EMPLOYMENT AGREEMENT AND INCENTIVE COMPENSATION PLAN
This Employment Agreement and Incentive Compensation Plan ("Agreement")
is made as of the 19th day of September, 1995, between Details, Inc., a
California corporation ("Details"), and XXXXXX X. XXXXX ("Employee") with
respect to the following recitals of facts:
R E C I T A L S
A. Details is an electronics component manufacturer engaged in the
business of quick turn-around production of high quality multilayer printed
circuit boards for production prototype applications and for urgently needed
assembly operations in the electronics industry.
B. Employee is a Certified Public Accountant desiring to commence
employment with Details in the position of Vice President, Finance.
C. Details and Employee desire by this Agreement to provide for the
terms of employment, and a plan of compensation for employee for 36 months of
employment.
NOW THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and conditions hereinafter set forth, the parties agree as follows:
1. EMPLOYMENT OF EMPLOYEE. On and subject to the terms and conditions
hereinafter set forth, Details hereby offers to Employee and Employee hereby
accepts employment with Details, Inc.
2. TERM. This Agreement shall cover the term commencing on November 13,
1995 and ending on October 31, 1998.
3. COMPENSATION. The compensation payable to Employee under this
Agreement during the term hereof shall be as follows:
A. BASE SALARY. The Base Salary for each year of the term shall
be the applicable amount set forth below, payable in weekly installments:
YEAR BASE SALARY
11-1-95 - 10-31-96 $240,000
11-1-96 - 10-31-97 $252,000
11-1-97 - 10-31-98 $265,000
B. ADDITIONAL COMPENSATION. Employee shall be entitled to
Additional Compensation in each month of employment, equal to 1% of the amount
by which the actual Earnings Before Income Tax (being all income less all
expenses except federal income tax, as reflected on Details normal statements of
income) during such month exceeds the following minimum levels:
MINIMUM MONTHLY EARNINGS
MONTHS BEFORE INCOME TAX
------ ------------------------
November, 1995 through December, 1995 $2,200,000
January, 1996 through October, 1996 $2,200,000
November 1996 through October, 1997 $2,500,000
November 1997 through October, 1998 $2,800,000
C. Employee shall be paid Additional Compensation on a quarterly
basis, and subject to the usual deductions.
D. For purposes of determining the Additional Compensation in
each month, the Earnings Before Income Tax actually achieved in such month shall
be adjusted as follows:
(i) In each Month in which the Minimum Monthly Before
Income Tax is not achieved ("Deficient Month"), the deficiency shall be offset
against the amount by which the Earnings Before Income Tax actually achieved in
each subsequent month exceeds the applicable Minimum Monthly Earnings Before
Income Taxes for such subsequent month, until the deficiency arising from the
Deficient Month is fully offset.
(ii) In the event that long term indebtedness of Details
increases in connection with a sale of a majority of the outstanding stock of
Details, there shall be added back to Earnings Before Income Taxes actually
achieved: (a) an amount equal to the interest paid in such month on the amount
of such debt incurred in a contemplated transaction with Chase Manhattan Capital
Corporation, if consumated, exceeding any amounts therein received by Details
to: (1) payoff then existing long term
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indebtedness, and (2) provide equipment financing or working capital, and (b) an
amount equal to the goodwill amortized as expense during such month, to the
extent such amortization is required by generally accepted accounting
principles.
E. In addition to the foregoing, the Board of Directors, may, in
its sole and exclusive discretion, grant an additional bonus to Employee.
4. GENERAL OBLIGATIONS OF EMPLOYEE. During the term hereof, employee
shall:
A. Devote his full employment energies, interest, abilities, time
and attention to the performance of his obligations hereunder, and shall not,
without the written consent of the Chairman and Chief Executive Officer of
Details, render any service of any kind to a third party for compensation.
B. Not engage in any activity which conflicts with or interferes
with the performance of his duties hereunder, whether or not for compensation.
C. Provide his exclusive loyalty to Details, with a view toward
maintaining the highest quality standards, improving profitability through cost
controls, increasing revenues consistent with holding margins, assuring
compliance with applicable laws, sustaining employee morale, and assuring
equipment is maintained in its best operating condition.
5. SPECIFIC DUTIES OF EMPLOYEE. Subject at all times to the direction
of the Board of Directors and the approval of the Chairman and Chief Executive
Officer, employee shall:
A. Establish, implement and oversee Details' accounting activities
and accounting personnel, to assure prompt, accurate and complete reporting of
all material information regarding fiscal activities and operations of Details
to the Board of Directors of Details.
B. Maintain full and adequate controls over corporate commitments
and expenditures to assure continuous fiscal integrity and profitability.
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C. Investigate and report irregularities as required from time to
time to assure full compliance with law, first quality effort and results by
personnel, and proper internal reporting and communications.
D. Represent and continuously promote the interests of Details in
fiscal matters with lenders, tax authorities, outside accountants, department
personnel, and major customers and vendors.
E. Establish and maintain budgets and variance reporting for all
operations of Details, including proper budgeting for current operations and
anticipated capital and other expenditures, maintenance and improvement of
product margins, full product quality assurance and proper operational systems
(including ISO 9000 standards compliance).
F. Coordinate with other officers and subordinate executives,
managers and supervisors to assure smooth implementation of accounting controls
and reporting.
G. Establish and implement computerized accounting and management
information systems, tax accounting and reporting systems, risk management
controls and insurance analysis, and personnel compensation accounting and
payments including incentive compensation benefits.
H. Perform such other tasks and functions as directed by the
President and the Chairman and Chief Executive Officer of Details.
6. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Employee now possesses
and will obtain "Confidential Information", which is all financial and other
information disclosed or obtained in connection with employment with Details,
which has been created, discovered, developed or otherwise become known to
Details, its customers, or suppliers, and/or in which proprietary rights have
been assigned or otherwise provided to Details, and (ii) which has commercial
value in the businesses in which Details and its customers and suppliers are
engaged. Employee agrees that all Confidential Information is a valuable
property and asset of Details, and Details shall be the sole owner of all
patents, trademarks, copyrights, trade secrets, and other proprietary rights
arising therefrom. Employee shall at all times, during and after employment
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maintain the confidentiality of Confidential Information,
and not use or disclose same other than (a) for a purpose
connected with Employee's obligations to Details under
this agreement, or (b) with the written consent of the
Chairman and Chief Executive Officer of Details.
A. The following are examples of Confidential
Information, but not an exclusive listing: information
relating to trade secrets, processes, customer lists,
structures, formulas, data, know-how, techniques,
marketing plans, manufacturing methods, strategies,
forecasts, products, equipment utilization, software and
financial data.
B. Notwithstanding the foregoing,
Confidential Information does not include information (a)
generally available to the public, (b) contained in an
issued patent, or (c) generally known to persons in the
printed circuit board business.
7. DISCHARGE FOR CAUSE. Employee may be
discharged for any of the following causes, which shall be
effective upon written notice thereof to employee. Upon
any such discharge, (i) Employee's entitlement to benefits
(subject only to legal requirements of general application
for continuation of benefits, such as COBRA) and other
compensation under this agreement shall cease, and (ii)
Employee shall return all property of Details within 24
hours following such termination, including without
limitation all Confidential Information and Proprietary
Rights.
A. BREACH. Any failure or refusal to comply in
good faith with the obligations of employee under this
agreement, with a view toward providing the maximum
benefits available to Details hereunder, including without
limitation, refusal to work or resignation.
B. INCAPACITY. The inability to perform the
obligations of employee under this agreement due to death,
injury, disease, mental illness or other disability, which
shall continue for a period of 30 days, or which, in the
aggregate shall involve 60 days in the preceding twelve
month period.
C. DISHONESTY. The commission of a crime
punishable by imprisonment in the state prison (whether or
not actual criminal prosecution and imprisonment results),
or perpetration of, or attempt to perpetrate, any fraud,
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embezzlement or theft with respect to Details, or any or its shareholders,
directors, personnel, vendors or customers.
D. MISCONDUCT. As involves personnel, vendors, and customers of
Details, (i) discrimination based on age, gender, race, national origin, or
religion; and (ii) sexual harassment.
9. VACATIONS AND BENEFITS. Employee shall be entitled to benefits
generally available to Details full time personnel, such as participation in
health care plans and similar benefits plans, including vacation and sick pay
entitlements for salaried employees. As an additional benefit, Details shall
pay, while Employee is employed by Details, an amount not exceeding $500
monthly, for up to 36 months, with respect to Employee's existing vehicle lease
obligation.
10. INUREMENT. This agreement shall be binding upon and inure to the
benefit of the parties, and their successors, assigns and personal
representatives.
11. ASSIGNMENT. Employee may not assign this agreement or any interest
therein. Details may assign this agreement to any entity which shall assume all
of the obligations of Details hereunder, provided that either (i) Details shall
own a majority of the voting securities of such entity, or (ii) such entity has
purchased a majority of the assets of Details. Upon any such assignment,
Details shall be released from all obligations hereunder.
12. INTEGRATION. This agreement contains the entire understanding of the
parties relating to the subject matter hereof, and shall supersede all other
written and oral prior and contemporaneous promises and agreements.
13. APPLICABLE LAW. This agreement is made in the State of California,
and California law shall govern its interpretation.
14. ENFORCEMENT. Should legal action between the parties be necessary or
appropriate to enforce any of the provisions hereof, the prevailing party shall
be entitled to recover reasonable attorneys fees, whether or not such action
proceeds to a final judgment.
15. SEVERABILITY. If any of the provisions of this agreement, as applied
to a particular party or
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circumstance, shall be found by a court with proper jurisdiction to be void or
unenforceable, such finding shall not affect the provision in any other
application, or the validity or enforceability of other provisions hereof.
16. AMENDMENTS. Any amendment to this agreement must be in writing and
signed by each of the parties to be valid, and any purported amendment not
meeting the requirements of this section shall be without force or effect.
IN WITNESS WHEREOF, this agreement is executed as of the day and year
first above written.
EMPLOYEE: DETAILS, INC.
/s/ Xxxxxx X. Xxxxx by /s/ Xxxxx X. Xxxxxxx, CEO
------------------- --------------------------
XXXXXX X. XXXXX XXXXX X. XXXXXXX,
CHIEF EXECUTIVE OFFICER
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FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT AND INCENTIVE
COMPENSATION PLAN
This amendment is made as of December 12, 1996 to the Employment
Agreement and Incentive Compensation Plan ("Agreement") dated as of September
19, 1995, between Details, Inc., a California corporation ("Details"), and
Xxxxxx X. Xxxxx. ("Employee").
NOW THEREFORE, in consideration of $1.00 paid to Employee, receipt of
which is hereby acknowledged, the Agreement is hereby amended in the following
particulars only, and except as so amended, shall continue in full force and
effect.
1. Paragraph 3B. of the Agreement is hereby deleted and replaced with
the following:
ADDITIONAL COMPENSATION. Employee shall be entitled to Additional
Compensation in each month of employment, equal to 1.5% of the amount by which
the actual Earnings Before Income Tax (being all income less all expenses except
federal and state income taxes, as reflected on Details normal statements of
income) during such month exceeds the following minimum levels:
MINIMUM MONTHLY EARNINGS
MONTHS BEFORE INCOME TAXES
------ -------------------
January, 1996 through December, 1996 $2,100,000
January, 1997 through December, 1997 $2,100,000
January, 1998 through October, 1998 $2,400,000
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
day and year first above written.
DETAILS, INC. EMPLOYEE
by /s/ Xxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxx
------------------------------ ------------------------------
Xxxxx X. Xxxxxxx Xxxxxx X. Xxxxx
Chairman and Chief
Executive Officer
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AMENDMENT NO. 1
TO
EMPLOYMENT AGREEMENT AND INCENTIVE COMPENSATION PLAN
This Amendment No. 1 To The Employment Agreement And Incentive Compensation
Plan is made as of October 28, 1997, between Details, Inc., a California
corporation ("Details"), and Xxxxxx X. Xxxxx ("Employee") with respect to the
following recitals of facts:
RECITALS
A. Employee is presently an employee of Details.
B. Details and Employee entered into an Employment Agreement and Incentive
Compensation Plan on September 19, 1997 (the "Agreement") which provided the
terms of employment and a plan of compensation for Employee. Capitalized terms
used herein shall have the meanings set forth in the Agreement, unless otherwise
provided herein.
C. On October 28, 1997, Details entered into an Amended and Restated
Recapitalization Agreement (the "Recapitalization Agreement") pursuant to which
it will exchange its capital stock for certain consideration on the closing date
(the "Closing Date"). Employee is a stockholder and optionholder of Details and
will derive substantial personal economic benefit from the consummation of the
transaction contemplated by the Recapitalization Agreement.
D. The Recapitalization Agreement contemplates that the parties hereto
execute this Agreement.
E. Details and Employee desire by this amendment to provide for the
continued employment and to extend the term of the employment of the Employee on
the terms contained in the Agreement as amended hereby.
NOW THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and conditions hereinafter set forth, the parties agree as follows:
1. CONTINUED EMPLOYMENT OF EMPLOYEE. On and subject to the terms and
conditions set forth in the Agreement as amended hereby (the "Amended
Agreement"), Details hereby offers to Employee and Employee hereby
accepts continued employment with Details as Vice President, Finance.
In the event of a conflict between any provision of this Amended
Agreement and the Agreement, the provisions of the Amended Agreement
shall control.
2. TERM. This Amended Agreement shall cover the term commencing on the
Closing Date and ending three calendar years from the Closing Date (the
"Expiration Date").
3. COMPENSATION. The Base Salary for fiscal years 1997, 1998 and 1999
shall be $252,000, $265,000 and $275,000, respectively. The Base Salary
for each year on or after January 1, 2000 covered by the Amended
Agreement will be established by Details at a level that is at least as
high as the Base Salary for 1999.
The Additional Compensation shall be calculated according to the table
set forth on Schedule 1 hereto and shall be based on the following
EBITDA targets ("Target EBITDA")(rather than Gross Profit or any other
measuring device or indicator).
Target
Fiscal Year EBITDA
----------- ------
(In Millions)
1997 $33,396
1998 $37,571
1999 $42,267
For purposes of this Agreement, EBITDA is defined in accordance with
the definition of Consolidated EBITDA in the Senior Credit Agreement
dated October 27, 1997.
After the preparation and finalization of the financial statements
reflecting the first six months of each fiscal year (the "Six Month
Financials"), Details shall pay the Employee an advance on the
Additional Compensation, if any, payable to the Employee for such
fiscal year (the "Advance").
The Advance shall equal seventy-five percent (75%) of fifty percent
(50%) of the Target Additional Compensation (i.e., the Additional
Compensation that Details expects to pay Employee at fiscal year end
based on Detail's good faith estimate of Details' EBITDA for such
fiscal year).
If the Additional Compensation for the fiscal year is less than the
amount of the Advance paid to the Employee in such fiscal year, then
the amount of Additional Compensation to which the Employee would
otherwise be entitled in subsequent periods shall first be applied to
eliminate such shortfall.
4. DISCHARGE FOR CAUSE. The parties hereto hereby reaffirm the section of
the Agreement entitled "Discharge for Cause." The parties hereto
further agree
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that the following causes shall constitute the only causes for which
the Employee may be discharged.
a. BREACH. Any failure or refusal to comply in good faith with
the obligations of the Employee under the Amended Agreement, which
failure shall, in the sole determination of the Board of Directors,
constitute gross neglect by the Employee or result from the willful
misconduct of the Employee.
b. DISHONESTY. As determined by the Board of Directors based upon
substantial evidence, any of the following whether or not actual
criminal prosecution or conviction arises therefrom: (a) perpetration
of, or attempt to perpetrate, any fraud, embezzlement or theft with
respect to Details, or any of its subsidiaries, shareholders,
directors, personnel, vendors or customers, or (b) conviction of any
felony, or of any misdemeanor originally charged as a felony, whether
or not imprisonment results.
5. LIFE INSURANCE. Details agrees to use its reasonable efforts to
procure a term life insurance policy in the amount of one million
dollars ($1,000,000) on the life of the Employee, provided that the
Employee presents typical underwriting risks for a non-smoker in good
health who is Employee's age and that the Employee cooperates in
Details' efforts to procure such policy. Details will pay the premiums
for such policy for the period beginning on the date such policy is
procured and ending on the earlier of (i) the Expiration Date or (ii)
the date Employee ceases to be an employee of Details.
6. DISABILITY. Details may terminate the Employee's employment upon
notice to the Employee in the event the Employee becomes disabled
during his employment hereunder through any illness, injury, accident
or condition of either a physical or psychological nature and, as a
result, is unable to perform substantially all of his duties and
responsibilities under the Amended Agreement for a period of ninety
(90) consecutive calendar days or for an aggregate of one hundred
eighty (180) days during any period of three hundred sixty-five (365)
consecutive calendar days. In the event of a termination pursuant to
the preceding sentence, Details shall continue to pay to the Employee
the Base Salary payable to the Employee pursuant to the Amended
Agreement for a period of up to one calendar year from the date of
such disability, such Base Salary to be payable in such installments
as the Base Salary is paid him under the terms of the Amended
Agreement, provided however if the Employee is eligible to receive
disability payments under a long-term disability plan adopted by
Details, such payments of the Employee's Base Salary shall cease.
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7. STOCK AWARD. Details will award Employee 676.7889 shares of Class A-5
Common Stock on the Closing Date, which shares will be duly
authorized, fully-paid and non-assessable.
8. BONUS. In addition to any other compensation to which Employee is
entitled, on the date on which Employee ceases to be the beneficial
owner (as defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended) of any shares of capital stock of Details, Details
will pay to Employee, whether or not he continues to be an employee at
such time, an amount equal to $155,197.52. The provisions of this
Section 9 shall survive the Expiration Date.
9. ENFORCEMENT. In the event that any provision of this Amended Agreement
shall be determined by any court of competent jurisdiction to be
unenforceable by reason of its being extended over too great a time,
too large a geographic area or too great a range of activities, such
provision shall be deemed to be modified to permit its enforcement to
the maximum extent permitted by law.
[Remainder of this page intentionally left blank]
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Employment Agreement
October 28, 1997
IN WITNESS WHEREOF, this agreement is executed as of the day and year first
above written.
EMPLOYEE: DETAILS, INC.
/s/ Xxxxxx X. Xxxxx By /s/ Xxxxx XxXxxxxx
---------------------------------- ------------------------------------
Xxxxxx X. Xxxxx Xxxxx XxXxxxxx
SCHEDULE 1
----------
to Amendment No. 1
to Employment Agreement and
Incentive Compensation Plan
The Additional Compensation for each year shall be determined by the
following methodology. EBITDA for each year shall be divided by the Target
EBITDA for that year. The resulting fraction (expressed as a percentage) is the
"EBITDA Percentage". The amount of the Additional Compensation for each year is
a function of the EBITDA Percentage for that year as set forth on the table
below:
--------------------------------------------------------------------------------
If the EBITDA The Additional Compensation
Percentage is: in each year shall equal:
--------------------------------------------------------------------------------
1997 1998 1999
----------------------------------------------
Below 90% -0- -0- -0-
--------------------------------------------------------------------------------
Between 90% and below 95% $3,350 $66,667 $66,667
--------------------------------------------------------------------------------
95% $6,700 $133,333 $133,333
--------------------------------------------------------------------------------
100% $10,050 $200,000 $200,000
--------------------------------------------------------------------------------
105% $11,558 $230,000 $230,000
--------------------------------------------------------------------------------
110% $13,065 $260,000 $260,000
--------------------------------------------------------------------------------
115% $14,573 $290,000 $290,000
--------------------------------------------------------------------------------
120% $16,080 $320,000 $320,000
--------------------------------------------------------------------------------
For an EBITDA Percentage that exceeds 95%, Additional Compensation will be
determined from the foregoing table by linear interpolation based upon the
actual EBITDA Percentage. For an EBITDA Percentage that exceeds 120%, Additional
Compensation will be determined from the foregoing table by linear
extrapolation.
[Xxxxxx X. Xxxxx]
