EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT, dated as of December 31, 2001, between AMERICAN
TECHNICAL CERAMICS CORP., a Delaware corporation having its principal place of
business at Xxx Xxxxxx Xxxx, Xxxxxxxxxx Xxxxxxx, Xxx Xxxx 00000 (the
"Company"), and XXXXX XXXX, who resides at 0000 Xxxxxx Xxx Xxx, Xxxxx Xxxxx
Xxxxx, Xxxxxxx 00000 ("Employee").
W I T N E S S E T H :
WHEREAS, Employee is currently employed as the Senior Vice President - Thin
Film Products of the Company pursuant to an employment agreement, dated January
1, 1998, which expires December 31, 2001;
WHEREAS, the Company desires to provide for Employee's continued
performance of services for the Company and any present or future parent,
subsidiary, or affiliate of the Company, and Employee desires to continue to
perform such services, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the other party's agreement to enter
into this Agreement, the mutual promises contained herein and other good and
valuable consideration, the receipt, adequacy, and sufficiency of which are
hereby acknowledged, the Company and Employee hereby agree as follows:
1. Term. The Company agrees to employ Employee, and Employee agrees to
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serve as Senior Vice President - Thin Film Products of the Company, upon the
terms and conditions hereinafter set forth, for a period commencing on January
1, 2002 and ending on December 31,
2005, or for such shorter period as may be provided for herein; provided,
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however, that, on December 31, 2005, and on each December 31st thereafter, the
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period covered by this Agreement shall automatically be extended by one
additional year unless at least 60 days prior to any such December 31st the
Company shall deliver to Employee or Employee shall deliver to the Company
written notice that the period covered by this Agreement will not be extended,
in which case, this Agreement will terminate upon the expiration of the then
existing term of this Agreement, including any previous extension. The period
during which Employee is employed hereunder is hereinafter referred to as the
"Employment Period."
2. Duties. Employee agrees to use his best efforts, skills, and
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abilities to perform faithfully all duties consistent with his position (or any
other position of a similar nature) assigned to him from time to time by the
Company in accordance with all Company policies and procedures and to devote his
full business time, labor, energies, and attention to the performance of such
duties. Employee shall not become involved in any personal investment or other
matters which may detract from the performance of his duties or otherwise
adversely affect the Company or any present or future parent, subsidiary, or
affiliate of the Company. In the performance of his duties, Employee shall be
subject to the direction of the Board of Directors, the Chief Executive Officer
of the Company, and any officer of the Company designated by the Board or the
Chief Executive Officer of the Company.
3. Place of Performance. In connection with his employment by the
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Company, Employee shall be based at the Company's offices in Jacksonville,
Florida. Employee shall be available to travel at such times and to such places
as may be necessary in connection with the performance of his duties hereunder.
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4. Annual Compensation.
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(a) Salary. During the first year of the Employment Period,
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Employee shall receive a base salary at the annual rate of $125,000. During
each successive year of the Employment Period, Employee's base salary shall be
increased by 8% over the annual rate in effect during the immediately preceding
year. For purposes of this Agreement, a "year of the Employment Period" shall
be a period commencing on January 1st and ending on the next succeeding December
31st. Employee's salary shall be payable in weekly installments or at such
other frequency as the Company may from time to time determine (but not less
frequently than monthly).
(b) Bonus. (i) In addition to his base salary, during each year
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of the Employment Period, Employee shall be entitled to receive an annual
incentive bonus (the "Thin Film Incentive") equal to 3% of the Thin Film Profit
Contribution (as hereinafter defined) in respect of such year. The Company
shall pay quarterly estimates of the Thin Film Incentive to Employee as set
forth herein.
(ii) The Thin Film Incentive shall be calculated on a quarterly
basis and bonus payments in respect thereof shall be made to Employee within 45
days after the end of the quarter to which such calculation relates. In the
event the Thin Film Profit Contribution calculated for any calendar quarter is
less than zero, then no payment shall be made in respect of said quarter and the
amount by which the Thin Film Profit Contribution is less than zero shall be
carried forward to reduce the Thin Film Profit Contribution, if any, in the
immediately succeeding calendar quarters in the same calendar year. No such
negative amount shall be carried forward beyond the end of the calendar year in
which it is recorded.
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(iii) As used herein, "Thin Film Profit Contribution" shall mean
(A) net revenues received by the Company from the sale of products designated by
the Company as "Thin Film Products," plus (B) an amount equal to 10% of the
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identifiable costs incurred by the Company's metalized substrates and circuits
business which is under Employee's direction in connection with products
provided or services performed by such business specifically and exclusively for
other businesses and product lines of the Company other than Thin Film Products,
the provision or performance of which has been specifically requested by the
President of the Company, minus (without double counting) (C) identifiable costs
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directly attributable to the production, promotion, marketing, sale and
administration of Thin Film Products, including, without limitation, (1) salary,
bonuses and benefits and other costs for all direct and indirect personnel
involved in the production, promotion, marketing, sale and administration of
Thin Film Products, including Employee (but excluding Employee's Thin Film
Incentive); (2) all materials and supplies, outside services, and maintenance
and repair services relating to the production, promotion, marketing, sale and
administration of Thin Film Products; (3) salary, bonuses, benefits and other
costs for all internal sales personnel attributable to the sale of Thin Film
Products; (4) outside sales representatives' commissions attributable to the
sale of Thin Film Products; (5) departmental travel expenses; (6) advertising
and promotion expenditures attributable to the marketing, promotion and sale of
Thin Film Products; and (7) depreciation of assets used in the production,
promotion, marketing and sale of Thin Film Products, and minus (D) an aliquot
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portion of all costs associated with the facilities in which the Company's
metalized substrates and circuits businesses are located (considering the entire
Jacksonville, Florida facility as one facility), based upon the square footage
utilized by the Company's metalized substrates and circuits business at each
such facility, including, without limitation, all
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rental payments, utilities, real estate taxes, insurance, costs of maintenance
and repairs, environmental costs. As of the date hereof, the products designated
as "Thin Film Products" shall be as set forth on Exhibit A hereto.
(c) Modified Officer's Bonus. During the Employment Period,
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Employee shall also be entitled to receive ay incentive bonus to which Employee
would otherwise be entitled as an officer of the Company under the Company's
Officers' Bonus Plan, as same may be in effect from time to time, less an amount
equal to 0.5% of the Thin Film Profit Contribution (if greater than zero)
calculated for the period to which such officer's incentive bonus pertains.
Employee hereby acknowledges that officers' bonuses are awarded in the sole
discretion of the Board of Directors of the Company and are generally paid on a
quarterly basis, if at all. Nothing contained herein shall require the Company
to maintain the Officers' Bonus Plan.
(d) Deductions. The Company shall deduct from all amounts payable
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to Employee all taxes and other amounts which the Company is now or may
hereafter become obligated to deduct under any applicable law.
5. Benefits. Employee shall be entitled to participate in such
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employee benefit plans established by the Company from time to time and
generally made available to employees at levels similar to Employee's for which
he meets the eligibility requirements. Nothing contained herein shall require
the Company to establish or maintain any employee benefit plan.
6. Termination.
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(a) Notwithstanding anything herein contained to the contrary, if
on or after the date hereof and prior to the end of the Employment Period, (i)
either (A) Employee shall be physically or mentally incapacitated or disabled or
otherwise unable fully to discharge his
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duties hereunder ("Disabled") for a period of 90 consecutive days or for an
aggregate of 90 days within any period of twelve consecutive months, (B)
Employee shall be convicted of a felony or other crime of moral turpitude, (C)
Employee shall commit any act or omit to take any action in bad faith to the
detriment of the Company or any present or future parent, subsidiary, or
affiliate of the Company, (D) Employee shall willfully fail or refuse to perform
any duties consistent with his position (or any other position of a similar
nature) assigned to him from time to time, or (E) Employee shall breach any
other term of this Agreement and fail to correct such breach within 10 days
after receiving notice of the same, or if such breach is not capable of
correction within such 10 day period, Employee shall fail to take substantial
steps necessary to correct such breach within such 10 day period and shall not
have corrected such breach within 30 days after receiving such notice, then, and
in each such case, the Company shall have the right to give notice of
termination of Employee's services hereunder as of a date to be specified in
such notice, and this Agreement shall terminate on the date so specified, or
(ii) Employee shall die, then this Agreement shall terminate on the date of
Employee's death.
(b) If this Agreement is terminated by the Company for any of the
reasons set forth in Paragraph 6(a) hereof, or if Employee shall resign or
otherwise voluntarily terminate his employment with the Company, Employee shall
be entitled to receive only his salary at the rate provided in Paragraph 4(a)
hereof through and including the date upon which termination shall take effect.
(c) If Employee's employment by the Company pursuant to this
Agreement is terminated by the Company for any reason other than any of the
reasons set forth in Paragraph 6(a), or for no reason, then, provided Employee
continues to abide by the provisions of Section 7, 8 and 9 of this Agreement,
(i) the Company shall continue to pay to Employee, in
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lieu of any other payments to which he would be entitled hereunder, his base
salary at the rate and at the times provided in Section 4(a) hereof for until
the earlier of (A) Employee's death, and (B) the date the term of this Agreement
(as same previously may have been extended) was next scheduled to expire
(assuming timely notice of non-renewal is given by the Company or Employee
pursuant to Section 1 of this Agreement) but for such termination, and (ii)
Employee shall be entitled to exercise all of his stock options that have vested
on or prior to the date of termination for a period of one year after such
termination, subject to the terms of the plan pursuant to which such options
were granted and the stock option agreements evidencing same.
7. Confidentiality.
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(a) Employee acknowledges and agrees that he has been and, during
the Employment Period, will continue to be, privy to confidential proprietary
and secret information relating to the Company, its present or future parents,
subsidiaries and affiliates and their respective customers, clients and
suppliers. Employee hereby agrees that, beginning on the date hereof, and at
any time hereafter, Employee shall treat as strictly confidential any
proprietary, confidential or secret information relating to the business or
interests of the Company or any present or future parent, subsidiary or
affiliate of the Company, or any customer, client or supplier of any of them,
including, but without limitation, the organizational structure, operations,
business plans or projects of the Company or any present or future parent,
subsidiary or affiliate of the Company, or any customer, client or supplier of
any of them, and any research datum or result, invention, trade secret, customer
list or customer information, process or other work product developed by or for
the Company or any present or future parent, subsidiary or affiliate of the
Company, or any customer, client or supplier of any of them, whether on the
premises of the Company or elsewhere ("Confidential Information"). Employee
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hereby agrees that, beginning on the date hereof, and at any time hereafter,
Employee shall not disclose to any person or entity, utilize for his own
purposes or for the benefit of any other person or entity or make accessible to
any person or entity, in any manner or in any form, any Confidential Information
other than in connection with performing the services required of him under this
Agreement, without the prior written consent of the Company.
(b) Employee agrees that the provisions of this Paragraph 7 shall
survive the termination of his employment and of this Agreement.
8. Assignment of Intellectual Property Rights.
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(a) If at any time or times during his employment by the Company
and during the six month period following his termination for any reason (or for
no reason) Employee shall (either alone or with others) make, conceive, discover
or reduce to practice any Intellectual Property (as hereinafter defined)
whatsoever or any interest therein ("Intellectual Property Rights"), whether or
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not patentable or registrable under copyright or similar statutes or subject to
analogous protection (herein called "Developments"), that (i) relates to the
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business of the Company or any present or future parent, subsidiary or affiliate
of the Company or any of their respective customers, clients or suppliers or any
of the products or services being developed, manufactured, sold or provided by
any of them which may be used in connection therewith, (ii) results from tasks
assigned to Employee by the Company or any present or future parent, subsidiary
or affiliate of the Company, or (iii) results from the use of premises or
personal property (whether tangible or intangible) owned, leased or contracted
for by the Company or any present or future parent, subsidiary or affiliate of
the Company, such Developments and the benefits thereof shall immediately become
the sole and absolute property of the Company and its assigns, and Employee
shall promptly disclose to the Company (or any
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persons designated by it) each such Development and hereby assigns any rights
Employee may have or acquire in the Developments and benefits and/or rights
resulting therefrom to the Company and its assigns without further compensation
and shall communicate, without cost or delay, and without publishing the same,
all available information relating thereto (with all necessary plans and models)
to the Company. As used herein, the term "Intellectual Property" shall mean all
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industrial and intellectual property, including, without limitation, patents,
patent applications, patent rights, trademarks, trademark applications, trade
names, service marks, service xxxx applications, copyrights, copyright
applications or registrations, databases, algorithms, computer programs and
other software, know-how, trade secrets, proprietary processes and formulae,
inventions, trade dress, logos, design and all documentation and media
constituting, describing or relating to the above.
(b) Upon disclosure of each Development to the Company, Employee
will, during his employment and at any time thereafter, at the request and cost
of the Company, sign, execute, make and do all such deeds, documents, acts and
things as the Company and its duly authorized agents may reasonably require to
(i) apply for, obtain and vest in the name of the Company alone (unless the
Company otherwise directs) letters, patents, copyrights or other analogous
protection in any country throughout the world and when so obtained or vested to
renew and restore the same, (ii) defend any actions or opposition proceedings in
respect of such applications and any opposition proceedings or petitions or
applications for revocation of such letters, patents, copyrights or other
analogous protection, and (iii) bring any action to enforce any rights in any
Developments.
(c) The Employee hereby irrevocably designates and appoints the
Company and its duly authorized officers and agents as the Employee's agent and
attorney-in-fact, to act
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for and in the Employee's behalf and stead to execute and file any such
application or applications and to do all other lawfully permitted acts to
further the prosecution and issuance of any such letters, patents, copyrights
and other analogous protection thereon with the same legal force and effect as
if executed by Employee.
(d) In the event of the termination of Employee's employment for
any reason (or no reason), Employee agrees to deliver to the Company all
documents, notes, drawings, blueprints, formulae, specifications, computer
programs, data and other materials of any nature pertaining to any proprietary
information or Intellectual Property of the Company or to Employee's work with
the Company, and the Employee will not take any of the foregoing or any
reproduction of any of the foregoing that is embodied in a tangible medium of
expression.
(e) The obligations of Employee pursuant to this Paragraph 8 shall
survive termination of his employment and of this Agreement.
9. Non-Competition.
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(a) Employee acknowledges that (i) in September 1993, the Company
purchased from Miltech Corp., a corporation of which Employee was the principal
stockholder, certain assets that were used by the Company to initiate its
metalized substrates and ceramic business, and (ii) in August 1998, the Company
purchased Employee's remaining inventory of ceramic substances. Employee
further acknowledges and agrees that (i) the retention of Confidential
Information is essential to the continued existence of the Company, and that
such information constitutes trade secrets, disclosure of which would
irreparably harm the business of the Company, and (ii) the services to be
furnished by Employee to the Company are of a special, unique, extraordinary and
intellectual character which gives them unique and peculiar value to the
Company. Accordingly, Employee agrees that he will not during the period he is
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employed by the Company or any present or future parent, subsidiary or affiliate
of the Company, under this Agreement or otherwise, and, subject to the
penultimate sentence of this Paragraph 9(a), during the Post-Employment
Non-Compete Period (as hereinafter defined) (i) engage in, or otherwise directly
or indirectly be employed by, or act as a consultant, advisor or lender to, or
be a director, officer, employee, stockholder, owner, or partner of, any other
Competitive Business (as hereinafter defined), or (ii) assist others in engaging
in any Competitive Business. In addition, Employee agrees that he will not
during the period he is employed by the Company or any present or future parent,
subsidiary or affiliate of the Company, under this Agreement or otherwise, and
during the Post-Employment Non-Compete Period, (i) induce any employee of the
Company or any present or future parent, subsidiary or affiliate of this Company
to terminate his employment with the Company or such parent, subsidiary or
affiliate, or engage in any Competitive Business, within a period of one year
after such person is no longer employed by the Company or any present or future
parent, subsidiary or affiliate of the Company, or (ii) induce any entity or
person with which the Company or any of present or future parent, subsidiary or
affiliate has a business relationship to terminate or alter such business
relationship. As used herein "Competitive Business" means and includes the
business of designing, developing, manufacturing and marketing
RF/Microwave/Millimeter/ Wave ceramic capacitors, thin film products and other
passive components and any other business that provides services and/or products
which are comparable to the services and/or products provided or contemplated to
be provided by the Company or any present or future parent, subsidiary or
affiliate of the Company; and "Post-Employment Non-Compete Period" means (i) in
the case of the termination of
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Employee's employment with the Company upon expiration of the Employment Period,
two years, and (ii) in the case of the termination of Employee's employment with
the Company prior to the scheduled expiration of the Employment Period, the
period commencing on the date Employee's employment with the Company is
terminated and ending on the later of (A) the date the Employment Period (as
same previously may have been extended) was next scheduled to expire (assuming
timely notice of non-renewal is given by the Company or Employee pursuant to
Section 1 of this Agreement) but for such termination of employment, and (B) the
second anniversary of such termination of employment. In the case of (i) the
termination of Employee's employment with the Company upon expiration of the
Employment Period, on (ii) the termination of Employee's employment with the
Company for any other reason other than Employee's resignation or other
voluntary termination of his employment or the termination by the Company of
Employee's employment for any of the reasons specified in Paragraph 6(a)(i)
hereof, Employee's obligations pursuant to the third sentence of this Paragraph
9(a) shall continue for only so long as the Company continues to pay to Employee
his base salary at the rate in effect on the date his employment was so
terminated in the installments and at the frequency that such payments were made
at the time of such termination of employment. Payments made to Employee by the
Company pursuant to Paragraph 6(c) of this Agreement shall also constitute
payments for purposes of the immediately preceding sentence. Notwithstanding
anything contained herein to the contrary, the provisions of this Paragraph 9
will not be deemed breached merely because Employee owns not more than 1% of the
outstanding common stock of a corporation, if, at the time of its acquisition by
Employee, such stock is listed on a national securities exchange, is reported on
NASDAQ, or is regularly traded in the over-the-counter market by a member of a
national securities exchange.
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(b) Employee understands that the foregoing restrictions may limit
his ability to earn a livelihood in a business similar to that of the Company or
any present or future parent, subsidiary or affiliate of the Company, but he
nevertheless has received and will receive sufficient consideration (including,
without limitation, the Company's agreement to enter into this Agreement) and
other benefits as an employee of the Company and as otherwise provided hereunder
to justify such restrictions which, in any event (given his education, skills
and ability), Employee does not believe would prevent him from earning a
livelihood.
(c) The obligations of Employee pursuant to this Paragraph 9 shall
survive the termination of his employment and of this Agreement.
10. Scope of Agreement. Employee acknowledges that the restrictions
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contained in Paragraphs 7, 8 and 9 are a condition of his employment by the
Company and constitute a material inducement to the Company's decision to enter
into this Agreement. Employee further acknowledges that such restrictions are
reasonable in view of the nature of the business in which the Company is
engaged, the uniqueness of the services he is providing to the Company and his
knowledge of the Company's business, and that any breach of his obligations
under Paragraphs 7, 8 and 9 hereof will cause the Company irreparable harm for
which the Company will have no adequate remedy at law. As a result, the Company
shall be entitled to the issuance by a court of competent jurisdiction of an
injunction, restraining order or other equitable relief in favor of itself
restraining Employee from committing or continuing any such violation. Any
right to obtain an injunction, restraining order or other equitable relief
hereunder will not be deemed a waiver of any right to assert any other remedy
the Company may have under this Agreement or otherwise at law or in equity.
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11. Representations and Warranties. Employee represents and warrants
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that the execution and delivery of this Agreement and the performance of all the
terms of this Agreement do not and will not breach any agreement to which he is
a party, including, without limitation, any agreement to keep in confidence
proprietary information acquired by Employee in confidence or trust. Employee
has not entered into and shall not enter into any agreement, either written or
oral, in conflict with this Agreement. Employee further represents and warrants
that he has not brought and will not bring with him to the Company or use at the
Company any materials or documents of an employer or a former employer that are
not generally available to the public, unless express written authorization from
such employer for their possession and use has been obtained. Employee further
understands that he is not to breach any obligation of confidentiality that he
has to any employer or former employer and agrees to fulfill all such
obligations during the period of his affiliation with the Company.
12. Assignment. Under no circumstances shall Employee assign, pledge
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or otherwise dispose of any of his rights or obligations under this Agreement,
and any such attempted assignment, pledge, or disposition shall be void and
shall relieve the Company of all its obligations under this Agreement. The
Company may assign any of its rights or obligations under this Agreement to any
present or future parent, subsidiary, affiliate, or successor.
13. Entire Agreement. This Agreement is the entire agreement between
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the Company and Employee with respect to the subject matter hereof and
supersedes all other agreements, written or oral, concerning the subject matter
hereof, including, without limitation, the Amended and Restated Employment
Agreement, dated as of January 1, 1998, between the Company and Employee, which
agreement is of no further force or effect.
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14. Waivers and Further Agreements Any waiver of any breach of any
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terms or conditions of this Agreement shall not operate as a waiver of any other
breach of such terms or conditions or any other term or condition, nor shall any
failure to enforce any provision hereof on any one occasion operate as a waiver
of such provision or of any other provision hereof or a waiver of the right to
enforce such provision or any other provision on any subsequent occasion.
15. Amendments. This Agreement may not be amended, nor shall any waiver,
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change, modification, consent, or discharge be effected, except by an instrument
in writing executed by or on behalf of the party against whom enforcement of any
such amendment, waiver, change, modification, consent, or discharge is sought.
16. Severability
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(a) If any provision of this Agreement shall be held or deemed to
be invalid, inoperative, or unenforceable as written, it shall be construed, to
the greatest extent possible, in a manner which shall render it valid and
enforceable, and any limitation on the scope or duration of any such provision
necessary to make it valid and enforceable shall be deemed to be part thereof.
(b) If any provision of this Agreement shall be held or deemed to
be invalid, inoperative, or unenforceable as applied to any particular case in
any jurisdiction or jurisdictions, or in all jurisdictions or in all cases,
because of the conflict or any provision with any constitution or statute or
rule of public policy or for any other reason, such circumstance shall not have
the effect of rendering the provision or provisions in question invalid,
inoperative, or
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unenforceable in any other jurisdiction or in any other case or circumstance or
of rendering any other provision or provisions herein contained invalid,
inoperative, or unenforceable to the extent that such other provisions are not
themselves actually in conflict with such constitution, statute, or rule of
public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative, or unenforceable provision
had never been contained herein, and such provision reformed so that it would be
valid, operative, and enforceable to the maximum extent permitted in such
jurisdiction or in such case.
17. Governing Law. This Agreement shall be governed by and construed
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and enforced in accordance with the laws of the State of New York, without
giving effect to rules governing conflicts of law.
18. Courts. Any action to enforce any of the provisions of this
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Agreement shall be brought in the courts of the State of New York. The parties
hereby consent to the jurisdiction of the courts of the State of New York.
19. Notices. Any notices required or permitted by this Agreement shall
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be in writing and personally delivered or mailed by certified or registered
mail, return receipt requested, addressed to the parties at their addresses set
forth above, or to such other addresses as one party may specify to the other
party, from time to time, in writing. Any notice personally delivered shall be
deemed given at the time of receipt thereof, and any notice given by certified
or registered mail shall be deemed given at the time of certification or
registration thereof.
20. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
AMERICAN TECHNICAL CERAMICS CORP.
By:
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Xxxxxx Xxxxxxx, President and
Chief Executive Officer
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Xxxxx Xxxx
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