPLOYER'S dependents are then entitled to
subscribe under the Consolidated omnibus Reconciliation Act of 1986 ("Cobra");
such premium payments by EMPLOYER shall continue for the extension period of
thirty-six (36) months following the death of EMPLOYEE.
4.7 Split Dollar Life Insurance.
4.7.1 If at any time during the term of this Agreement the
Pretax Earnings (as defined in Section 3.5.3) exceed the Projected Pretax
Earnings (as defined in Section 3.5.4) by $50,000 or more, EMPLOYER shall
obtain and maintain a whole-life or universal life insurance policy on the life
of EMPLOYEE having a death benefit of Five Hundred Thousand Dollars ($500,000)
payable to the beneficiary or beneficiaries designated by EMPLOYEE.
EMPLOYER further agrees to pay all premiums on the policy during EMPLOYEE'S
employment term.
4.7.2 Title and ownership of the policy shall reside in EMPLOYER
for its use and for the use of EMPLOYEE all in accordance with this Agreement,
EMPLOYER alone may, to the extent of its interest, exercise the right to borrow
on the policy.
4.7.3 EMPLOYEE (or his assignee) shall have the right and power
to designate a beneficiary or beneficiaries to receive proceeds payable on his
death and to elect and change a payment option for such beneficiaries, but
subject always to any right or interest EMPLOYER may have in such proceeds as
provided herein.
4.7.4 Premiums shall be paid upon each premium due date
specified by the policy. If either EMPLOYER fails to fulfill the obligation
to pay premiums under this Section 4.7.4. EMPLOYEE may assume such obligation,
in which event the rights of the parties hereunder shall be altered in the
manner described in Section 4.7.8.
4.7.5 Where premiums are paid in strict accordance with Section
4.7.4 or when EMPLOYEE'S death occurs before the end of the grace period for
any premium in default, death proceeds of the policy shall be divided as
follows: EMPLOYER shall be entitled to an amount equal to the policy's tabular
cash value determined as of the date to which premiums are paid, plus any
outstanding dividend accumulations or the cash value of any paid-up additions
and any postmortem dividend, less any indebtedness to be determined as of the
date of death, The beneficiaries designated by EMPLOYEE shall be entitled to
the remainder of such proceeds. EMPLOYER and EMPLOYEE (or his assignee) shall
share in any interest due on the death proceeds as their respective share of the
proceeds bears to the total proceeds, excluding any such interest.
4.7.6 Where there is a refund of unearned premium as provided
in the contract of insurance, any refund shall be apportioned as follows:
4.7.6.1 Where EMPLOYEE (or his assignee) has contributed
to the policy premium at the last required premium interval, the refund of
unearned premiums shall be divided between EMPLOYER and EMPLOYEE (or his
assignee) as their respective share of the premium payment obligation bears
to the total required for such interval.
4.7.6.2 Where EMPLOYEE (or his assignee) has not
contributed to the premium at the last required premium interval, the refund
of unearned premium shall be refunded in total to EMPLOYER.
4.7.7 When premiums are paid in strict accordance with Section
4.7.4 and where surrender occurs not later than sixty (60) days after due date
of any premium in default, the net cash surrender value of the policy shall be
distributed as follows: EMPLOYER shall be entitled to an amount equal to the
policy's tabular cash value, plus any outstanding dividend accumulations or
cash value of any paid-up additions, less any indebtedness against, the policy,
such cash values, accumulations, and cash value of paid-up additions and
indebtedness to be determined as of the date of surrender.
4.7.8 Where premiums are not paid in strict accordance with
Section 4.7.4 death proceeds or net cash value of the policy shall be divided
as follows:
4.7.8.1 If EMPLOYER pays less in the aggregate than its
share of the premiums specified in Section 4.7.4. EMPLOYER'S share of death
proceeds or of the net cash value of the policy on surrender shall be decreased
within the limits of such proceeds or net cash value, as the case may be, by
the total amount of such decreased premiums. EMPLOYER'S (or his assignees)
designated beneficiary, in the event of death, and EMPLOYEE (or his assignee)
in the event of surrender, shall be entitled to any remainder of proceeds or
net cash value, as thecase may be.
4.7.8.2 If EMPLOYER pays more in the aggregate than the
share of premiums specified in Section 4.7.4. EMPLOYER'S share of death
proceeds or of the net cash value of the policy on surrender shall be increased
within the limits of such proceeds or net cash value, as the case may be, by
the total amount of such increased premiums to the extent that such increased
share does not exceed the sum of EMPLOYERTS premiums paid, EMPLOYEE'S (or his
assignees) designated beneficiary, in the event of death, and EMPLOYEE (or his
assignee) in the event of surrender, shall be entitled to any remainder of
proceeds or net cash value, as the case may be.
4.7.9 EMPLOYER'S share of death proceeds payable on EMPLOYEE'S
death while the policy is in force under any of its nonforfeiture provisions
shall be an amount equal to the excess, if any, of EMPLOYER'S share of the
polices net cash value at the date of default in premium payment (such share
determined in the manner prescribed in Sections 4.7.5 or 4.7.8 in relation to
the facts presented) over any indebtedness against the policy at EMPLOYEE'S
death. The designated beneficiary(s) shall be entitled to any remainder of
such proceeds.
4.7.10 EMPLOYER'S share of the net cash value payable on
surrender of the policy while it is in force under any of its non-forfeiture
provisions shall be an amount equal to the lesser of the net cash value at
date of surrender or (ii) the excess, if any, of EMPLOYER'S share of the
policy's net cash value at the date of default in premium (such share determined
in the manner prescribed in Sections 4.7.7, 4.7.8 or 4.7.9 in relation to the
facts presented), over any indebtedness on the policy at the date of surrender,
EMPLOYEE (or his assignee) shall be entitled to any remainder of such net cash
value.
4.7.11 If the policy contains a premium waiver provision, any
premium waived shall be considered for all purposes of this Agreement as having
been paid by EMPLOYER.
4.8 Key-Man Insurance. In addition to the insurance required under
Section 4.7. EMPLOYER may, at its election and for its benefit, purchase
"key-man" insurance insuring EMPLOYEE against accidental loss or death,
EMPLOYEE shall submit to such physical examination and supply such information
as may be required in connection therewith.
4.9 Miscellaneous.
4.9.1 It is understood and agreed that the services required by
EMPLOYER will require EMPLOYEE to incur entertainment expenses during the
employment term on behalf of EMPLOYER. EMPLOYER shall make available to
EMPLOYEE sufficient funds for this purpose at such times as EMPLOYEE shall
request. In each instance, EMPLOYEE shall furnish to EMPLOYER adequate
records and other documentary evidence required by federal and state (or
their equivalents) statutes and regulations for the substantiation of each such
expenditure as an income tax deduction.
4.9.2 During the employment term EMPLOYER shall pay all
reasonable dues and fees necessary to maintain EMPLOYEE'S membership in such
professional organizations as EMPLOYEE may reasonably select.
4.9.3 In addition to the foregoing specifically provided
benefits, EMPLOYEE shall be entitled to and shall receive during the employment
term all other benefits and conditions of employment generally available to
full-time salaried employees of EMPLOYER.
Section 5.0 - Business Expenses
5.1 Use of Credit Card, All business expenses reasonably incurred by
EMPLOYEE in promoting the business of EMPLOYER, including but not limited to
expenditures for entertainment, gifts, and travel, shall be paid for, insofar
as is, reasonably possible, by the use of credit cards in the name of an
EMPLOYER and furnished to EMPLOYEE.
5.2 Reimbursement of Other Business Expenses.
5.2.l EMPLOYER shall promptly reimburse EMPLOYEE for all other
reasonable business expenditures reasonably incurred by EMPLOYEE in connection
with the business of EMPLOYER.
5.2.2 Each such expenditure shall be reimbursable only if it is
of a nature qualifying it as a proper deduction on the federal and state income
tax return of the applicable EMPLOYER.
Section 6.0 - Termination of the Agreement
6.1 Involuntary Termination. If EMPLOYEE for any reason whatsoever
becomes permanently incapacitated or disabled so that he is mentally or
physically incapable of performing the duties prescribed herein for a period of
(i) three (3) months or longer (defined as a "Disabling Event"), EMPLOYER may,
at that time or at any time thereafter, at its option, terminate the employment
of EMPLOYEE under this Agreement immediately upon giving him notice to that
effect (such termination and (i) a termination by operation of clause (ii) of
Section 2.2 being hereinafter called "Involuntary Termination"), An Involuntary
Termination under this Section 6,1 (for a Disabling Event) shall be subject to
the provisions of Section 3.3.
6.2. EMPLOYER Termination f or cause EMPLOYER may, with the approval
of its Boards of Directors, terminate the employment of EMPLOYEE hereunder at
any time during the employment tern for "cause" (such termination being herein
called a "EMPLOYER Termination for Cause") by giving EMPLOYEE written notice of
such termination, which shall be effective no sooner than sixty (60) days after
delivery of the notice to EMPLOYEE provided, however, that EMPLOYER may relieve
EMPLOYEE from the obligation to perform his duties during such sixty (60) days
after delivery of the notice. For the purposes of this Section 6.2. "cause"
means (i) EMPLOYEE'S willful and substantial misconduct with respect to the
business and affairs of EMPLOYER; (ii) the commission by EMPLOYEE of
embezzlement, fraud, or other like crime involving money or other property of
EMPLOYER; or (iii) EMPLOYEE'S material breach of an expressly stated material
obligation under this Agreement; and (iv) EMPLOYEE'S failure to cure the same
to EMPLOYER'S reasonable satisfaction within sixty (60) days after receiving
notice from EMPLOYER specifying the grounds upon which EMPLOYER seeks to
terminate the employment of EMPLOYEE.
6.3 EMPLOYEE Termination For Cause. EMPLOYEE may terminate this
Agreement at any time during the employment term for "cause" (such termination
being, herein called an "EMPLOYEE Termination for Cause") by giving EMPLOYER
notice of such termination which shall be effective no sooner than sixty (60)
days after delivery of the notice to EMPLOYER provided, however, that EMPLOYER
may relieve EMPLOYEE from the obligation to perform his duties during such
sixty (60) days after delivery of the notice. For the purposes of this Section
6.3 "cause" means material breach by EMPLOYER of one or more of its obligations
under this Agreement.
6.4 EMPLOYER Termination Without Cause. EMPLOYER may, with the
approval of its Board of Directors, terminate the employment of EMPLOYEE
hereunder at any time during the employment term without "cause" (such
termination being herein called an "EMPLOYER Termination Without Cause") by
giving EMPLOYEE notice of such termination which shall be effective immediately
upon delivery of the notice to EMPLOYEE.
6.5 Voluntary Termination. Any termination of the employment of
EMPLOYEE otherwise than as a result of an Involuntary Termination, an EMPLOYER
Termination For Cause, an EMPLOYER Termination Without Cause or an EMPLOYEE
Termination For Cause shall be deemed to be a "Voluntary Termination", A
Voluntary Termination shall be effective as specified in a written notice of
termination provided, however, that EMPLOYER may relieve EMPLOYEE of the
obligation to perform his duties after the delivery of the written notice of
termination.
6.6 Effect of Termination of EMPLOYEE'S Employment.
6.6.1 Upon the termination of EMPLOYEE'S employment hereunder
pursuant to a Voluntary Termination or an EMPLOYER Termination For Cause,
neither EMPLOYEE nor his beneficiary(s) or estate shall have any surviving
rights or claims against any of EMPLOYER except to receive promptly upon
such termination: (i) any unpaid portion of EMPLOYEE'S Regular compensation
provided for in Section 3.1 and Incentive Compensation provided for in Section
3.5 computed on a pro rata basis to the date of termination; (ii) reimbursement
for any expenses for which EMPLOYEE is entitled to reimbursement under this
Agreement and for, which he shall not have received payment; (iii) payment for
any unused annual vacation time and sick leave for which EMPLOYEE has not been
compensated as of the date of termination; (iv) all employee benefits vested in
EMPLOYEE and/or his dependents, including, without limitation, the benefits
specified in Section 7.2 and (v) in the case of an EMPLOYER Termination for
Cause only, payment of an amount equal to the lesser of (x) three (3) months'
of EMPLOYEE'S Regular Compensation or (y) Employee's Regular Compensation for
the remainder of the term of the Agreement, in, each case computed at the
rate in effect on the date of such termination and in each case payable in equal
weekly installments.
6.6.2 Upon the termination of EMPLOYEE'S employment hereunder
pursuant to an Involuntary Termination, neither EMPLOYEE nor his beneficiary(s)
or estate shall have any surviving rights or claims against EMPLOYER except to
receive promptly upon such termination: (i) payments and benefits specified in
Section 6.6.1 and 7.2; (ii) if such Involuntary Termination is due to a
Disabling Event, payments pursuant to Section 3.3; and (iii) if such Involuntary
Termination is due to the death of EMPLOYEE, payment of all death benefits
provided under Sections 4.6 and 4.7.
6.6.3 Upon the termination of EMPLOYEE'S employment under this
Agreement pursuant to an EMPLOYER Termination Without Cause or an EMPLOYEE
Termination For Cause, neither EMPLOYEE nor his beneficiary(s) or estate shall
have any surviving rights or claims against EMPLOYER except benefits specified
in Sections 6.6.1 and 7.2; (ii) payment of an to receive promptly upon such
termination: (i) payments and amount equal to the greater of (x) six (6) months'
of EMPLOYEE'S Regular Compensation or (y) Employee's Regular Compensation for
the remainder of the term of the Agreement, in each case computed at the rate
in effect on the date of such termination and in each case payable in equal
weekly installments; (iii) payment of the premium payments due upon the health
and dental insurance for the entire period to which EMPLOYEE is entitled to
subscribe under Cobra as a result of such termination; and (iv) transfer without
charge to EMPLOYEE of the entire interest, if any, which EMPLOYEE does not own
on the date of such termination in the life insurance policy on EMPLOYEE'S life
provided for in Section 4.7.
Section 7.0 - Stock Bonus Plan
7.1 Stock Purchase Agreement.
7.1.1 Upon execution of this Agreement, EMPLOYER shall issue
and sell one thousand eight hundred eighty eight (1188) shares of its common
stock, representing twenty percent (20%) of EMPLOYER'S outstanding shares after
issuance, to EMPLOYEE for the sum of $20,000, payable in immediately available
funds.
7.2 Restricted Stock Option.
7.2.1 EMPLOYER hereby grants EMPLOYEE the option to purchase
additional shares of its common stock, exercisable on and after each anniversary
date of this Agreement and any extensions thereof (each such anniversary date
being hereinafter referred to as "Exercise Date"), at a price equal to 75% of
its fair market value on the Exercise Date ("Option").
7.2.2 The number of shares subject to the Option on each
Exercise Date shall be determined by dividing 40% of EMPLOYEE'S Regular
Compensation on the applicable Exercise Date by the exercise price. For
example, if EMPLOYEE'S Regular Compensation is $100,000 per annum on the first
anniversary date of this Agreement (i.e., the first Exercise Date), the number
of shares subject to the Option vesting on such anniversary date would
determined by dividing 40,000 (40% of $100,000) by the then fair market per
share value of EMPLOYER'S shares. If the fair market value is $1.00 per share,
the maximum number of shares subject to such option would be 40,000 shares.
7.2.3 The Option shall be exercisable as to the shares optioned
on the applicable Exercise Date for a period of ten 10) years following such
Exercise Date.
7.2.4 If EMPLOYEE'S employment by EMPLOYER is terminated for
any reason, only that portion of the Option exercisable at the time of such
termination of employment may thereafter be exercised by EMPLOYEE or, in the
case of termination by EMPLOYER'S death, by EMPLOYEE'S legal representative(s).
7.2.5 The Option is not intended to be and shall not be treated
as an incentive stock option under Section 4.2.2 of the Internal Revenue Code
unless this sentence has been manually lined out and its deletion is followed
by the signature of a corporate officer of EMPLOYER and EMPLOYEE.
/s/
__________________________
EMPLOYER Officer signature
/s/
__________________________
EMPLOYEE Signature
If the parties elect to treat the option as an incentive stock option under
Section 4.2.2 as herein provided, the Option shall be subject to, and EMPLOYER
and EMPLOYEE agree to be bound by, all of the terms and conditions of the
EMPLOYER stock option plan to which the Option shall be subject, as the same
may be amended from time to time in accordance with the terms thereof, provided
no such amendment shall deprive EMPLOYEE of the option or any of his rights
hereunder.
7.2.6 EMPLOYEE may not transfer the Option except by will or
the laws of descent and distribution. The Option shall not be otherwise
transferred, assigned, pledged, hypothecated or disposed of in any way, whether
by operation of law or otherwise, and shall be exercisable during EMPLOYEE'S
lifetime only by EMPLOYEE or his guardian or legal representative.
7.3 Piggyback Registration and Preemptive Rights.
7.3.1 For purposes of this Section 7.3 the following terms shall
have the following meanings:
7.3.1.1 "Shares" shall mean those shares of common stock
of EMPLOYER acquired by EMPLOYEE pursuant to the option or otherwise.
7.3.1.2 "Holder" shall mean any person or entity holding
Shares, including EMPLOYEE.
7.3.1.3 "Registration Expenses" shall mean all expenses,
except Selling Expenses as defined below, incurred by the EMPLOYER in complying
with Section 7.3.2 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the EMPLOYER, blue sky fees and expenses, the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the EMPLOYER which shall
be paid in any event by EMPLOYER) and the reasonable fees and disbursements of
one counsel for all Holders.
7.3.1.4 "Selling Expenses" shall mean all underwriting
discounts, selling commissions and stock transfer taxes applicable to the
securities registered by the Holders and, except as set forth in the definition
of Registration Expenses, all reasonable fees and disbursements of counsel for
any Holder.
7.3.2 If the EMPLOYER shall determine to register any of its
securities, whether pursuant to an underwriting or not, either for its own
account or the account of a security holder or holders, other than a
registration relating solely to employee benefit plans, EMPLOYER will (i)
promptly give to each Holder written notice thereof; and (ii) include in such
initial registration only (and any related qualification under blue sky laws or
other compliance), and in any underwriting involved wherein, all the Shares of
each Holder specified in a written request or requests, made within 20 days
after receipt of such written notice from the EMPLOYER, by any Holder.
7.3.3 If the registration of which EMPLOYER gives notice is for
a registered public offering involving an underwriting, EMPLOYER shall so advise
the Holders in writing. In such event, the right of any Holder to registration
pursuant to Section 7.3.2 shall be conditioned upon such Holder's participation
in such underwriting and the inclusion of such Holder's Shares in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Shares through such underwriting shall (together with the EMPLOYER and
any other shareholders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the managing
underwriter selected for such underwriting by the EMPLOYER. Notwithstanding
any other provision of this Section 7.3.3 if the managing underwriter in good
faith determines that marketing factors require a limitation of the number of
shares to be underwritten, the managing underwriter may limit the Shares to be
included in such registration, but only in proportion to the limits imposed on
the number of other issued and outstanding shares to be included in the
registration. EMPLOYER shall so advise all Holders and the number of Shares
that may be included in the registration and underwriting shall be allocated
among all Holders in proportion, as nearly as practicable, to the respective
amounts of Shares held by such holders at the time of filing the registration
statement. To facilitate the allocation of shares in accordance with the above
provisions, EMPLOYER may round the number of shares allocated to any Holder or
other shareholder to the nearest 100 shares. If any Holder disapproves of the
terms of any such underwriting, he may elect to withdraw therefrom by written
notice to EMPLOYER and the managing underwriter. Any Shares excluded or
withdrawn from such underwriting shall be withdrawn from such registration and
shall not be transferred in a public distribution prior to 90 days after the
effective date of the registration statement relating thereto, or such other
shorter period of time as the underwriters may require.
7.3.4 All Registration Expenses incurred in connection with
(i) a registration pursuant to Section 7.3.2 shall be borne by the EMPLOYER.
Unless otherwise stated, all Selling Expenses relating to Shares registered on
behalf of the Holders shall be borne by the Holders of such securities pro rata
on the basis of the number of Shares so registered.
7.3.5 In the case of a registration, qualification or
compliance effected by the EMPLOYER pursuant to Section 7.3.2. EMPLOYER will
keep each Holder advised in writing as to the initiation of each registration,
qualification and compliance and as to the completion thereof.
7. 4
7.4.1 EMPLOYEE shall have full preemptive or preferential
rights, as defined by law, to subscribe for or purchase his proportional part
of any shares that may be issued at any time by EMPLOYER, EMPLOYER'S articles
of incorporation shall be amended to include such preemptive and preferential
rights, EMPLOYER shall notify EMPLOYEE in writing at least sixty (60) days
prior to any issuance of EMPLOYER'S shares, Such notice shall be accompanied by
the subscription agreement, if any, and shall specify the date of the
contemplated issuance, the identity of the subscriber(s) for the shares, total
number of shares to be issued to such subscribers, the price per share and the
total number of shares of such issuance EMPLOYEE is entitled to purchase
pursuant to EMPLOYER'S preemptive and preferrential rights. At any time prior
to the date of issuance specified in the notice, EMPLOYEE may purchase all or
any portion of the shares EMPLOYEE is entitled to purchase by delivering to
EMPLOYER the subscription agreement, if any, signed by EMPLOYEE and the
consideration specified in the notice.
7.4.2 If the outstanding shares of the class then subject to
the Option are increased or decreased, or are changed into or exchanged for a
different number or kind of shares or securities, as a result of one or more
reorganizations, recapitalizations, stock splits, reverse stock splits, stock
dividends or the like, appropriate adjustments shall be made in the number
and/or kind of shares or securities for which the unexercised portions of the
Option may thereafter be exercised, all without any change in the aggregate
exercise price applicable to the unexercised portions of the Option, but with a
corresponding adjustment in the exercise price per share or other unit. No
fractional share of stock shall be issued under the Option or in connection
with any such adjustment.
7.4.3 EMPLOYER shall not, by amendment to its articles of
incorporation or through any reorganization, sale of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of the
option, but will at all times in good faith assist in the carrying out of
all such terms. Without limiting the generality of the foregoing, EMPLOYER
will not (i) issue any capital stock of any class which is preferred as to
dividends or as to the distribution of assets upon voluntary or involuntary
dissolution or (ii) transfer all or substantially all of its properties and
assets to any other person (corporate or otherwise), or consolidate with or
merge into any other person or permit any such person to consolidate with or
merge into EMPLOYER (if EMPLOYER is not the surviving person) unless such
other person shall expressly assume in writing and will be bound by all the
terms of the option.
7.5 Treatment of Shares upon Acquisition of EMPLOYER.
7.5.1 If EMPLOYER is acquired by a publicly-traded company,
EMPLOYEE shall have the continuing right to exchange his Shares (including
those held by him as of the acquisition and any issued in the future under the
option) for registered stock of the acquiring company having an equivalent
market value on the date of the exchange.
7.5.2 Subject to the provisions of paragraph 7.3 if any current
or future parent of EMPLOYER shall determine to register any of its securities,
whether pursuant to an underwriting or not, either for its own account or the
account of a security holder or holders, other than a registration relating
solely to employee benefit plans, EMPLOYEE shall have the right to participate
in such registration through an exchange of his shares (on an equivalent market
value basis) for registrable shares in such parent.
8.0 General Provisions
8.1 Notices. Notices and other communications among the parties
shall be in writing and shall be delivered personally or sent by air courier
or first class certified or registered mail, return receipt requested and
postage prepaid, addressed as follows:
If to EMPLOYEE:
Xx. Xxxxxxxx Xxxx
00000 Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
If to EMPLOYER:
Assembly and Manufacturing Systems, Inc.
0000 Xxxxxx Xxx,
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxx Xxxxxxx
Chairman
All notices and other communications given to any party in accordance with the
provisions of this Agreement shall be deemed to have been given on the date of
delivery if personally delivered; on the business day after the date when sent
if sent by air courier; and on the third business day after the date when sent
if sent by mail, in each case addressed to such party as provided in this
Section 8.1 or in accordance with the latest unrevoked direction from such
party.
8.2 Binding Agreement; Benefit. The provisions of this Agreement
will be binding upon, and will inure to the benefit of, the respective heirs,
representatives, assigns and successors of the parties.
8.3 Governing Laws This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of California,
USA.
8.4 Waiver of Breach. The waiver by any party of a breach of any
provision of this Agreement by any other party(s) must be in writing and shall
not operate or be construed as a waiver of any subsequent breach by such other
party(s).
8.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.6 EMPLOYEE Liability to EMPLOYER. EMPLOYEE shall not be liable
to EMPLOYER for any action taken or omitted to be taken by him except in the
case of his own failure to exercise the care, skill, prudence prevailing that
skill, prudence and diligence under the circumstances then prevailing that a
prudent man acting in a like capacity and familiar with such matters would use
in the conduct of a company with similar purposes.
8.7 Indemnification of EMPLOYEE, To the extent not expressly
prohibited by applicable law, and regardless of whether or not EMPLOYEE succeeds
on the merits of any litigation, EMPLOYER, jointly and severally, shall defend,
EMPLOYEE from any and all costs, indemnify and hold harmless expenses, damages,
claims, liabilities and judgments (including the reasonable costs of the defense
of any claim or action and any sums which may be paid with the consent of
EMPLOYER in settlement thereof) which may be incurred by or awarded against
EMPLOYEE, by reason of any action taken or omitted to be taken on behalf of
EMPLOYER or in furtherance of its interest. EMPLOYEE shall not be entitled to
claim any indemnity or reimbursement under this Section 8.7 to the extent the
same is in respect of any cost, expense, damage or claim that may be incurred
by EMPLOYEE which results from the failure of EMPLOYEE to act in accordance with
the provisions of this Agreement and the "prudent man" standard of care set
forth in Section 8.6. To the extent permitted by applicable law, EMPLOYER shall
make prompt payment of litigation expenses at the request of EMPLOYEE in advance
of payment of indemnification. In defending any appeal by EMPLOYEE of a
determination that EMPLOYEE has not met the requisite standard of conduct
required for indemnification under this Section 8.8. EMPLOYER shall be
required to prove under applicable standards of proof that EMPLOYEE has not met
such standard of conduct in order to prevail,
8.8 Assignment. This Agreement is personal in its nature and no
party shall, without the consent of all the others, assign or transfer this
Agreement or any rights or obligations hereunder; provided, however, that the
provisions hereof shall inure to the benefit of, and be binding upon (i) each
successor of any of the corporate parties, whether by merger, consolidation,
transfer of all or substantially all assets, or otherwise and (ii) the heirs
and legal representatives of EMPLOYEE.
8.9 Section Headings and Cross-References. The section headings
contained in this Agreement are for convenience only and will not be construed
as part of this Agreement. Cross-references to section numbers in this Agreement
shall be construed to refer only to the sections of this Agreement and not to
the sections of any exhibit incorporated into or referred to herein, unless
expressly indicated otherwise,
8.10 Amendments. No amendments or additions to this Agreement shall
be binding unless reduced to writing and signed by all the parties, except as
otherwise may be specifically provided herein.
9.0 Covenant Not To Compete During the term hereof, EMPLOYEE shall
not compete, directly or indirectly, with EMPLOYER, or interfere with,
solicit, disrupt or attempt to disrupt the relationship, contractual or
otherwise, between the EMPLOYER and any customer, client, supplier, consultant
or employee of the EMPLOYER. An activity competitive with an activity engaged
in by EMPLOYER shall include becoming an employee, officer, consultant or
director of, or being an investor in, lender to, or owner of, an entity or
person engaged in the business then engaged in by the EMPLOYER.
10.0 Confidential Information. EMPLOYEE recognizes and acknowledges
that EMPLOYER'S trade secrets and proprietary information and processes, as
they may exist from time to time, are valuable, special and unique assets of
EMPLOYER's business, access to and knowledge of which are essential to the
performance of EMPLOYEE's duties hereunder. EMPLOYEE will not, in whole or
in part, disclose such secrets, information or processes to any persons
(legal or natural), firm, corporation, association or other entity for any
reasons or purpose whatsoever, nor shall EMPLOYEE make use of any such property
for his own purposes or for the benefit of any person, firm, corporation or
other entity (except the EMPLOYER) under any circumstances, provided that these
restrictions shall not apply to such secrets, information and processes which
are then in the public domain (provided that EMPLOYEE was not responsible,
directly or indirectly, for such secrets, information or processes entering the
public domain without EMPLOYER's consent), EMPLOYEE agrees to hold as EMPLOYER'S
property, all memoranda, books, papers, letters, formulas and other data, and
all copies thereof and therefrom, in any way relating to EMPLOYER's business
and affairs, whether made by him or otherwise coming into his possession, and
on termination or expiration of his employment to deliver all of the same
(including all copies) to the EMPLOYER.
IN WITNESS WHEREOF the parties hereto have entered into and made effective this
Agreement as of the day and year first above written,
" EMPLOYER"
ASSEMBLY AND MANUFACTURING SYSTEMS, INC.
/s/Xxx Xxxxxxx
By: __________________
Its:____________________
"EMPLOYEE"
/s/
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XXXXXXXX XXXX
Exhibit 4.25
