CONSULTING AGREEMENT
This Consulting Agreement is entered into as of August 23,
1996, between Electronic Fab Technology Corp., a Colorado corporation
(the "Company"), and Xxxxxx X. Xxxx (the "Consultant").
The parties agree as follows:
A. Engagement. The Company hereby agrees to engage
Consultant and the Consultant hereby accepts such engagement on the
terms and conditions set forth in this Agreement.
A. Duties.
(a) Consultant shall provide technical assistance
and personal services to the Company from time to time as requested by
the Chief Executive Officer of the Company. The Consultant shall be
available for up to 40 hours a week to provide such services, but shall
provide only such services as are requested by the Chief Executive
Officer of the Company and are reasonably acceptable to the Consultant.
(b) Consultant agrees not to provide any services
for or on behalf of the Company except those explicitly described above
or those specifically requested by the Chief Executive Officer of the
Company. Consultant will not represent to any third parties that he has
any other ability to act for or on behalf of the Company.
(c) Consultant shall provide all office space and
equipment as necessary to fulfill his duties under this Agreement.
Consultant shall perform his obligations under this Agreement as an
independent contractor, not as an employee. Consultant shall be
responsible for all tax withholding and estimated tax or other tax
payments attributable to this Agreement.
A. Term. The initial term of this Agreement shall
begin on the date of this Agreement and shall terminate one year from
the date of this Agreement. The Consultant may extend the term of this
Agreement for up to three additional consecutive one-year periods by
giving written notice of extension to the Company at least 15 days
before the end of the previous one-year period. Notwithstanding the
foregoing, this Agreement shall be terminated as of the date set forth
below upon the occurrence of any of the following events:
1. immediately if the Consultant dies (except
as specified in Section 4(d));
1. six months after such time as the closing
sale price of the Company's common stock on the NASDAQ trading system
shall be $8 per share or higher for at least 20 of any 30 consecutive
trading days;
1. 30 days after the aggregate number of
shares of the Company's common stock sold by Consultant or his wife
after the date of this Agreement shall equal or exceed 500,000; or
1. such time as any person or group (as
defined in Section 13(d) under the Securities Exchange Act of 1934),
excluding the Consultant and his spouse, shall acquire beneficial
ownership of shares with a majority of the voting power of the Company's
outstanding stock entitled to vote generally in elections of directors.
For these purposes, the term "group" shall be defined, and beneficial
ownership shall be determined, as provided in Section 13(d) of the
Securities Exchange Act of 1934 and regulations of the Securities and
Exchange Commission under such section.
A. Compensation. Consultant shall receive the
following compensation for his availability and services hereunder:
1. Simultaneously with and as consideration
for the execution and delivery of this Agreement, the Company is
(i) making a one-time payment to Consultant of $100,000 cash and
(ii) transferring and assigning to Consultant the Jeep Grand Cherokee
owned by the Company that has been made available previously for
Consultant's use. All costs of insuring, maintaining and operating that
vehicle will be at the Consultant's expense.
1. The Company shall pay to Consultant fees
of $100,000 per year. This amount shall be paid biweekly in arrears.
If at any time the total number of shares of the Company's common stock
sold by Consultant and his wife on or after the date of this Agreement
exceeds 100,000, then the compensation due Consultant under this Section
4(a) shall be reduced by the amount of all proceeds received by
Consultant or his wife from the sale of such shares in excess of 100,000
(net of all sales commissions and other selling expenses). Such
reduction shall be effected by withholding any payments until the total
amount withheld equals such excess proceeds. If more shares are then
sold, further compensation will be withheld on each occasion in the same
manner. However, under no circumstances will Consultant be required to
return any compensation already paid to him.
1. Throughout the term of this Agreement,
Consultant will continue to receive health, dental and vision insurance
as is generally made available by the Company to its employees, at no
expense to Consultant. This insurance shall cover both Consultant and
his wife. If Consultant dies, his wife will still be entitled as a
third-party beneficiary to receive such health insurance through the
fourth anniversary of the date of this Agreement.
1. The Company shall reimburse Consultant for
all expenses reasonably incurred by the Consultant in performing his
duties under this Agreement, as such duties are approved by the
Company's Chief Executive Officer.
A. Confidential Information. Consultant
acknowledges that the trade secrets, know-how and proprietary processes
of the Company and its confidential business plans, strategies,
concepts, prospects and financial data (collectively, "confidential
information") are valuable, unique assets of the Company. Consultant
shall not, during or after the term of this Agreement, disclose any of
the confidential information (unless already generally known to and
available for use by the public other than as a result of a violation by
Consultant of this Section 6 or as required by law) to any person or
entity for any purpose, nor shall Consultant use or permit the use of
any confidential information except, in either case, as is required for
Consultant to perform his duties under this Agreement.
A. Covenants Not to Compete or Interfere.
1. Scope. In view of the unique and valuable
consulting services that Consultant has been retained to render to the
Company and Consultant's current and future knowledge of the customers,
trade secrets and other proprietary information relating to the business
of the Company and its customers and suppliers, Consultant agrees that
during the term of this Agreement and for one year thereafter, he will
not Participate In (as defined below) the business of electronic
contract manufacturing.
1. Definition. For purposes of this
Section 6, "Participate In"means "directly or indirectly, for his own
benefit or for, with or through any other person, firm or corporation,
own, manage, operate, control, lend money to or participate in the
ownership, management, operation or control of, or be connected as a
director, officer, employee, partner, Consultant, agent, independent
contractor or otherwise with, or acquiesce in the use of his name in."
Notwithstanding the foregoing, Consultant shall not be deemed to
Participate In a business merely because he owns less than 5% of the
outstanding stock of a corporation (measured in voting power or equity),
if, at the time of its acquisition by Consultant, such stock is listed
on a national securities exchange or is reported on NASDAQ. In
addition, Consultant's ownership of stock of the Company will not
violate this Section 6. If any restriction contained in this Section 6
is deemed to be invalid, illegal or unenforceable by reason of its
duration, geographical scope or otherwise, then such provision shall be
deemed reduced in extent, duration, geographical scope or otherwise by
the minimum reduction necessary to cause the restriction to be
enforceable.
1. Noninterference. During the period
specified in Section 6(a) of this Agreement, Consultant shall not
(i) directly or indirectly cause or attempt to cause any employee of the
Company to leave the employ of the Company, (ii) in any way interfere
with the relationship between the Company and any employee, customer or
supplier, (iii) directly or indirectly hire any employee of the Company
to work for any organization of which Consultant is an officer,
director, employee, Consultant, independent contractor or owner of an
equity or other financial interest, or (iv) interfere or attempt to
interfere with any transaction in which the Company was involved during
the term of this Agreement or his employment.
A. Intellectual Property.
1. Consultant agrees to assign to the
Company, or to any person or entity designated by the Company, the
entire right, title and interest of the Consultant in and to all
inventions, ideas, discoveries and improvements (collectively,
"Inventions"), whether patented or unpatented, and material subject to
copyright, made or conceived by the Consultant, solely or jointly, that
arise out of or are related to research conducted by, for or under the
direction of the Company, or that relate to methods, apparatuses,
designs, products, processes or devices, sold, leased, used or under
consideration or development by the Company at the time of such
Invention. Consultant further acknowledges that all copyrightable
materials developed or produced by Consultant within the scope of his
employment by the Company constitute works made for hire.
1. Consultant shall communicate promptly and
disclose to the Company, in such form as the Company may reasonably
request, all information, details and data pertaining to any such
inventions, ideas, discoveries and improvements described in
paragraph 7(a) above.
A. Injunctive Relief. Upon an actual or threatened
breach by Consultant of Section 5, 6 or 7 of this Agreement, the Company
shall be entitled to an injunction restraining Consultant from such
breach. Nothing in this Agreement shall limit the Company's ability to
obtain any other remedies, including damages for such actual or
threatened breach.
A. Waiver of Breach. A waiver by the Company of a
breach of any provision of this Agreement by Consultant shall not be
construed as a waiver of any breach of another provision or subsequent
breach of the same provision.
A. Severability. The invalidity or
unenforceability in any application of any provision in this Agreement
will not affect the validity or enforceability of any other provision or
of such provision in any other application.
A. Notices. All communications, requests, consents
and other notices provided for in this Agreement shall be in writing and
shall be deemed given if and when delivered personally by hand, sent by
telecopy at the appropriate number indicated below with electronic
confirmation of receipt, or mailed by first class mail, postage prepaid,
addressed as follows:
a. If to the Company:
Electronic Fab Technology Corp.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Facsimile No. (000) 000-0000
with a copy to:
Holme Xxxxxxx & Xxxx LLC
0000 Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Facsimile No. (000) 000-0000
a. If to Consultant:
Xxxxxx X. Xxxx
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
or to such other address or telecopy number as either party may
designate by notice pursuant to this Section 11.
A. Governing Law. This Agreement shall be governed
by Colorado law.
A. Assignment. The Company may assign its rights
and delegate its obligations under this Agreement to any affiliate of
the Company or to any acquirer of substantially all of the business of
the Company whether through merger, purchase of assets, purchase of
stock or otherwise. Otherwise, neither party may assign any rights or
delegate any duties under this Agreement. This Agreement shall be
binding upon and inure to the benefit of the parties and their
respective legal representatives, heirs, and permitted successors and
assigns.
A. Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties and supersedes all
prior understandings, agreements or representations by the parties,
written or oral, that relate to the subject matter of this Agreement.
In particular, the parties hereby terminate Consultant's Employment
Agreement with the Company dated as of February 28, 1994, and Consultant
shall not be entitled to any severance or other payments or benefits,
and shall have no obligations, under such terminated agreement.
Consultant hereby resigns all positions he may hold with the Company
other than his membership on the Board of Directors, his position as
Chairman of the Board and the position as outside consultant described
in Section 2.
A. Amendments. No provision of this Agreement may
be amended or waived except by an instrument in writing signed by the
party sought to be charged with the amendment or waiver.
Executed as of the date set forth on page 1.
ELECTRONIC FAB TECHNOLOGY CORP.
By Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
