EXHIBIT 10.38
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of December 20, 2001 by and between
Manufacturers' Services Limited, a Delaware corporation (the "COMPANY"), and
Xxxxxx X. Xxxxxxxx ("EXECUTIVE").
W I T N E S S E T H :
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WHEREAS, the Company and Executive wish to enter into an employment
agreement whereby Executive will be employed by the Company in accordance with
the terms and conditions stated below.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement and good and valuable consideration, the receipt of
which are hereby acknowledged, the parties hereby agree as follows:
1. GENERALLY.
(a) AGREEMENT TO EMPLOY. UPON THE TERMS AND SUBJECT TO THE
CONDITIONS OF THIS AGREEMENT, THE COMPANY HEREBY EMPLOYS EXECUTIVE AND
EXECUTIVE HEREBY ACCEPTS EMPLOYMENT WITH THE COMPANY.
(b) TERM OF EMPLOYMENT. EXCEPT AS OTHERWISE PROVIDED IN
SECTION 5, THE COMPANY SHALL EMPLOY EXECUTIVE FOR THE PERIOD COMMENCING
ON JANUARY 7, 2002 OR SOONER (THE "Commencement Date") AND ENDING ON
THE THIRD ANNIVERSARY OF THE COMMENCEMENT DATE (THE "Initial Term");
PROVIDED THAT EXECUTIVE'S EMPLOYMENT SHALL THEREAFTER BE AUTOMATICALLY
EXTENDED, UPON THE TERMS AND CONDITIONS OF THIS AGREEMENT, FOR
ADDITIONAL PERIODS OF ONE YEAR. NOTWITHSTANDING THE FOREGOING, THIS
AGREEMENT MAY BE TERMINATED BY EITHER PARTY BY GIVING WRITTEN NOTICE TO
THE NON-TERMINATING PARTY, AT LEAST 30 DAYS PRIOR TO THE EXPIRATION OF
THE INITIAL TERM OR ANY SUBSEQUENT EXTENDED TERM OF SUCH PARTY'S
INTENTION NOT TO RENEW THIS AGREEMENT. THE PERIOD DURING WHICH
EXECUTIVE IS EMPLOYED PURSUANT TO THIS AGREEMENT SHALL BE REFERRED TO
AS THE "Employment Period". THE PARTIES ACKNOWLEDGE THAT THIS AGREEMENT
IS EFFECTIVE AND ENFORCEABLE COMMENCING AS OF THE DATE OF THIS
AGREEMENT, NOTWITHSTANDING THE COMMENCEMENT DATE.
(c) PLACE OF WORK. EXECUTIVE SHALL CARRY OUT HIS DUTIES UNDER
THIS AGREEMENT IN CONCORD, MASSACHUSETTS AND SUCH OTHER PLACE IN ANY
PART OF THE WORLD AS SHALL FROM TIME TO TIME BE REASONABLY REQUIRED IN
THE PERFORMANCE OF HIS DUTIES UNDER THIS AGREEMENT. EXECUTIVE'S
PRINCIPAL WORKPLACE LOCATION SHALL BE CONCORD, MASSACHUSETTS.
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2. POSITION, DUTIES AND RESPONSIBILITIES.
(a) GENERALLY. DURING THE EMPLOYMENT PERIOD, EXECUTIVE SHALL
SERVE AS PRESIDENT AND CHIEF EXECUTIVE OFFICER OF THE COMPANY,
REPORTING TO THE BOARD OF DIRECTORS OF THE COMPANY (THE "Board"), WITH
THE DAY-TO-DAY SUPERVISION OF, CONTROL OVER AND RESPONSIBILITY
REGARDING THE COMPANY AND ITS BUSINESS AND AFFAIRS CONSISTENT WITH SUCH
POSITION. IN ADDITION, EXECUTIVE SHALL HAVE SUCH OTHER DUTIES AND
RESPONSIBILITIES AS THE BOARD MAY ASSIGN (INCLUDING SERVING IN SUCH
OTHER POSITION OR POSITIONS WITH THE COMPANY AND ITS AFFILIATES AS THE
BOARD SHALL FROM TIME TO TIME SPECIFY); PROVIDED THAT SUCH DUTIES AND
RESPONSIBILITIES ARE CONSISTENT WITH EXECUTIVE'S POSITION.
(b) DIRECTORSHIP. WITHIN 30 DAYS OF THE COMMENCEMENT DATE, THE
COMPANY SHALL ELECT EXECUTIVE TO SERVE AS A MEMBER OF THE BOARD. AT
EACH MEETING OF SHAREHOLDERS OF THE COMPANY DURING THE EMPLOYMENT
PERIOD AT WHICH EXECUTIVE MAY BE ELECTED TO SERVE AS A MEMBER OF THE
BOARD, THE COMPANY SHALL NOMINATE OR RECOMMEND FOR ELECTION EXECUTIVE
AS A MEMBER OF THE BOARD.
(c) NATURE OF SERVICE. EXECUTIVE SHALL DEVOTE HIS BEST EFFORTS
AND HIS FULL TIME AND ATTENTION TO THE BUSINESS AND AFFAIRS OF THE
COMPANY, EXCEPT FOR (i) TIME SPENT IN MANAGING HIS PERSONAL, FINANCIAL
AND LEGAL AFFAIRS AND SERVING ON CORPORATE, CIVIC OR CHARITABLE BOARDS
OR COMMITTEES, IN EACH CASE ONLY IF AND TO THE EXTENT NOT MATERIALLY
INTERFERING WITH EXECUTIVE'S PERFORMANCE OF THIS AGREEMENT (INCLUDING,
WITHOUT LIMITATION, SECTION 6) AND (ii) PERIODS OF VACATION OR OTHER
LEAVE TO WHICH HE IS ENTITLED. EXCEPT AS PROVIDED ABOVE, EXECUTIVE WILL
NOT, WITHOUT PRIOR WRITTEN CONSENT OF THE BOARD, RENDER ANY MATERIAL
SERVICES TO ANY OTHER BUSINESS CONCERN UNRELATED TO THE COMPANY,
IRRESPECTIVE OF WHETHER OR NOT SUCH CONCERN COMPETES WITH THE COMPANY
OR ITS AFFILIATES. EXECUTIVE SHALL PERFORM HIS DUTIES AND
RESPONSIBILITIES TO THE BEST OF HIS ABILITIES IN A DILIGENT,
TRUSTWORTHY, BUSINESSLIKE AND EFFICIENT MANNER TO THE SATISFACTION OF
THE BOARD.
3. COMPENSATION.
(a) BASE SALARY. DURING THE EMPLOYMENT PERIOD, THE COMPANY
SHALL PAY EXECUTIVE A BASE SALARY (THE "Base Salary") AT THE ANNUAL
RATE OF $600,000 OR SUCH HIGHER RATE AS THE BOARD OR THE COMPENSATION
COMMITTEE OF THE BOARD MAY DESIGNATE FROM TIME TO TIME, WHICH BASE
SALARY SHALL BE PAYABLE IN REGULAR INSTALLMENTS IN ACCORDANCE WITH THE
COMPANY'S GENERAL PAYROLL PRACTICES.
(b) ANNUAL BONUS OPPORTUNITY. FOLLOWING THE END OF EACH FISCAL
YEAR OF THE COMPANY DURING THE EMPLOYMENT PERIOD, THE COMPANY MAY AWARD
EXECUTIVE A BONUS BASED UPON THE ACTUAL PERFORMANCE OF THE COMPANY
VIS-A-VIS A BUSINESS PLAN RELATING TO THE COMPANY (THE "Annual Bonus"),
AS DETERMINED IN THE SOLE DISCRETION OF THE BOARD. NOTWITHSTANDING THE
FOREGOING, THE TARGET OPPORTUNITY FOR SUCH ANNUAL BONUS SHALL BE AN
AMOUNT EQUAL TO 100% OF BASE SALARY (PROVIDED, HOWEVER, THAT ANY ACTUAL
ANNUAL BONUS MAY BE GREATER OR LOWER THAN SUCH AMOUNT), AND EXECUTIVE
SHALL RECEIVE A GUARANTEED ANNUAL BONUS IN AN AMOUNT NOT LESS THAN
$600,000 IN RESPECT OF EACH OF 2002 AND 2003 WITHOUT REGARD
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TO ACTUAL PERFORMANCE OF THE COMPANY; PROVIDED THAT (i) EXECUTIVE IS AN
EMPLOYEE OF THE COMPANY AS OF THE LAST DAY OF THE FISCAL YEAR TO WHICH
THE ANNUAL BONUS RELATES (THE "Applicable Date"), (ii) THE DATE OF
PAYOUT OF ANY ANNUAL BONUS SHALL NOT BE LATER THAN 45 DAYS AFTER THE
APPLICABLE DATE, (iii) THE GUARANTEED ANNUAL BONUS IN RESPECT OF EACH
OF 2002 AND 2003 SHALL BE PAID PURSUANT TO CLAUSE (ii) REGARDLESS OF
WHETHER OR NOT EXECUTIVE IS AN EMPLOYEE OF THE COMPANY AS OF THE
APPLICABLE DATE AND (iv) ANY TERMINATION OF THIS AGREEMENT PURSUANT TO
THE NON-RENEWAL PROVISIONS IN SECTION 1(b) SHALL NOT AFFECT THE
COMPANY'S OBLIGATION TO PAY IN ACCORDANCE WITH THIS SECTION 3(b) AN
ANNUAL BONUS, IF ANY, REGARDLESS OF WHETHER OR NOT EXECUTIVE IS AN
EMPLOYEE OF THE COMPANY AS OF THE APPLICABLE DATE. FOR THE AVOIDANCE OF
DOUBT, NO ANNUAL BONUS SHALL BE AWARDED IN RESPECT OF 2001.
(c) COMMENCEMENT BONUS. AS SOON AS PRACTICABLE, BUT NOT LATER
THAN 10 DAYS AFTER THE COMMENCEMENT DATE, THE COMPANY SHALL PAY
EXECUTIVE $1,500,000 AS A ONE-TIME COMMENCEMENT BONUS (THE
"Commencement Bonus"). IF THERE IS A TERMINATION OF EMPLOYMENT (i) BY
THE COMPANY FOR CAUSE DURING THE INITIAL TERM (WHETHER BEFORE OR AFTER
A CHANGE IN CONTROL) OR (ii) BY EXECUTIVE FOR OTHER THAN GOOD REASON
DURING THE INITIAL TERM AND PRIOR TO A CHANGE IN CONTROL (AS SUCH
PREVIOUSLY UNDEFINED TERMS ARE DEFINED IN SECTION 8(a)), THEN EXECUTIVE
SHALL REPAY TO THE COMPANY THE COMMENCEMENT BONUS IN FULL WITHIN 45
DAYS AFTER SUCH TERMINATION OF EMPLOYMENT. FOR THE AVOIDANCE OF DOUBT,
IF THERE IS A TERMINATION OF EMPLOYMENT (iii) BY EITHER THE COMPANY OR
EXECUTIVE FOR ANY REASON AFTER THE END OF THE INITIAL TERM OR (iv) BY
EXECUTIVE FOR ANY REASON AFTER A CHANGE IN CONTROL (WHETHER OR NOT FOR
GOOD REASON), THEN EXECUTIVE SHALL NOT BE REQUIRED TO REPAY THE
COMMENCEMENT BONUS.
(d) OPTIONS. EXECUTIVE SHALL BE AWARDED AN INITIAL STOCK
OPTION TO PURCHASE 1,000,000 SHARES OF THE COMPANY'S COMMON STOCK, WITH
AN EXERCISE PRICE PER SHARE EQUAL TO $5.00 PER SHARE. SUCH INITIAL
STOCK OPTION SHALL VEST IN 3 EQUAL INSTALLMENTS (SUBJECT TO ROUNDING)
ON EACH OF THE FIRST 3 ANNIVERSARIES OF THE COMMENCEMENT DATE AND WILL
ACCELERATE AND BECOME FULLY EXERCISABLE UPON A CHANGE IN CONTROL FOR
(i) ITS TERM IF EXECUTIVE REMAINS WITH THE COMPANY FOR MORE THAN 30
DAYS AFTER SUCH CHANGE IN CONTROL AND (ii) UP TO 4 YEARS AFTER SUCH
CHANGE IN CONTROL IF EXECUTIVE TERMINATES HIS EMPLOYMENT WITH THE
COMPANY WITHIN 30 DAYS AFTER SUCH CHANGE IN CONTROL. IN ALL OTHER
RESPECTS, SUCH INITIAL STOCK OPTION SHALL BE AWARDED PURSUANT TO THE
TERMS AND CONDITIONS OF THE COMPANY'S APPLICABLE EQUITY COMPENSATION
PLAN AS THEN IN EFFECT. IN ADDITION, EXECUTIVE MAY BE ELIGIBLE FOR
AWARDS OF ANNUAL STOCK OPTIONS TO PURCHASE SHARES OF THE COMPANY'S
COMMON STOCK, SUBJECT TO APPROVAL BY THE COMPENSATION COMMITTEE OF THE
BOARD IN ITS SOLE DISCRETION, CONSIDERING EXPECTED FUTURE CONTRIBUTION,
INDIVIDUAL AND/OR COMPANY PERFORMANCE, STOCK PRICE AND MARKET
COMPETITIVE CONDITIONS. ANY SUCH ANNUAL STOCK OPTIONS SHALL BE AWARDED
PURSUANT TO THE TERMS AND CONDITIONS OF THE COMPANY'S APPLICABLE EQUITY
COMPENSATION PLAN AS THEN IN EFFECT.
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4. BENEFITS, PERQUISITES AND EXPENSES.
(a) BENEFITS AND PERQUISITES. EXECUTIVE AND HIS ELIGIBLE
FAMILY MEMBERS SHALL BE ENTITLED TO PARTICIPATE IN ANY PLAN, PROGRAM OR
ARRANGEMENT MAINTAINED BY THE COMPANY FOR THE PURPOSE OF PROVIDING
BENEFITS OR PERQUISITES FOR ITS SENIOR EXECUTIVES AND THEIR FAMILY
MEMBERS, IN ACCORDANCE WITH THE TERMS OF ANY SUCH PLAN, PROGRAM OR
ARRANGEMENT, AS THE SAME MAY BE AMENDED FROM TIME TO TIME; PROVIDED
THAT ANY SUCH BENEFIT OR PERQUISITE PAYABLE TO EXECUTIVE SHALL BE
REDUCED BY THE AMOUNT OF ANY BENEFIT OR PERQUISITE PAYABLE TO EXECUTIVE
UNDER A SIMILAR PLAN, PROGRAM OR ARRANGEMENT MAINTAINED BY AN AFFILIATE
OF THE COMPANY, TO THE EXTENT NECESSARY TO AVOID DUPLICATION OF
BENEFITS.
(b) VACATION. DURING THE EMPLOYMENT PERIOD, EXECUTIVE SHALL BE
ENTITLED TO 4 WEEKS OF PAID VACATION ON AN ANNUALIZED BASIS. UP TO 2
WEEKS OF ANY UNUSED VACATION ENTITLEMENT FROM A GIVEN YEAR MAY BE
CARRIED OVER INTO THE IMMEDIATELY SUBSEQUENT YEAR. IF EITHER PARTY
SERVES THE OTHER WITH NOTICE OF TERMINATION OF THIS AGREEMENT, THE
COMPANY MAY REQUIRE EXECUTIVE TO TAKE ANY ACCRUED BUT UNUSED VACATION
ENTITLEMENT DURING THE NOTICE PERIOD.
(c) RELOCATION BENEFITS. AS SOON AS PRACTICABLE, BUT NOT LATER
THAN 10 DAYS AFTER THE COMMENCEMENT DATE, THE COMPANY SHALL PAY
EXECUTIVE $700,000 IN CASH TO DEFRAY ALL COSTS ASSOCIATED WITH
EXECUTIVE'S RELOCATION TO MASSACHUSETTS, INCLUDING, WITHOUT LIMITATION,
MOVING EXPENSES, EXPENSES RELATING TO THE SALE AND PURCHASE OF PRIMARY
RESIDENCES (INCLUDING ORDINARY AND CAPITAL LOSS, IF ANY, ON THE SALE OF
EXECUTIVE'S EXISTING RESIDENCE) AND TEMPORARY HOUSING AND OTHER
TRANSITION COSTS (INCLUDING ANY TRIPS BETWEEN EXECUTIVE'S CURRENT HOME
AND MASSACHUSETTS PRIOR TO ACTUAL RELOCATION).
(d) EXPENSES. DURING THE EMPLOYMENT PERIOD, THE COMPANY SHALL
REIMBURSE EXECUTIVE FOR ALL REASONABLE EXPENSES INCURRED BY HIM IN THE
COURSE OF PERFORMING HIS DUTIES UNDER THIS AGREEMENT WHICH ARE
CONSISTENT WITH THE COMPANY'S POLICIES IN EFFECT FROM TIME TO TIME WITH
RESPECT TO TRAVEL, ENTERTAINMENT AND OTHER BUSINESS EXPENSES, SUBJECT
TO THE COMPANY'S REQUIREMENTS WITH RESPECT TO REPORTING AND
DOCUMENTATION OF SUCH EXPENSES.
5. TERMINATION OF EMPLOYMENT.
(a) BASIS FOR TERMINATION. DURING THE EMPLOYMENT PERIOD,
EXECUTIVE'S EMPLOYMENT MAY BE TERMINATED BY EXECUTIVE FOR ANY REASON OR
NO REASON OR BY THE COMPANY WITH OR WITHOUT CAUSE OR DUE TO EXECUTIVE'S
DEATH OR DISABILITY. A TERMINATION OF EXECUTIVE'S EMPLOYMENT WITH THE
COMPANY DURING THE EMPLOYMENT PERIOD IS REFERRED TO AS A "Termination"
AND THE DATE OF THE TERMINATION IS REFERRED TO AS THE "Termination
Date".
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(b) SEVERANCE UPON CERTAIN EVENTS. AT ANY TIME DURING THE
INITIAL TERM, IN THE EVENT OF A TERMINATION (X) BY THE COMPANY OTHER
THAN FOR CAUSE OR (Y) BY EXECUTIVE FOR GOOD REASON, INCLUDING, IN
EITHER CASE, AFTER A CHANGE IN CONTROL:
(i) The Company shall continue to pay Executive his Base
Salary and his target Annual Bonus (including the guaranteed
Annual Bonus pursuant to Section 3(b), in each case as in effect
as of the Termination Date, in monthly increments for the
remaining Initial Term;
(ii) Any stock options to purchase shares of the Company's
common stock shall accelerate and become fully exercisable for up
to 4 years after such event of Termination; and
(iii) For the period commencing on the Termination Date and
ending on the earlier of the expiration of the Initial Term or the
date when Executive becomes eligible for comparable benefits under
the benefit plans, programs or arrangements of a subsequent
employer, Executive and his eligible family members shall be
entitled to continue to participate in the Company's plans,
programs or arrangements for its senior executives and their
family members, in each case as in effect as of the Termination
Date, on the same basis that such benefits were provided to
Executive and his eligible family members as of the Termination
Date; and
(iv) Any other accrued but unpaid benefits shall be paid,
provided or otherwise satisfied in accordance with the Company's
plans, programs or arrangements for its senior executives as in
effect of the Termination Date.
The foregoing severance shall be lieu of any severance to which
Executive may otherwise be entitled under any of the Company's other
plans, programs or arrangements.
(c) SEVERANCE UPON ANY OTHER TERMINATION. IN CONNECTION WITH
ANY TERMINATION NOT DESCRIBED IN SECTION 5(b), EXECUTIVE SHALL RECEIVE
HIS SEVERANCE IN ACCORDANCE WITH THE COMPANY'S PLANS, PROGRAMS OR
ARRANGEMENTS FOR ITS SENIOR EXECUTIVES AS IN EFFECT AS OF THE
TERMINATION DATE.
(d) RESIGNATION UPON TERMINATION. EFFECTIVE AS OF ANY
TERMINATION DATE, EXECUTIVE SHALL RESIGN WITHOUT CLAIM FOR ANY
ADDITIONAL COMPENSATION OTHER THAN AS PROVIDED BY THIS AGREEMENT, IN
WRITING, FROM ALL BOARD MEMBERSHIPS AND OTHER POSITIONS THEN HELD BY
HIM WITH THE COMPANY AND ITS AFFILIATES.
(e) FULL DISCHARGE OF COMPANY OBLIGATIONS. THE COMPENSATION
AND BENEFITS REQUIRED TO BE PAID OR PROVIDED UNDER THIS SECTION 5
(INCLUDING AMOUNTS PAYABLE TO EXECUTIVE UNDER THE COMPANY'S AND ITS
AFFILIATES' BENEFIT PLANS, PROGRAMS AND ARRANGEMENTS) SHALL BE IN FULL
AND COMPLETE SATISFACTION OF EXECUTIVE'S RIGHTS UNDER THIS AGREEMENT
AND ANY OTHER CLAIMS EXECUTIVE MAY HAVE IN RESPECT OF HIS EMPLOYMENT
UNDER THIS AGREEMENT.
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(f) BENEFITS AFTER TERMINATION. IN THE EVENT OF A TERMINATION,
ANY BENEFITS REQUIRED TO BE PAID OR PROVIDED UNDER SECTION 5(b)(iii)
SHALL BE REDUCED BY ANY BENEFITS RECEIVED FROM OR PROVIDED BY A
SUBSEQUENT EMPLOYER.
6. RESTRICTIVE COVENANTS.
(a) CONFIDENTIALITY. EXECUTIVE AGREES THAT HE SHALL NOT
DISCLOSE TO ANY UNAUTHORIZED PERSON OR ENTITY OR USE FOR HIS OWN
ACCOUNT OR FOR THE BENEFIT OF ANY UNAUTHORIZED PERSON OR ENTITY ANY
CONFIDENTIAL INFORMATION WITHOUT THE PRIOR WRITTEN CONSENT OF THE
BOARD, UNLESS SUCH INFORMATION HAS BEEN PREVIOUSLY DISCLOSED TO THE
PUBLIC BY THE COMPANY. THE RESTRICTIONS OF THIS SECTION 6(a) APPLY
REGARDLESS OF WHETHER SUCH CONFIDENTIAL INFORMATION IS IN WRITTEN,
GRAPHIC, COMPUTER, RECORDED, PHOTOGRAPHIC OR ANY MACHINE READABLE FORM,
IS ORALLY CONVEYED TO, KNOWN OR MEMORIZED BY EXECUTIVE.
(b) NON-DISPARAGEMENT. EXECUTIVE AGREES THAT HE SHALL NOT
DISPARAGE THE COMPANY OR ITS AFFILIATES OR ANY OF THEIR RESPECTIVE
OFFICERS OR DIRECTORS, PRODUCTS OR SERVICES. THE COMPANY AGREES THAT IT
SHALL NOT (AND SHALL CAUSE ITS OFFICERS, DIRECTORS AND AFFILIATES NOT
TO) DISPARAGE EXECUTIVE OR HIS PERFORMANCE OF THIS AGREEMENT.
(c) COMPANY PROPERTY. PROMPTLY FOLLOWING EXECUTIVE'S
TERMINATION OF EMPLOYMENT, EXECUTIVE SHALL RETURN TO THE COMPANY ALL
PROPERTY OF THE COMPANY, AND ALL DOCUMENTS, ACCOUNTS, LETTERS AND
PAPERS OF EVERY DESCRIPTION RELATING TO THE AFFAIRS AND BUSINESS OF THE
COMPANY OR ITS AFFILIATES, AND COPIES THEREOF IN EXECUTIVE'S POSSESSION
OR UNDER HIS CONTROL.
(d) WORK PRODUCT. EXECUTIVE AGREES THAT ALL INVENTIONS,
INNOVATIONS, IMPROVEMENTS, DEVELOPMENTS, METHODS, DESIGNS, ANALYSES,
DRAWINGS, REPORTS AND ALL SIMILAR OR RELATED INFORMATION WHICH RELATES
TO THE COMPANY'S ACTUAL OR ANTICIPATED BUSINESS, RESEARCH AND
DEVELOPMENT OR EXISTING OR FUTURE PRODUCTS OR SERVICES AND WHICH ARE
CONCEIVED, DEVELOPED OR MADE BY EXECUTIVE DURING THE EMPLOYMENT PERIOD
(THE "Work Product") BELONG TO THE COMPANY. EXECUTIVE SHALL PROMPTLY
DISCLOSE SUCH WORK PRODUCT TO THE BOARD AND PERFORM ALL ACTIONS
REASONABLY REQUESTED BY THE BOARD (WHETHER DURING OR AFTER THE
EMPLOYMENT PERIOD) TO ESTABLISH AND CONFIRM SUCH OWNERSHIP (INCLUDING,
WITHOUT LIMITATION, ASSIGNMENTS, CONSENTS, POWERS OF ATTORNEY AND OTHER
INSTRUMENTS).
(e) NON-COMPETITION AND NON-SOLICITATION. EXECUTIVE
ACKNOWLEDGES THAT IN THE COURSE OF HIS EMPLOYMENT WITH THE COMPANY, HE
WILL BECOME FAMILIAR WITH THE COMPANY'S TRADE SECRETS AND WITH OTHER
CONFIDENTIAL AND PROPRIETARY BUSINESS INFORMATION CONCERNING THE
COMPANY, AND THAT HE WILL HAVE THE OPPORTUNITY TO DEVELOP RELATIONSHIPS
WITH THE COMPANY'S EMPLOYEES, CLIENTS AND CUSTOMERS AND, THEREFORE,
THAT HIS SERVICES WILL BE OF SPECIAL, UNIQUE AND EXTRAORDINARY VALUE TO
THE COMPANY. THEREFORE, EXECUTIVE AGREES AS FOLLOWS:
(i) NON-COMPETITION. During the longer of the Initial Term or
the Employment Period, Executive shall not, directly or indirectly,
own, manage,
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control, participate in, consult with, be employed by, render
services for, or in any manner engage in any business competing
with the business of the Company, or any other business entity of
the Company as any of those businesses exist or are being planned
at any time prior to the Termination Date (collectively referred
to as "COMPANY BUSINESS"), within any geographical area in which
the Company or such Company Business is active or plans to become
active at any time prior to the Termination Date, or within 12
months thereafter.
(ii) NON-SOLICITATION. During the longer of the Initial Term
or the Employment Period, Executive shall not, directly or
indirectly, induce or attempt to induce any employee of the
Company to leave the employ of the Company, or in any way
interfere with the relationship between the Company and any
employee thereof; hire any individual who was an employee of the
Company at any time during the Initial Term or the Employment
Period; solicit, provide services to or do business with any
person or entity who was a client, customer, licensee or other
business relation of the Company as of the Termination Date; or
induce or attempt to induce any client, customer, licensee or
other business relation of the Company to cease doing business
with the Company or in any way interfere with the relationship
between any such client, customer, licensee or business relation
and the Company.
(iii) SCOPE. If, at the time of enforcement of this Section
6(e), a court shall hold that the duration, scope or area
restrictions stated in this Section 6(e) are unreasonable under
circumstances then existing, the parties agree that the maximum
duration, scope or area reasonable under such circumstances shall
be substituted for the stated duration, scope or area and that the
court shall be allowed to revise the restrictions contained in
this Section 6(e) to cover the maximum period, scope and area
permitted by law.
(iv) DISCLOSURE TO PROSPECTIVE EMPLOYERS. Executive agrees
that if he applies for, or is offered employment by (or is to
provide consultancy services to) any other person or entity
whatsoever during the restriction periods set forth in this
Section 6(e), he shall promptly, and before entering into any
contract or arrangement with any such third party, provide to such
third party a full copy of this Section 6(e) in order to ensure
that such other party is fully aware of Executive's obligations
this Section 6(e).
(f) INJUNCTIVE RELIEF WITH RESPECT TO COVENANTS. EXECUTIVE
ACKNOWLEDGES AND AGREES THAT THE COVENANTS AND OBLIGATIONS OF EXECUTIVE
IN THIS SECTION 6 RELATE TO SPECIAL, UNIQUE AND EXTRAORDINARY MATTERS
AND THAT A VIOLATION OF ANY OF THE TERMS OF SUCH COVENANTS AND
OBLIGATIONS WILL CAUSE THE COMPANY IRREPARABLE INJURY FOR WHICH
ADEQUATE REMEDIES ARE NOT AVAILABLE AT LAW. THEREFORE, EXECUTIVE AGREES
THAT THE COMPANY SHALL BE ENTITLED TO AN INJUNCTION, RESTRAINING ORDER
OR SUCH OTHER EQUITABLE RELIEF (WITHOUT THE REQUIREMENT TO POST BOND OR
OTHER SECURITY) RESTRAINING EXECUTIVE FROM COMMITTING ANY VIOLATION OF
THE COVENANTS AND OBLIGATIONS CONTAINED IN THIS SECTION 6. THESE
INJUNCTIVE
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REMEDIES ARE CUMULATIVE AND ARE IN ADDITION TO ANY OTHER RIGHTS AND
REMEDIES THE COMPANY MAY HAVE AT LAW OR IN EQUITY.
7. SUCCESSORS.
(a) THIS AGREEMENT IS PERSONAL TO EXECUTIVE AND, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMPANY, SHALL NOT BE ASSIGNABLE BY
EXECUTIVE. THIS AGREEMENT SHALL INURE TO THE BENEFIT OF AND BE
ENFORCEABLE BY EXECUTIVE'S LEGAL REPRESENTATIVES.
(b) THIS AGREEMENT SHALL INURE TO THE BENEFIT OF AND BE
BINDING UPON THE COMPANY AND ITS SUCCESSORS.
8. MISCELLANEOUS.
(a) DEFINITIONS. FOR PURPOSES OF THIS AGREEMENT, CAPITALIZED
TERMS HAVE THE FOLLOWING MEANINGS:
"CAUSE" means Executive (i) is convicted of or enters a plea
of guilty or nolo contendere to a felony, or to a crime or offense
which has a materially detrimental effect to the property of the
Company; (ii) commits any act involving dishonesty, fraud or
disloyalty, or breach of his fiduciary duty to the Company, which
in any such case is materially detrimental to the business,
reputation, character or standing of the Company; (iii)
continually fails in any material respect or refuses to perform
his duties as reasonably directed by the Board or continually
fails or refuses for any reason to devote his best efforts and
full business time and attention to the affairs of the Company in
a manner consistent with Section 2(c); (iv) engages in gross
negligence or willful misconduct with respect to his duties on
behalf of the Company; or (v) engages in any other material breach
of this Agreement.
"CHANGE IN CONTROL" means any merger, consolidation or
reorganization occurring after the date hereof which results in
any person (as such term is used in Section 3(a)(9) and Section
13(d)(3)of the Exchange Act), other than (i) one or more of the
DLJ Entitles (as defined in the Stockholders Agreement dated as of
January 20, 1995 by and among the parties thereto, as amended from
time to time) or one or more affiliates of such DLJ Entities as of
the date hereof or any future date (ii) any group (as used in
Section 13(d)(3) of the Exchange Act) of which the one or more of
the DLJ Entities or one or more affiliates of such DLJ Entities as
of the date hereof or any future date constitute a majority, on
the basis of ownership interest, acquiring, directly or
indirectly, shares of the Company representing, on a fully diluted
basis, more than 50% of voting power of all shares of the Company.
"CONFIDENTIAL INFORMATION" means any trade secrets,
confidential or proprietary business information relating to the
Company and its affiliates, licensees, suppliers or customers
which is not generally known to and available for use by the
public, other than as a result of a breach by Executive of his
obligations under this Agreement. Confidential Information shall
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include, without limitation: business or operational plans,
strategies, know-how, portfolios, prospects or objectives;
structure, products, product development, technology distribution,
sales, advertising services, support and marketing plans,
practices and operations; methods of pricing, costs and details of
the services; financial condition and results of operations; the
performance of any accounts; research and development, operations
or plans; lists of customer and potential customers (including,
without limitation, the identity of customers, names, addresses or
other contact information, contact persons and the customer's
business needs and characteristics); information received from
third parties under confidential conditions; management
organization and related information (including, without
limitation, data and other information concerning the compensation
and benefits paid to the Board, officers, directors, employees and
the management of the Company); personnel and compensation
policies; policies and manuals; financial records and related
information; means of gaining access to the Company's computer
data system and related information; existing and new or
envisioned plans, designs, products and data; computer aided
systems, software strategies, methods and plans relating to its
business; financial and investment data, formulas, patterns,
compilations, studies, strategies, methods, techniques, processes
and system analyses; or other valuable financial, commercial,
business, technical and marketing information related to, or any
of the products or services made, developed or sold by, the
Company.
"DISABILITY" means total and permanent disability as
determined by the Board (or, in the absence of such determination,
pursuant to the Company's disability policy then in effect with
respect to the Company's senior executives).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GOOD REASON" means the occurrence of (i) the Company's
relocation of Executive's principal workplace outside the 50 mile
radius from Concord, Massachusetts; (ii) the Company's reduction
of Executive's Base Salary or target Annual Bonus opportunity;
(iii) a material adverse change (including any material reduction)
in Executive's duties and responsibilities; (iv) any reduction in
Executive's title; (v) the death or Disability of Executive; or
(vi) the Company engages in any other material breach of this
Agreement.
(b) EXECUTIVE REPRESENTATIONS. EXECUTIVE HEREBY REPRESENTS AND
WARRANTS TO THE COMPANY THAT THE EXECUTION, DELIVERY AND PERFORMANCE OF
THIS AGREEMENT BY EXECUTIVE DOES NOT AND WILL NOT CONFLICT WITH,
BREACH, VIOLATE OR CAUSE A DEFAULT UNDER ANY CONTRACT, AGREEMENT,
INSTRUMENT, ORDER, JUDGMENT OR DECREE TO WHICH EXECUTIVE IS A PARTY OR
BY WHICH HE IS BOUND. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
EXECUTIVE IS NOT A PARTY TO OR BOUND BY ANY EMPLOYMENT AGREEMENT,
NON-COMPETITION AGREEMENT, NON-SOLICITATION AGREEMENT OR
CONFIDENTIALITY AGREEMENT WITH ANY OTHER PERSON OR ENTITY WHICH
CONFLICTS WITH EXECUTIVE'S OBLIGATIONS UNDER THIS AGREEMENT, AND, UPON
THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE COMPANY, THIS
AGREEMENT SHALL BE THE VALID AND BINDING OBLIGATION OF EXECUTIVE AND
ENFORCEABLE IN ACCORDANCE WITH ITS TERMS.
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(c) APPLICABLE LAW. THIS AGREEMENT AND ANY DISPUTE,
CONTROVERSY, PROCEEDINGS OR CLAIM OF WHATEVER NATURE ARISING OUT OF OR
RELATING THERETO, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF MASSACHUSETTS (EXCEPT TO THE EXTENT THAT THE CORPORATE LAWS
OF DELAWARE WOULD APPLY), APPLIED WITHOUT REFERENCE TO PRINCIPLES OF
CONFLICT OF LAWS.
(d) THIRD PARTY BENEFICIARIES. THERE ARE NO THIRD-PARTY
BENEFICIARIES.
(e) ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE
AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE MATTERS REFERRED TO
IN THIS AGREEMENT AND EXPRESSLY SUPERSEDES ANY OTHER AGREEMENT BETWEEN
THE COMPANY AND EXECUTIVE RELATING TO HIS EMPLOYMENT. NO OTHER
AGREEMENT RELATING TO THE TERMS OF EXECUTIVE'S EMPLOYMENT BY THE
COMPANY (OTHER THAN, TO THE EXTENT APPLICABLE, THE COMPANY'S EQUITY
COMPENSATION PLAN DOCUMENTS), ORAL OR OTHERWISE, SHALL BE BINDING
BETWEEN THE PARTIES UNLESS IT IS IN WRITING AND SIGNED BY THE PARTY
AGAINST WHOM ENFORCEMENT IS SOUGHT. THERE ARE NO PROMISES,
REPRESENTATIONS, INDUCEMENTS OR STATEMENTS BETWEEN THE PARTIES OTHER
THAN THOSE THAT ARE EXPRESSLY CONTAINED HEREIN. EXECUTIVE ACKNOWLEDGES
THAT HE IS ENTERING INTO THIS AGREEMENT OF HIS OWN FREE WILL AND
ACCORD, AND WITH NO DURESS, THAT HE HAS READ THIS AGREEMENT AND THAT HE
UNDERSTANDS IT AND ITS LEGAL CONSEQUENCES.
(f) NOTICES. ANY NOTICE PROVIDED FOR IN THIS AGREEMENT MUST BE
IN WRITING AND MUST BE EITHER PERSONALLY DELIVERED, MAILED BY FIRST
CLASS MAIL (POSTAGE PREPAID AND RETURN RECEIPT REQUESTED) OR SENT BY
REPUTABLE OVERNIGHT COURIER SERVICE (CHARGES PREPAID) OR FACSIMILE TO
THE RECIPIENT AT THE ADDRESS OR FACSIMILE NUMBER BELOW INDICATED:
To the Company:
Manufacturers' Services Limited
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Secretary
Facsimile: (000) 000-0000
With a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxx, Xx.
Facsimile: (000) 000-0000
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To Executive:
Xxxxxx X. Xxxxxxxx
c/o Manufacturers' Services Limited
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx Xxxx
c/o Balch & Xxxxxxx LLP
0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000-0000
Facsimile: (000) 000-0000
or such other address or to the attention of such other person as
the recipient party shall have specified by prior written notice
to the sending party. Any notice under this Agreement will deemed
to have been given when personally delivered or, if sent by
reputable overnight courier one day after delivery to such
overnight courier, or, if mailed, 5 days after deposit in the
U.S. mail.
(g) TAXES. THE COMPANY MAY WITHHOLD FROM ANY PAYMENTS MADE
UNDER THIS AGREEMENT ALL APPLICABLE TAXES, INCLUDING, WITHOUT
LIMITATION, INCOME AND PAYROLL TAXES AS SHALL BE REQUIRED BY APPLICABLE
LAW.
(h) GRIEVANCES. ANY GRIEVANCE, DISPUTE OR CLAIM RELATING TO OR
ARISING OUT OF EXECUTIVE'S EMPLOYMENT OR THIS AGREEMENT SHALL FIRST BE
REFERRED TO THE BOARD FOR ATTEMPTED RESOLUTION. IN THE EVENT ANY SUCH
GRIEVANCE, DISPUTE OR CLAIM IS NOT RESOLVED TO EXECUTIVE'S OR THE
COMPANY'S FULL SATISFACTION, SUCH GRIEVANCE, DISPUTE OR CLAIM SHALL BE,
SUBJECT TO SECTION 6, FULLY, FINALLY AND EXCLUSIVELY RESOLVED BY A
PANEL OF THREE NEUTRAL ARBITRATORS TO BE MUTUALLY AGREED UPON BY
EXECUTIVE AND THE COMPANY. SUCH ARBITRATION WILL BE DECIDED UNDER THE
EMPLOYMENT DISPUTE RESOLUTION RULES OF THE AMERICAN ARBITRATION
ASSOCIATION AND WILL BE HELD AT A LOCATION MUTUALLY AGREEABLE TO THE
PARTIES. IF THE PARTIES CANNOT AGREE UPON THE THREE NEUTRAL ARBITRATORS
OR THE LOCATION WITHIN 20 DAYS AFTER SUBMISSION OF A PARTY'S REQUEST
FOR ARBITRATION, THE ARBITRATORS AND THE LOCATION WILL BE SELECTED IN
ACCORDANCE WITH THE PROCEDURES OF THE AMERICAN ARBITRATION ASSOCIATION.
THE FINDING OF THE PANEL MAY NOT CHANGE THE EXPRESS TERMS OF THIS
AGREEMENT AND SHALL BE CONSISTENT WITH THE PANEL'S UNDERSTANDINGS OF
THE FINDINGS THAT A COURT OF COMPETENT JURISDICTION WOULD MAKE IN
APPLYING THE APPLICABLE LAW TO THE FACTS UNDERLYING THE DISPUTE. IN NO
EVENT WHATSOEVER SHALL SUCH AN ARBITRATION AWARD INCLUDE ANY AWARD OF
DAMAGES OTHER THAN THE AMOUNTS IN CONTROVERSY UNDER THIS AGREEMENT. THE
PARTIES HEREBY WAIVE THE RIGHT TO RECOVER, IN ANY SUCH ARBITRATION, ANY
PUNITIVE DAMAGES. THE ENTIRE COST OF SUCH ARBITRATION SHALL BE BORNE BY
THE COMPANY; PROVIDED THAT EACH PARTY SHALL BE RESPONSIBLE FOR ITS
RESPECTIVE ATTORNEY'S FEES AND EXPENSES.
(i) AMENDMENTS. THE PROVISIONS OF THIS AGREEMENT MAY BE
AMENDED OR WAIVED ONLY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY
AND EXECUTIVE, AND
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NO COURSE OF CONDUCT OR FAILURE OR DELAY IN ENFORCING THE PROVISIONS OF
THIS AGREEMENT SHALL AFFECT THE VALIDITY, BINDING EFFECT OR
ENFORCEABILITY OF THIS AGREEMENT.
(j) SEVERABILITY. IN THE EVENT THAT ANY ONE OR MORE OF THE
PROVISIONS OF THIS AGREEMENT SHALL BE OR BECOME INVALID, ILLEGAL OR
UNENFORCEABLE IN ANY RESPECT, THE VALIDITY, LEGALITY AND ENFORCEABILITY
OF THE REMAINING PROVISIONS CONTAINED IN THIS AGREEMENT SHALL NOT BE
AFFECTED THEREBY.
(k) COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED IN
COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL AND ALL OF
WHICH TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.
(l) HEADINGS. THE SECTION AND OTHER HEADINGS CONTAINED IN THIS
AGREEMENT ARE FOR THE CONVENIENCE OF THE PARTIES ONLY AND ARE NOT
INTENDED TO BE A PART HEREOF OR TO AFFECT THE MEANING OR INTERPRETATION
HEREOF.
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IN WITNESS WHEREOF, Executive has hereunder set his hand and the Company has
caused this Agreement to be executed in its name and on its behalf, all as of
the day and year first written above.
MANUFACTURERS' SERVICES LIMITED
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Name: Xxxxx X. Xxxxx
Title: Chairman of the Board
XXXXXX X. XXXXXXXX
/s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
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