EXECUTIVE EMPLOYMENT AGREEMENT
PARTIES:
XXXXXX XXXXX, Chief Financial Officer ("Executive")
00000 Xxxxxxx Xxxx
Xxxxx Xxxxxx, Xxxxxxxxx 00000
August Technology Corporation ("Company")
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Dated this 21st-day of September, 1998.
RECITALS
A. The parties desire to provide for employment of Executive by Company as
its Chief Financial Officer.
B. Executive desires to be protected in the event of a change in the
control of the Company.
C. Company desires reasonable protection of Company's confidential
business and technical information which has been developed over the
years by Company at substantial expense.
Company and Executive, each intending to be legally bound, covenant and agree as
follows:
1. EMPLOYMENT. Upon the terms and conditions set forth in this Agreement,
Company hereby employs Executive, and Executive accepts such employment
as its Chief Financial Officer. Except as expressly provided herein,
termination of this Agreement by either party shall also terminate
Executive's employment by Company.
2. DUTIES. Executive shall devote his full-time and best efforts to
Company and fulfilling the duties of his position which shall include
such duties as may from time to time be assigned him or her by the CEO
or Board of Directors of the Company; provided that such duties are
reasonably consistent with Executive's education, experience and
background.
3. EMPLOYMENT DATE. Executive's employment shall commence as of the date
hereof ("Employment Date"), and continue until terminated as provided
herein. In any event, the Agreement shall automatically terminate
without notice when the Executive reaches 70 years of age. If
employment is continued after the age of 70 by mutual agreement, it
shall be terminable at will by either party.
4. COMPENSATION.
(a) BASE SALARY. For all services rendered under this Agreement
during the term of Executive's employment, Company shall pay
Executive a Base Salary ("Base
Salary" shall mean regular cash compensation paid on a
periodic basis exclusive of benefits, bonuses or incentive
payments) at the annual rate of $97,500, payable twice monthly
subject to adjustment by the Board of Directors at least
annually. If the Executive's salary is adjusted during the
term of this Agreement, the adjusted amount shall be the Base
Salary until further adjusted by the Board of Directors. A
merit review will be held at six (6) months from employment
start date, with all follow on merit reviews to occur
annually, in accordance with the Company's standard review
policy.
(b) BONUS AND INCENTIVE. Bonus or incentive compensation shall be
at the discretion of the Board of Directors, provided that
Executive shall participate in those bonus or incentive plans
in which any executive employee of the Company currently or
hereafter participates. Company reserves the right to alter,
amend or eliminate any bonus or incentive plans in accordance
with their terms.
(c) FRINGE BENEFITS. In addition to the compensation payable to
Executive as provided in paragraphs 4(a) and (b) above:
i) VACATION. Executive shall be entitled to accrue three
(3) weeks paid vacation for each year of employment,
which shall be calculated in arrears on a monthly
basis commencing as of the end of the month following
the Employment Date. Vacation shall accumulate, so
that if the full vacation that is earned and accrued
in a particular year of employment is not taken in
that particular year of employment, any unused
portion will be carried into and may be taken in the
following year of employment only.
ii) OTHER BENEFITS. The Executive shall be entitled to
participate in all other benefit programs offered by
the Company to its full-time executive employees,
including, but not limited to,
health/medical/cafeteria plans; retirement benefits
through the Company's 401k plans; personal days off
benefits; and other benefits that may be offered from
time to time by the Company.
(d) STOCK OPTIONS. Company hereby agrees to grant the Executive
Incentive Stock Options under the Company's 1997 Stock Option
Plan to purchase up to 85,000 shares of its common stock Such
options shall have an exercise price equal to $1.80, shall
expire seven (7) years from the date of hereof, shall vest 20%
per year commencing August 31, 1999 (subject to paragraph 10
hereof), and shall have other provisions generally included in
stock option agreements of the Company. Such stock options
shall be governed by the terms of the Company's applicable
stock option plan(s) and a stock option agreement with
Executive. It is the intention of the Board of Directors, from
time to time, to make additional options available to
executives based on performance.
5. BUSINESS EXPENSES. Company shall, in accordance with, and to the extent
of, its policies in effect from time to time, bear all ordinary and
necessary business expenses incurred by the Executive in performing his
duties as an employee of Company, provided that
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Executive accounts promptly for such expenses to Company in the manner
prescribed from time to time by Company.
6. TERMINATION. Subject to the respective continuing obligations of the
parties, pursuant to paragraphs 7, 8, 9, 10, 11 and 12, this Agreement
may be terminated as follows:
(a) BY THE COMPANY. The Company may terminate this Agreement under
the following circumstances:
(i) WITH CAUSE, ETC. Company may terminate this Agreement
immediately for cause, which for purposes of this
agreement shall include without limitation, fraud,
misrepresentation, theft or embezzlement of Company
assets, material intentional violations of law or
Company policies, actions involving moral turpitude
or a material breach of the provisions of this
Agreement, including specifically the repeated
failure to perform his duties as required by
paragraph 2 after notice of such failure from Company
and the expiration of thirty (30) days without
collective action having been undertaken by
Executive.
(ii) WITHOUT CAUSE. Company may terminate this Agreement
without cause on sixty (60) days' advance written
notice subject to the severance payment provisions
set forth in paragraph 7.
(b) BY EXECUTIVE. Executive may terminate this Agreement without
cause on sixty (60) days' notice.
(c) DEATH. If Executive should die during the term of this
Agreement, this Agreement shall thereupon terminate; provided,
however, that the Company shall pay to the Employees
beneficiary or estate, the compensation as provided in
paragraph 7 below.
(d) PERMANENT DISABILITY. in the event the Executive should become
permanently disabled during the term of this Agreement, then
this Agreement shall terminate. For the purposes hereof, a
permanent disability shall mean that disability resulting from
injury, disease or other cause, whether mental or physical,
which incapacitates the Executive from performing his normal
duties as an employee, appears to be permanent in nature and
contemplates the continuous, necessary and substantially
complete loss of all management and professional activities
for a continuous period of six (6) months.
(e) PARTIAL DISABILITY. If the Executive should become partially
disabled, he shall be entitled to his salary as provided
herein for a period of six (6) months. At the end of said
period of time, if such Executive remains partially disabled,
the disabled Executive's salary shall be reduced according to
the amount of time the disabled Executive is able to devote to
the Company's business.
(f) TEMPORARY DISABILITY. In the event the Executive should become
disabled, but such disability is not permanent, as defined
above, such disabled Executive shall
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be entitled to his salary for a period of six (6) months. If
such temporary disability continues longer than said period of
time, then the disabled Executive shall be deemed to have
become permanently disabled for the purposes of this Agreement
at the end of said six (6) month period.
7. REMEDIES FOR EARLY TERMINATION.
(a) In the event of termination pursuant to paragraph 6, Base
Salary and any other compensation shall be paid as follows:
(i) In the event of termination pursuant to paragraph
6(a)(i), Base Salary shall continue to be paid on a
semimonthly basis prorated through the date of
termination specified in any notice of termination
and Executive shall be entitled to continue to
participate in those benefit programs provided by
Subparagraph 4(c)(ii) for the minimum time period
required by law following termination at his own
cost.
(ii) In the event of termination pursuant to paragraph
6(a)(ii), Base Salary shall continue to be paid on a
semi-monthly basis for six (6) months following the
date of termination specified in any notice of
termination, and Executive shall be entitled to
continue to participate in those benefit programs
provided by Subparagraph 4(c)(ii) for the longer of
six (6) months or the minimum time period required by
law following termination, provided that the Company
shall bear the cost of such benefits for no longer
than six (6) months.
(iii) In the event of termination pursuant to paragraph
6(b), compensation shall continue to be paid as if
the notice of termination is given by Executive at
any time, Base Salary shall continue to be paid on a
semi-monthly basis prorated through the date of
termination specified in such notice and Executive
shall be entitled to continue to participate in those
benefit programs provided by Subparagraphs 4(c)(ii)
for the minimum time period required by law following
termination at his own cost.
(iv) In the event of termination of this Agreement by
reason of Executive's death, payment of Base Salary
shall terminate as of the end of the month following
the Executive's death.
(v) In the event of disability, payment of Base Salary
shall terminate as of the end of the month in which
the last day of the six (6) month period of
Executive's inability to perform his duties occurs.
(b) In the event of termination by reason of Executive's death or
disability (clauses (a)(iv) and (a)(v) above):
(i) Executive shall receive a pro rata portion (prorated
through the last day Base Salary is payable pursuant
to clauses (a)(iii) and (a)(iv), respectively) of any
bonus or incentive payment (for the you in which
death or
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disability occurred), to which he/she would have been
entitled had he/she remained continuously employed
for the full fiscal year in which death or disability
occurred and continued to perform his duties in the
same manner as they were performed immediately prior
to the death or disability; and
(ii) The exercise of any options then held by Executive
shall be governed by the terms of the applicable
Company stock option plan.
8. CONFIDENTIAL INFORMATION.
(a) For purposes of this paragraph 8, the term "Confidential
Information" means information which is not generally known
and which is proprietary to Company or which has been made
available to the Company in a manner reasonably understood to
require confidential treatment, including (i) trade secret
information about Company and its products; and (ii)
information relating to the business of Company as conducted
at any time within the previous two (2) years or anticipated
to be conducted by Company, and to any of its past, current or
anticipated products, including, without limitation,
information about Company's research, development
manufacturing, purchasing, accounting, engineering, marketing,
selling, leasing or servicing. All information that Executive
has a reasonable basis to consider Confidential Information or
which is treated by Company as being Confidential Information
shall be presumed to be Confidential Information, whether
originated by Executive or by others, and without regard to
the manner in which Executive obtains access to such
information.
(b) Executive will be governed by the terms of the Employee
Assignment and Disclosure Agreement attached hereto as Exhibit
A .
9. INVENTIONS.
(a) For purposes of this paragraph 9, the term "Inventions" means
discoveries, improvements and ideas (whether or not in writing
or reduced to practice) and works of authorship, whether or
not patentable or copyrightable, (1) which relate directly to
the business of Company, or to Company's actual or
demonstrably anticipated research or development, (2) which
result from any work performed by Executive for Company, (3)
for which equipment, supplies, facilities or trade secret
information of Company is utilized, or (4) which were
developed during the time Executive was obligated to perform
the duties described in paragraph 2.
(b) Executive will be governed by the terms of the Employee
Assignment and Disclosure Agreement attached hereto as Exhibit
A.
10. BUSINESS COMBINATION. For purposes of this paragraph 10, a "Business
Combination" shall mean the merger or consolidation of Company with,
the sale of all or substantially all the assets of Company to, or the
ownership of fifty-one percent (51%) or more of the total voting
capital stock of Company then issued and outstanding by, any person or
entity not affiliated with Company as of the date of this Agreement. It
is expressly recognized by the parties that a Business Combination
would necessarily result in
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material alteration or diminishment of Executive's position and
responsibilities. Therefore, notwithstanding any other provision
herein, if, during the first twenty-four (24) months of this Agreement,
there shall occur, with or without the consent of Company, a Business
Combination, the Company shall have the option to terminate this
Agreement on ten (10) days' notice. Accordingly, in the event that
Company elects to terminate the agreement because of a Business
Combination under this paragraph 10:
(a) Executive shall be under no obligation whatever to seek other
employment opportunities during any period between termination
of this Agreement under this paragraph 10 and expiration of
six (6) months, and Executive shall not be obligated to accept
any other employment opportunity which may be offered to
Executive during such period.
(b) During such six (6) months, one hundred percent (100%) of
Executive's Base Salary in effect upon the date immediately
prior to the Business Combination shall continue to be paid on
a semi-monthly basis.
(c) In addition to the continued compensation provided in
paragraph 10(b), a bonus in an amount equal to one hundred
percent (100%) of the total aggregate Base Salary payments
provided in paragraph 10(b) shall also be paid on a
semi-monthly basis for six (6) months, together with the
payments provided in paragraph 10(b).
(d) Executive shall be entitled to continue to participate in
those benefit programs provided by Subparagraphs 4(c)(ii) for
the longer of six (6) months or the minimum time period
required by law following termination, provided that the
Company shall bear the cost of such benefits for no longer
than six (6) months.
The right to exercise any unexpired stock options granted Executive shall
accelerate as provided by the terms of the 1997 Stock Option Plan regardless of
when the Business Combination occurs.
11. NO ADEQUATE REMEDY. The parties declare that it is impossible to
measure in money the damages which will accrue to either party by
reason of a failure to perform any of the obligations under this
Agreement. Therefore, if either party hall institute any action or
proceeding to enforce the provisions hereof, such person against whom
such action or proceeding is brought hereby waives the claim or defense
that such party has an adequate remedy at law, and such person shall
not urge in any such action or proceeding the claim or defense that
such party has an adequate remedy at law.
12. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the successors and assigns of
Company, whether by way of merger, consolidation, operation of
law, assignment, purchase or other acquisition of
substantially all the assets or business of Company and shall
only be assignable under the foregoing circumstances and shall
be deemed to be materially breached by Company if any such
successor or assign does not absolutely and unconditionally
assume all of Company's obligations hereunder. Any such
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successor or assign shall be included in the term "Company" as
used in this Agreement.
(b) NOTICES. All notices, requests and demands given to or made
pursuant hereto shall, except as otherwise specified herein,
be in writing and be delivered or mailed to any such party at
its address which:
In the case of the Executive shall be:
Xxxxxx Xxxxx
00000 Xxxxxxx Xxxx
Xxxxx Xxxxxx, Xxxxxxxxx 00000
In the case of Company shall be:
August Technology Corporation
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Either party may, by notice hereunder, designate a changed address. Any
notice, if mailed properly addressed, postage prepaid, registered or
certified mail, shall be deemed dispatched on the registered date or
that stamped on the certified mail receipt, and shall be deemed
received within the second business day thereafter or when it is
actually received, whichever is sooner.
(c) CAPTIONS. The various headings or captions in this Agreement
are for convenience only and shall not affect the meaning or
interpretation of this Agreement.
(d) GOVERNING Law. The validity, construction and performance of
this Agreement shall be governed by the laws of the State of
Minnesota and any and every legal proceeding arising out of or
in connection with this Agreement shall be brought in the
appropriate courts of the State of Minnesota, each of the
parties hereby consenting to the exclusive jurisdiction of
said courts for this purpose.
(e) CONSTRUCTION. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
(f) WAIVERS. No failure on the part of either party to exercise,
and no delay in exercising, any right or remedy hereunder
shall operate as a waiver thereof, nor shall any single or
partial exercise of any right or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other
right or remedy granted hereby or by any related document or
by law.
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(g) MODIFICATION. This Agreement may not be and shall not be
modified or amended except by written instrument signed by the
parties hereto.
(h) ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement and understanding between the parties hereto in
reference to all the matters herein agreed upon; provided,
however, that this Agreement shall not deprive Executives of
any other rights Executives may have now or in the future,
pursuant to law or the provisions of Company benefit plans.
IN WITNESS WHEREOF, The parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
---------------------------------------------
Xxxxxx Xxxxx
August Technology Corporation
By:
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Its:
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