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EMPLOYMENT AGREEMENT
Agreement, made as of the 1st day of January 1998, by and
between The DII Group, Inc., a Delaware corporation (the "Company"), and Xxxxxxx
X'Xxxxxxxx ("Executive").
RECITALS
A. The Company desires to employ Executive as Senior Vice President and
President, DOVatron International, Inc.; and
B. Executive is willing to accept such employment on the terms and
conditions set forth in this Agreement.
THE PARTIES AGREE as follows:
1. Position and Term of Employment. Executive's employment
hereunder shall commence as of January 1, 1998 and shall end December 31, 2000,
unless terminated sooner pursuant to Section 6 of this Agreement or extended by
the mutual agreement of the parties. During the term hereof, Executive shall be
employed as Senior Vice President (and President, DOVatron International, Inc.)
of the Company and shall devote his full business time, skill, attention and
best efforts in carrying out his duties and promoting the best interests of the
Company. Executive shall also serve as a director and/or officer of one or more
of the Company's subsidiaries as may be requested from time to time by the Board
of Directors. Subject always to the instructions and control of the Board of
Directors of the Company, Executive shall report to the Chief Executive Officer
of the Company and shall be responsible for the duties of the Senior Vice
President and President, DOVatron International, Inc.
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Executive's duties under this Agreement shall be limited to those duties
performed while present in the United States relating to the Company and the
Company's subsidiaries.
Executive shall not at any time while employed by the Company
or any of its affiliates or for a period of one (1) year following the later of
(i) termination of employment for any reason or (ii) the date on which the last
payment is required to be made under Section 2.1(a)(ii) hereof, without the
prior consent of the Board of Directors, knowingly acquire any financial
interests, directly or indirectly, in or perform any services for or on behalf
of any business, person or enterprise which undertakes any business in
competition with the business of the Company and its affiliates or sells to or
buys from or otherwise transacts business with the Company and its affiliates;
provided that Executive may acquire and own not more than five percent (5%) of
the outstanding capital stock of any public corporation or mutual fund.
Executive shall not at any time while employed by the Company or any of its
affiliates or for a period of two (2) years following termination of employment
for any reason, directly or indirectly, solicit for employment, employ or enter
into any business or contractual relationship with any employee of the Company
or any of its affiliates.
2.1 Base Salary. (a) (i) Executive shall be paid an initial
salary at the monthly rate of Nineteen Thousand Eight Hundred Thirty-Eight and
42/100 Dollars ($19,838.42), which shall be paid in accordance with the
Company's normal payroll practice with respect to salaried employees, subject to
applicable payroll taxes and deductions (the "Base Salary"). Executive's Base
Salary shall be subject to review and possible change in accordance with the
usual practices and policies of the Company. However, Executive's base annual
salary shall not be reduced unless such reduction is part of a Company-wide
reduction in pay scale and
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such reduction is proportionate to reductions imposed on the Company's and its
subsidiaries' employees; however, in no event may Executive's then current Base
Salary be reduced by more than 10%.
(ii) If for any reason other than Executive's voluntary resignation or
termination pursuant to Sections 6(a), (b) or (c) hereof, Executive does not
continue to be employed by the Company, Executive shall continue to receive an
amount equal to his then current Base Salary plus an annual performance bonus
equal to the highest annual bonus payment Executive has received in the previous
three years for the then remaining balance of the term of this Agreement. In no
event shall such payment be less than one year's base salary plus such highest
annual bonus. The foregoing amounts shall be paid to Executive over the
remaining term of this Agreement or one year (whichever is applicable) in
accordance with the Company's payroll and bonus payment policies.
Notwithstanding the foregoing, no payments under this subparagraph (ii) shall be
made if the Company makes all payments to Executive required to be made under
the Executive's Senior Executive Severance Agreement (the "Severance Agreement")
in the event of a Change in Control. For purposes of this Agreement, a Change in
Control shall be deemed to have taken place upon the occurrence of any of the
following events:
(A) any corporation, person, other entity or group (other than
the trustee of any qualified retirement plan maintained by the Company) becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934), directly or indirectly, of securities representing twenty percent
(20%) or more of the combined voting power of the Company's then outstanding
securities; or
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(B) during any period of twenty-four consecutive months,
individuals who at the beginning of such consecutive twenty-four month period
constitute the Board of Directors cease for any reason (other than retirement
upon reaching normal retirement age, disability or death) to constitute at least
a majority thereof, unless the election or the nomination for election by the
Company's stockholders of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of such twenty-four month period; or
(C) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's assets; or
(D) there shall occur a transaction or series of transactions
which the Board of Directors shall determine to have the effect of a Change in
Control.
(b) If Executive resigns voluntarily or ceases to be employed
by the Company (or any affiliate) for any reason described in Section 6(a) or
(c) of this Agreement, all benefits described in Sections 2 and 3 hereof shall
terminate (except to the extent previously earned or vested).
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(c) If Executive's employment shall have been terminated
pursuant to Section 6(b), the Company shall pay in equal monthly installments
for the then remaining balance of the term of this Agreement to Executive (or
his beneficiaries or personal representatives, as the case may be) disability
benefits at a rate per annum equal to one hundred percent (100%) of his then
current Base Salary, plus amounts equal to the highest annual bonus as provided
in clause (ii) of Section 2.1(a), less payments and benefits, if any, received
under any disability plan or insurance provided by the Company and less any
"sick leave" payments received from the Company for the applicable period.
2.2 Bonuses. Executive shall be eligible for an annual
performance bonus for calendar years beginning after December 31, 1997, in
accordance with the Company's Senior Executive Performance Bonus Plan. The
Company shall administer such bonus plan on a basis consistent with the past.
2.3 Expenses. During the term hereof, the Company shall pay or
reimburse Executive in accordance with the Company's normal practices any
travel, hotel and other expenses or disbursements reasonably incurred or paid by
Executive in connection with the services performed by Executive hereunder, in
each case upon presentation by Executive of itemized accounts of such
expenditures or such other supporting information as the Company may require.
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3. Other Benefits. Executive shall be entitled to receive the
following benefits during the term of employment:
(a) participation in medical, dental, hospitalization,
disability and life insurance benefit plans made available by the Company to its
senior executives and Executive also shall be eligible to participate in
existing retirement or pension plans offered by the Company to its senior
executives, subject in each case to the terms and requirements of each such plan
or program;
(b) reimbursement for country club dues at one country club;
(c) usage of a Company-furnished 1998 Audi A8 and
reimbursement for non-routine maintenance costs;
(d) due to the differences in education programs in the United
States as compared with Ireland, educational allowances of (i) $12,000 per
school year commencing in September 1997 for one of Executive's children for a
period of five (5) years, and (ii) $12,000 per school year commencing September
1998 for a second child for a period of three (3) years. In addition, the
Company shall make additional payments on an after-tax basis to Executive equal
to Executive's actual federal, state and local tax liability resulting from such
educational allowances. For purposes hereof, after-tax basis shall mean with
respect to any payment to be received or deemed to be received by Executive, the
amount of such payment (the "Base Payment") supplemented by a further payment
(the "Additional Payment") to Executive so that the sum of the Base Payment plus
the Additional Payment shall, after deducting all taxes imposed on such
Executive as a result of the receipt or accrual of the Base Payment and such
Additional Payment, be equal to the Base Payment. In the event the Executive's
employment is terminated pursuant to Section 6(a) or (b), the Company shall
continue to provide the benefits
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under this paragraph (d) for the balance of the term provided that the
Executive's children continue their education in the United States;
(e) the Company agrees to loan Executive the sum of $550,000
to be applied towards the purchase of a residence. The term of such loan shall
be for a period ending December 31, 2000 subject to automatic extension if the
Company and the Executive extend this Employment Agreement (or enter into a new
Employment Agreement) in which event the term of the loan shall be extended
through the term of employment; provided that the loan shall be accelerated in
the event that (i) Executive resigns voluntarily or is terminated pursuant to
the provisions of Section 6(c) or (ii) Executive sells the residence . The loan
shall be interest-free, evidenced by a promissory note and shall be secured by a
second mortgage on the residence;
(f) payment of an annual financial and tax-planning allowance
in an amount up to 1% of base salary; and
(g) in the event that the Executive incurs liability as a
result of the vesting of performance shares in January 1996 and April 1997, the
Company shall make equitable provision in order to provide the Executive with
benefits on an equivalent basis as the Company's other senior executives, in
particular in the form of a loan to discharge the liability and provision for
the forgiveness of the indebtedness.
4. Confidential Information. Except as specifically permitted
by this Section 4, and except as required in the course of his employment with
the Company, while in the employ of the Company or thereafter, Executive will
not communicate or divulge to or use for the benefit of himself or any other
person, firm, association, or corporation without the prior written consent of
the Company, any Confidential Information (as defined herein) owned, or
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used by the Company or any of its affiliates that may be communicated to,
acquired by or learned of by Executive in the course of, or as a result of,
Executive's employment with the Company or any of its affiliates. All
Confidential Information relating to the business of the Company or any of its
affiliates which Executive shall use or prepare or come into contact with shall
become and remain the sole property of the Company or its affiliates.
"Confidential Information" means information not generally
known about the Company and its affiliates, services and products, whether
written or not, including information relating to research, development,
purchasing, marketing plans, computer software or programs, any copyrightable
material, trade secrets and proprietary information, including, but not limited
to, customer lists.
Executive may disclose Confidential Information to the extent
it (i) becomes part of the public domain otherwise than as a result of
Executive's breach hereof or (ii) is required to be disclosed by law. If
Executive is required by applicable law or regulation or by legal process to
disclose any Confidential Information, Executive will provide the Company with
prompt notice thereof so as to enable the Company to seek an appropriate
protective order.
Upon request by the Company, Executive agrees to deliver to
the Company at the termination of Executive's employment, or at such other times
as the Company may request, all memoranda, notes, plans, records, reports and
other documents (and all copies thereof) containing Confidential Information
that Executive may then possess or have under his control.
5. Assignment of Patents and Copyrights. Executive shall
assign to the Company all inventions and improvements within the existing or
contemplated scope of the Company's business made by Executive while in the
Company's employ, together with any such
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patents or copyrights as may be obtained thereon, both domestic and foreign.
Upon request by the Company and at the Company's expense, Executive will at any
time during his employment with the Company and after termination regardless of
the reason therefor, execute all proper papers for use in applying for,
obtaining and maintaining such domestic and foreign patents and/or copyrights as
the Company may desire, and will execute and deliver all proper assignments
therefor.
6. Termination.
(a) This Agreement shall terminate upon Executive's
death.
(b) The Company may terminate Executive's employment
hereunder upon fifteen (15) days' written notice if in the opinion of the Board
of Directors, Executive's physical or mental disability has continued or is
expected to continue for one hundred and eighty (180) consecutive days and as a
result thereof, Executive will be unable to continue the proper performance of
his duties hereunder. For the purpose of determining disability, Executive
agrees to submit to such reasonable physical and mental examinations, if any, as
the Board of Directors may request and hereby authorizes the examining person to
disclose his findings to the Board of Directors of the Company.
(c) The Company may terminate Executive's employment
hereunder "for cause" (as hereinafter defined). If Executive's employment is
terminated for cause, Executive's salary and all other rights not then vested
under this Agreement shall terminate upon written notice of termination being
given to Executive. As used herein, the term "for cause" means the occurrence of
any of the following:
(i) Executive having willfully and continually
failed to perform substantially his duties with the Company
(other than such failure
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resulting from incapacity due to physical or mental illness,
death or disability) after a written demand for substantial
performance has been delivered to the Executive by the Board
or the President of the Company which specifically identifies
the manner in which the Executive is not substantially
performing his duties; or (ii) Executive having willfully
engaged in conduct which is materially demonstrably injurious
to the Company. For purposes of this section, no act, or
failure to act, on the part of the Executive shall be
considered "willful" unless done, or omitted to be done, by
the Executive in bad faith and without reasonable belief that
such action or omission was in, or not opposed to, the best
interests of the Company. Any act or failure to act based upon
authority given pursuant to a resolution duly adopted by the
Board or based upon the advice of counsel to the Company shall
be conclusively presumed to be done or omitted to be done by
the Executive in good faith and in the best interests of the
Company. Notwithstanding the foregoing, the Executive shall
not be deemed to have been terminated for cause unless and
until there shall have been delivered to the Executive a copy
of a written resolution duly adopted by the affirmative vote
of not less than three-quarters (3/4) of the entire membership
of the Board at a meeting called and held for that purpose
after reasonable notice to and opportunity for the Executive
and the executive's counsel to be heard by the Board, finding
that in the good faith opinion of the Board the Executive was
guilty of the conduct set forth above in (i) or (ii) and
specifying the particulars thereof in detail.
7. Additional Remedies. Executive recognizes that irreparable
injury will result to the Company and to its business and properties in the
event of any breach by Executive of the non-compete or non-solicitation
provisions of Section 1, the confidentiality provisions of Section 4 or the
assignment provisions of Section 5 and that Executive's continued employment is
predicated on the covenants made by him pursuant to such Sections. In the event
of any breach by Executive of his obligations under said provisions, the Company
shall be entitled, in addition to any other remedies and damages available, to
injunctive relief to restrain any such breach by Executive or by any person or
persons acting for or with Executive in any capacity whatsoever and other
equitable relief.
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8. Successors and Assigns. This Agreement is intended to bind
and inure to the benefit of and be enforceable by Executive and the Company and
their respective legal representatives, successors and assigns. Neither this
Agreement nor any of the duties or obligations hereunder shall be assignable by
Executive.
9. Governing Law; Jurisdiction. This Agreement shall be
interpreted and construed in accordance with the laws of the State of Colorado.
Each of the Company and Executive consents to the jurisdiction of any state or
federal court sitting in Colorado, in any action or proceeding arising out of or
relating to this Agreement.
10 Headings. The paragraph headings used in this Agreement are
for convenience of reference only and shall not constitute a part of this
Agreement for any purpose or in any way affect the interpretation of this
Agreement.
11. Severability. If any provision, paragraph or subparagraph
of this Agreement is adjudged by any court to be void or unenforceable in whole
or in part, this adjudication shall not affect the validity of the remainder of
this Agreement. In addition, to the extent possible, a like valid term which
meets the objective of the void or unenforceable term shall be substituted for
any such void or unenforceable term.
12. Complete Agreement. This document embodies the complete
agreement and understanding among the parties, written or oral, which may have
related to the subject matter hereof in any way and shall not be amended orally,
but only by the mutual agreement of the parties hereto in writing, specifically
referencing this Agreement.
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13. Counterparts. This Agreement may be executed in one or
more separate counterparts, all of which taken together shall constitute one and
the same Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
THE DII GROUP, INC.
By: /s/ Xxxxxx X. Xxxxx
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Title: Chief Financial Officer
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/s/ Xxxxxxx X'Xxxxxxxx
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XXXXXXX X'XXXXXXXX
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