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EXHIBIT 10.1
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 Twenty-Four Thousand Five Hundred
Eighty-Three and 33/100 Dollars ($24,583.33), 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
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described in Sections 2 and 3 hereof shall terminate (except to the extent
previously earned or vested).
(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. Xxxxxx
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Title: CHB/CEO
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/s/ Xxxxxxx X'Xxxxxxxx
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XXXXXXX X'XXXXXXXX
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