EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into effective
as of the 23 rd day of September, 1999 ("Effective Date") by and between
National Manufacturing Technologies, Inc. (formerly Photomatrix, Inc.), a
California corporation ("Company"), and Xxxxxxx X. Xxxxx ("Employee").
WHEREAS, the Company desires to employ Employee and Employee desires to be
employed by the Company upon all the terms and conditions contained in this
Agreement.
NOW THEREFORE, in consideration of the mutual agreement herein contained,
the parties hereto hereby agree as follows:
1. Employment: Subject to the terms and conditions of this Agreement,
the Company hereby employs Employee as President and Chief Executive Officer and
in such capacity Employee shall serve as the Company's chief executive officer
with full authority and responsibility for the general supervision and
management of the Company and its subsidiaries' business. Employee will have
the responsibilities and duties commensurate with the position of President and
Chief Executive Officer of a public company on an on-going basis. Employee
hereby accepts such employment and agrees to perform the services specified
herein, all upon the terms and conditions herein contained. Employee agrees to
perform in good faith and to the best of his ability all services which may be
required of him hereunder, and to be available to render services at all
reasonable times and places in accordance with such reasonable directions,
requests, rules and regulations made by the Company in connection with his
employment. Employee will be reporting directly to the Board of Directors of
the Company.
1.1 Title: Employee title will be President and Chief Executive Officer.
2. Term:
2.1 Initial Term: The term of this Agreement and Employee's employment
hereunder shall commence on Effective date and, subject to earlier termination
as provided in Section 11 hereof, continue for the period of Effective date
through September 30, 2002 ("Employment Period").
2.2 Extension of term: The term of this Agreement shall automatically
be extended, unless not less than six (6) months prior to the expiration
date, the Company shall have delivered written notice to Employee that the
term of this Agreement shall terminate on the expiration date; or Employee,
not less than thirty (30) days prior to the expiration date, elects to
terminate this Agreement by delivering written notice of such desire to
terminate to the Company. The extension period hereunder shall be referred to
herein as an "Extension Period". Said Extension Period shall continue until
the Company delivers written notice to Employee that employment during this
Extension Period shall terminate not less than six (6) months prior to said
termination date; or Employee provides the Company not less than thirty (30)
days written notice of termination of employment during said Extension Period.
3. Compensation:
3.1 Salary: Subject to the other terms of this Agreement, Company shall
pay and Employee shall be entitled to receive from the Company an annual salary
("Base Salary")of not less than $175,000 for services rendered, paid in bi
weekly installments. The payment periods are referred to herein as the "Payment
Periods". The salary due under this Section 3.1 during any Payment Period is
referred to herein as the "Installment Amount".
3.2 Annual Salary Increase: On each anniversary of the effective date of
this Agreement, the Employee shall receive an increase of no less than six (6)
percent of his annual base salary.
3.3 Bonus: Employee shall be entitled to the following bonus, payable in
cash within ten (10) days after the end of the quarter:
Target Bonus: A target bonus equal to between zero and two hundred percent
(0-200%) of Employee's then existing base salary will be considered and
determined by the Board of Directors and its Compensation Committee. That bonus
will be considered semi-annually (i.e., each 6 months) based upon the Company's
achievement of the performance criteria set forth in the business plan, and
other performance criteria established by the Board of Directors and its
Compensation Committee.
3.4 Equity: Employee will be granted a stock option to purchase shares of
the Company's common stock (the "Option"). On the date of this Agreement, and on
each anniversary of such date for the remainder of the initial and extension
terms, the Company shall grant to Employee an option to acquire such number of
shares of common stock of Photomatrix equal to the quotient of $30,000 divided
by 100% the fair market value of the stock on the date of the grant. The
exercise price per share shall be the fair market value of the stock on the date
of the grant. The option shall be exercisable as of the date of the grant. The
option shall have other terms and conditions the same as those contained in
agreements entered into pursuant to the Company's 1998 Stock Option Plan ("1998
Plan") and as are not inconsistent with the foregoing provisions.
3.5 Automobile: An automobile allowance of $750 per month shall be
provided to the Employee. Expenses related to the use of such automobile ,
whether or not in the course of Company business, shall be the sole
responsibility of the Employee; provided, however, a car phone shall be
provided to the Employee and he shall be reimbursed upon substantiation in
accordance with the Company's policy for variable costs incurred in connection
with the use of the car phone on Company business.
3.6 Reimbursement of Expenses: During the Term of the Employment
Period and the Extension Period, if any, Employee shall be authorized to incur
reasonable and necessary expenses according to the Company's policy for the
purpose of promoting the business of the Company, including, without
limitation, expenses for entertainment, travel and similar items, provided
such expenses are reasonable and have a business purpose. The company shall
reimburse Employee for such expenses upon the presentment by Employee of an
itemized accounting of such expenses, including receipts where required by
federal tax regulations. Such accounting shall be promptly forwarded to the
company.
4. Additional Benefits: Throughout the term of the Initial Term and any
Extension Term, if any, Employee shall be entitled to receive executive benefits
that are provided to executive officers of the Company (i) such benefits or
rights as may be provided under any Employee benefit plan approved by the
Company from time to time, and ( ii ) such other benefits and perquisites of
employment as a generally made available to other members of management of the
Company, including, without limitations, at no cost to the Employee,
participation in life, medical, disability, retirement and dental insurance
plans, and participation in equity incentive and stock plans of the Company.
5. Vacation, Sick Leave and Holidays: Employee shall have the right during
each year of the Initial and Extension Terms, of this Agreement to take an
aggregate of twenty one (21) business days of vacation with pay at such time as
may be mutually agreed upon by the Company and Employee. In addition, Employee
shall be entitled to paid time off for personal illness and for observance of
holidays in accordance with the Company's policy as may exist from time to time.
6. Devotion of Time: During the term of the Employment Period and any
Extension Period, if any, Employee shall devote full time attention and energies
to the Company in order that he may satisfactorily and completely perform his
duties hereunder. Except as may be specifically permitted by the Company,
Employee shall not engage in any other business activity while in the employ of
the Company that would compete or interfere with his obligations to the Company
herein; provided, however, Employee may serve on the Board of Directors of
other companies without the Company's written consent. The foregoing shall not
be construed as preventing Employee from making passive investments in other
businesses and enterprises; provided, however, that such investments will not
require services on the part of Employee which would in any way impair the
performances of his duties under this Agreement and, provided further, that such
other businesses or enterprises are not engaged in any business competitive with
the business of the company as of the time at which such investments made, or
shall the foregoing be construed as requiring the divestiture of any investment
made by Employee prior to the date hereof. The foregoing shall in no way limit
the application of corporate policy generally applicable to employees in
comparable positions.
7. Directors and Officer Liability Insurance: The Company and Employee
understand and agree that it is the mutual intent of the parties that the
Company agrees to use its best effort to obtain directors and officers liability
insurance in a form acceptable to Employee.
7.1 Indemnification: (a) If, after the date of the commencement of
Employee's employment hereunder, the Employee is made a party or is threatened
to be made a party to any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding"), by reason of the fact that he
is or was a director or officer of the Company or is or was serving at the
request of the Company as a director, officer, member, employee or agent of
another corporation or partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether or not the
basis of such Proceeding is an alleged act or failure to act in an official
capacity as a director, officer, member, employee or agent, he shall be
indemnified and held harmless by the company to the fullest extent authorized by
California law, as the same exists or may hereafter be amended, against all
expense, liability and loss (including, without limitation, attorneys' fees,
judgements, fines and amounts paid or to be paid in settlement) reasonably
incurred or suffered by the Employee in connection therewith, including, without
limitation, payment of expenses incurred in defending a Proceeding prior to the
final disposition of such Proceeding (subject to receipt of an undertaking by
the employee to repay such amount if it shall ultimately be determined that the
Employee is not entitled to be indemnified by the Company under California law),
and such indemnification shall continue as to the Employee even if he has ceased
to be a director, officer, member, employee or agent of the Company or other
enterprise and shall inure to the benefit of his heirs, executors and
administrators.
(b) The right of indemnification and the payment of expenses incurred in
defending a Proceeding in advance of its final disposition conferred in this
Section 7.1 shall not be exclusive of any other right that the Employee may have
or hereafter may acquire under any statute, provision of the Certificate of
Incorporation or Bylaws of the Company, agreement, vote of shareholders or
disinterested directors or otherwise.
8. Disclosure to Company Inventions as Sole Property of Company: Employee
agrees promptly to disclose to Company all inventions, ideas, discoveries,
improvements, trade secrets, formulae, techniques, processes, developments,
know-how, writings, computer programs, and other intellectual property
(hereinafter collectively referred to as the "Inventions"), whether or not
patentable or copyrightable and whether or not reduced to practice, conceived,
made or learned by Employee during the period of his employment, whether alone
or jointly with others, which relate to or result form the actual or anticipated
business, work, research, or investigations of Company or which result to any
extent from use of Company's premises, resources, property or facilities.
Employee acknowledges and agrees that all inventions (including all patents
rights of copyright therein) shall be the sole property of Company or such
other person or entity as may be designated by Company, and Employee hereby
assigns and agrees to take all reasonable steps to assign to Company Employee's
entire right and interest in and to all the Inventions provided that any such
assignment or agreement to assign complies with the provisions of Section 2870
of the California Labor Code.
Further, Company or its designee shall be the sole owner of all domestic and
foreign rights pertaining to the Inventions. Employee agrees to assist Company
in every reasonable way (at Company's expense) to obtain , register and enforce
patents and copyrights on the Inventions in any and all countries, and to
execute all documents and do all other things reasonably necessary and
appropriate to vest more fully in Company all right, title, and interest ,
including copyrights and patent rights, in and to the Inventions. Employee's
obligation to assist Company shall compensate Employee at reasonable rate after
such termination for the time actually sent by Employee at Company's request for
such assistance.
9. Key Man Life Insurance: Employee agrees that key man life insurance may
be required by the Company and the Employee will cooperate with Company in
obtaining said insurance.
10. Restrictive Covenants:
10.1 Non-Competition: During the term of the Employment Period and any
Extension Period, if any, Employee shall not, directly or indirectly, carry on
or be engaged or otherwise take part in or render service to any person (other
than the Company, its officers, directors, shareholders, employees, and
affiliates or any subsidiary of the Company or such persons) who or which is
engaged in any business of a type now or hereafter (but during the Employment
Period, and any Extension Period), in competition with the Company. Without
limiting the generality of the foregoing provisions of this Section 10.1,
Employee shall be deemed to be engaged in a particular business if he is an
owner, proprietor, partner, stockholder, officer, employee, independent
contractor , director or joint venture of, or a consultant to, any person who or
which is directly or indirectly engaged in such a business. The restrictions of
this Section 10.0 prohibit ownership in a competitive business shall not apply
to (i) any ownership or interest held by Employee at the time of execution of
this Agreement, (ii) any ownership, directly or indirectly, of not more than
five percent (5%) of any class of equity securities of a corporation, provided
such class of equity security is registered under the securities Exchange Act of
1934, or (iii) any investment in real property (whether made directly or through
the vehicle of partnership, corporation, investment trust or other entity),
provided that no entity in competition with the Company may be a lessee of some
or all of such real property. For the purpose of this Section 10.1, the Business
of the Company shall include only any business involved in the contract
manufacturing business.
10.2 Delivery of Records: Upon demand and/or termination of Employee's
employment with the Company, whichever occurs first, Employee shall deliver to
the Company all papers, documents, writing, books, records, lists of customers
and investors, brochures and other property belonging to the Company or produced
by him or coming to his possession by or through his employment or relating to
the confidential knowledge, information or facts described in Section 10.3
hereof and Employee agrees that all such materials will at all times remain the
property of the Company. The provisions of this Section 10.2 shall survive the
termination of this Agreement.
10.3 Confidentiality: Except in the course of the Company's business,
Employee shall not at any time during or after his employment with the Company,
reveal, divulge or make known to any person, firm or corporation outside
Company, any confidential knowledge or information or any confidential facts
concerning any customers, methods, developments, schedules, lists, plans or
other confidential information, knowledge or facts of or relating to the
business of the Company and will retain all confidential knowledge and
information which he has acquired or which he will acquire during his
employment therewith relating to such customers, method, developments,
schedules, lists or plans and the business of the Company for the sole benefit
of the Company, its successors and assigns, provided, however, that this
restriction shall not apply to any knowledge, information or fact held by or
known to Employee which is generally available from sources other than Employee.
10.4 Specific Performance: Employee acknowledges that a remedy at law for
any breach or attempted breach of Section 10.2 and 10.3 of this Agreement may be
inadequate and agrees that Company shall be entitled to specific performance and
injunctive and other equitable relief in case of any such breach or attempted
breach, and further agrees to waive any requirement for the securing or posting
of any bond in connection with the obtaining of any such injunctive or any
other equitable relief. Nothing herein shall be construed as prohibiting the
Company from pursuing any other remedies available to the Company for such
breach or threatened breach, including recovery of damages from Employee. In the
event the Company brings action to enforce its rights hereunder, Employee shall
pay all the Company's court costs and legal fees and expenses arising out of
such action, and the Company shall pay all of Employee's court costs and legal
fees and expenses arising out of such action if Employee prevails in such
action.
10.5 Reasonableness: In the event any court shall finally hold that the
time of territory or any other provision of this Section 10 constitutes an
unreasonable restriction against Employee, the provisions hereof shall not be
rendered void but shall apply as to such time, territory and other provisions to
such extent as such court may judicially determine or indicate constitutes a
reasonable restriction under the circumstances involved.
11. Termination.:
11.1 Termination by the company or Employee: This Agreement may be
terminated by the Company for any reason at any time during the Initial or
Extension Term , if any, upon six (6) months written notice to the Employee,
provided, however, that unless Employee is terminated "for cause", as set forth
below, or Employee voluntarily terminates this Agreement other than for "good
cause", and except as provided in Sections 11.2 and 11.3 hereof, Employee shall
be entitled to be paid the remaining amounts due under this Employment Agreement
during its Initial Term, or for six (6) months his aggregate salary whichever is
greater, within five (5) business days of Employee's termination. For purposes
of determining Employee's aggregate salary, Employee shall receive payment of
his Base Salary at the highest annual salary level plus any accrued, but unpaid
bonus amounts already earned as of the termination date. The Employee may
terminate this Agreement for any reason whatsoever for other than good cause
upon thirty (30) days written notice to the Company.
Severance: In addition to any amounts otherwise due to Employee, Employee
shall receive sixteen (16) weeks severance pay upon termination of his
employment by the Company for any reason.
In the event, however, that Employee is terminated "for cause", he shall be
entitled to no further compensation beyond the notice period other than the
above stated severance pay (i.e., 16 weeks).
(a) For the purposes of this Agreement, "for cause" shall mean the willful
and continued failure by Employee to substantially perform his duties hereunder
(other than such failure resulting from Employee's incapacity due to physical or
mental illness) after written demand for substantial performance is approved by
the Board of Directors and delivered by the Company that specifically
identifies the manner in which the Company believes Employee has not
substantially performed his duties; or, the conviction of Employee of a felony
involving moral turpitude. For purposes of this Agreement, no act, or failure to
act, on Employee's part shall be considered "willful" unless done, or omitted to
be done, by Employee not in good faith and without reasonable belief that such
action or omission was in the best interest of the Company. Notwithstanding
anything to the contrary in the foregoing, no termination or other action shall
be considered to be for the cause under this Agreement unless (x) Employee first
shall have received notice setting for the reasons for the Company's intention
to terminate or take other action and (y) within (20) days after delivery of
such notice, Employee has not remedied the circumstances constituting the basis
for the proposed "for cause" termination, provided, however, if more than twenty
(20) days are reasonably needed to remedy such circumstances, Employee shall
have the number of additional days as, are reasonable to effectuate such remedy
but in no case greater than thirty (30) additional days and (z) within thirty
(30) days after the expiration of the period during which Executive may remedy
shall such circumstances employee shall have been provided an opportunity to
appear, accompanied by counsel, and be heard before the Board, and the Board
shall have duly adopted by an authorized action of the Board, and provided to
Employee, a resolution finding that in the good faith option of the Board,
Employee was guilty of conduct constituting "cause" as set forth above, and
specifying the particulars thereof in detail.
(b) For purposes of this Agreement , "good reason" shall mean (i) without
Employee's written consent (A) the failure of the Company to vest Employee with
the powers and authority of the Company's President and Chief Executive Officer,
(B) and removal of Employee from or failure to re-elect Employee to such offices
other than for cause or (C) the assignment to Employee of any duties
substantially inconsistent with those customarily performed by a company's
President and Chief Executive Officer, (ii) the failure of the Employee to serve
as member of the Board for any reason other than a voluntary resignation by
Employee or his removal for cause, (iii) the failure of the Company to nominate
Employee for election as a director of the Company at any election unless
Employee declines to stand for election, (iv) the failure by the Company ,
without Employee's written consent, to include Employee as a participant in any
bonus plans as provided in this Agreement, (v) the failure of the Company to
obtain from any successor or assignee of all or substantially all of the
business of the Company, before the succession or assignment takes place, an
agreement to assume and perform this Agreement, (vi) any purported termination
of Employee's employment for cause which is not effected pursuant to a notice
described in this Agreement, or (vii) the failure of the Company to comply with
any material provision of this Agreement.
11.2 Termination by Employee: In the event that Employee voluntarily
terminates this Agreement other than for "good reason", he shall be entitled to
the following compensation:
(a) Employee shall be entitled to the Base salary due under Section 3.1 and
any accrued but unpaid bonus payments and Equity provided for in Section 3.2,
3.3, and 3.4 of this Agreement. The employee shall also in such circumstance be
entitled to sixteen (16) weeks severance pay per the terms of the Employees
existing coverage pursuant to the Company's preexisting severance pay policy
that covers Employee.
11.3 Termination by Death or Disability: The parties hereto mutually
agree that although, pursuant to Section 4, Employee will be offered
participation in any disability plan the company might enter, providing, for the
security of one's family in the event of one's demise or disability ultimately
is a personal responsibility. Accordingly, this Agreement and the Company's
obligations to employee and Employee's heirs hereunder shall terminate upon the
death or disability of Employee, other than to pay unpaid salary and bonus, if
any, that shall have accrued as of the date of said death or disability, subject
to the following provisions:
(a) Death: To the extent that the Company might require the purchase of a
key man life insurance policy under Section 9 above, Company shall make
available to Employee the opportunity to purchase a rider under said policy for
the benefit of Employee's designee(s).
(b) Disability: If and only if Company obtains disability insurance
covering employee, Company agrees to pay to Employee Employee's Base Salary from
the date of Employee's disability until such time as the disability insurance
payments commence, for a period not to exceed three months.
12. Notices: All notices or other communications required or permitted by
this Agreement or by law to be given by any party hereto shall be in writing.
All such notices and communications shall be deemed duly served and given to the
other party when delivered by hand, if personally delivered, when answered back,
if telexed, when receipt is acknowledged, if telecopied; and five (5) calendar
days after mailed, if sent by registered or certified mail with return receipt.
For purposes hereof, notices and other communications hereunder shall be
directed to the parties hereto at the following address:
(a) To the Company:
National Manufacturing Technologies, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
(b) To the Employee:
Xxxxxxx X. Xxxxx
X.X. Xxx 0000
Xxxxxx Xxxxx Xx, XX 00000
Any party hereto may change its address for the purpose of receiving
notices and other communications as herein provided by a written notice given
in the manner aforesaid to the other party or parties hereto.
13. Applicable Law: This Agreement shall, in all respects, be construed,
interpreted and enforced in accordance with and governed by the internal
substantive laws of the State of California applicable to agreements executed
and to be wholly performed within the State of California , without regard to
choice of law rules thereof.
14. Severability: Any provision in this Agreement which is illegal,
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent to such illegality, invalidity or unenforceability
without invalidating the remaining provisions hereof or affecting the legality,
validity or unenforceability of such provision in any other jurisdiction. The
parties hereto agree to negotiate in good faith to replace any illegal, invalid
or unenforceable provision of this Agreement with a legal, valid and enforceable
provision that, to the extent possible, will preserve the economic bargain of
this Agreement, or otherwise to amend this Agreement, including the provision
relating to choice of law, to achieve such result.
15. Modification or Amendment: No amendment, change or modification of
this Agreement shall be valid unless in writing and signed by all the parties
hereto.
16. Successors and Assigns: This Agreement and the rights, interests and
obligations hereunder may not be assigned by Employee. Neither Employee nor his
spouse shall have any right to commute, encumber or dispose of any right to
revive payments hereunder, it being the intention of the parties that such
payment s and the right hereto are non-assignable and non-tranferable. All of
the terms and provisions contained herein shall inure to the benefit of and
shall be binding upon the parties hereto, their respective heirs, personal
representatives, permitted assigns and successors in interest.
17. Time of the Essence: Time of the essence of this Agreement and all of
the terms, provisions, covenants and conditions hereof.
18. Entire Agreement: This document constitutes the entire understanding
and all agreement of the parties with respect to the subject matter of this
Agreement, and any and all prior agreements, understand or representations are
hereby terminated and cancelled in their entirety and are of not further force
or effect.
19. Captions: The captions set forth in this Agreement are for convenience
only and shall not bee considered as part of this agreement or as in any way
limiting or amplifying the terms and provisions hereof.
20. Counterparts: This Agreement may be executed in multiple original
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Company:
National Manufacturing Technologies, Inc.
By: /s/ Xxxx Le
-----------------------------------------
Chairman
Compensation Committee
Employee:
/s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Xxxxxxx X. Xxxxx
