EMPLOYMENT AGREEMENT
Exhibit
10.7
EXECUTION
VERSION
This Employment Agreement (this
“Agreement”), is made and entered into as of October 3, 2008, by and between
Kulicke & Xxxxx Industries, Inc. (“Employer”), a Pennsylvania corporation,
and Xxxxx X. Xxxxxxxxxx (the “Executive”).
BACKGROUND
A. On
the date hereof, Employer and an affiliate of Employer, acquired substantially
all of the assets (the “Acquisition”) of
Orthodyne Electronics Corporation, a California corporation (the “Company”) related to
and used in connection with its business of designing, manufacturing and selling
equipment and tooling for the semiconductor and microelectronics industries,
through an asset purchase agreement, dated as of July 31, 2008, by and among
Employer and the Company, among others (the “Purchase
Agreement”). Any terms used but not otherwise defined herein
shall have the meaning set forth in the Purchase Agreement.
B. Immediately
prior to the Acquisition, Executive was an executive of the Company and employed
by the Company in such capacity.
C. Employer
wishes to employ Executive pursuant to the terms and conditions and for the
consideration set forth in this Agreement, and Executive wishes to accept
employment with Employer pursuant to such terms and conditions and for such
consideration.
NOW, THEREFORE, in consideration of the
premises and the mutual covenants and agreements contained herein and intending
to be legally bound hereby, the parties hereto agree as follows:
SECTION
1. CAPACITY AND DUTIES
1.1
Employment;
Acceptance of Employment. Employer shall employ Executive and
Executive hereby accepts employment by Employer for the period and upon the
terms and conditions hereinafter set forth.
1.2
Capacity
and Duties.
(a) Executive
shall be employed by Employer generally as Vice President of Finance, Orthodyne
Division of Employer, and shall report initially to the President of Orthodyne
Division of Employer. Executive shall perform such other duties and
shall have such authority as may from time to time reasonably be specified by
the Employer; provided, however, that Employer shall delegate to Executive
authority and duties consistent and commensurate with the authority and duties
of a Vice President of Finance. Executive shall perform his duties
for Employer principally at Employer’s office located in Irvine, California,
except for periodic travel to Employer’s or its affiliates’ offices worldwide
and other travel that may be necessary or appropriate in connection with the
performance of Executive’s duties hereunder.
(b) Executive
shall devote his full working time, energy, skill and best efforts to the
performance of his duties hereunder, in a manner that will faithfully and
diligently further the business and interests of the
Employer. Notwithstanding the foregoing, for so long as he complies
with the covenants provided in Section 5 of this
Agreement and solely in connection with passive investments or charitable
activities, Executive may participate as a Board member or advisor in the
management or operation of any enterprise or organization other than Employer;
provided, however, that such activity does not interfere with the performance of
his responsibilities to Employer without the prior written consent of the Board
of Directors of the Employer.
SECTION
2. TERM OF EMPLOYMENT
2.1
Term. The
initial term (the “Initial Term”) of
Executive’s employment hereunder shall commence on the date hereof and shall
expire three years thereafter. Upon expiration of the Initial
Term, the Executive shall be an “at will” employee of Employer.
SECTION
3. COMPENSATION
3.1
Compensation. As
compensation for Executive’s services hereunder, Employer shall pay to Executive
a salary at the annual rate of $307,200 (the “Base Salary”),
payable in periodic installments in accordance with Employer’s regular payroll
practices in effect from time to time. Following the first
anniversary of the date of this Agreement and on each successive anniversary
thereof during the Term, the Company may adjust the Base Salary upward based on
such factors as it deems appropriate in its sole
discretion. Executive shall participate in Employer’s Executive
Incentive Compensation Plan, which will be based 80% on the Orthodyne Division’s
quarterly performance and 20% on quarterly individual objectives with such
individual objectives to be administered by the President of such Orthodyne
Division. Executive shall not be entitled to participate in any other
bonus plan or in any equity compensation plan of Employer under this
Agreement.
3.2 Executive
Benefits. In addition to the compensation provided for in
Section 3.1,
Executive shall be entitled during the term of his employment to participate in
such employee benefit plans and benefit programs (including, without limitation,
vacation time and sick leave) as may from time to time be provided for other
employees of Employer whose duties, responsibilities, and compensation are
reasonably comparable to those of Executive. Executive acknowledges
and agrees that Employer may amend, diminish or enlarge any such benefits for
its employees and executives generally in its sole discretion from time to time
without notice. In addition, during the entire term of this
Agreement, Employer shall provide Executive with life insurance on terms
comparable to such life insurance (including, without limitation, the cost to
Executive of maintaining such life insurance) provided by Employer to similarly
situated employees.
3.3
Expense
Reimbursement. During the term of his employment, Employer
shall reimburse Executive for all reasonable expenses incurred by him in
connection with the performance of his duties hereunder, including travel
expenses, in accordance with its regular reimbursement policies applicable to
other employees of Employer whose duties, responsibilities, and compensation are
reasonably comparable to those of Executive as in effect from time to time and
upon receipt of itemized vouchers therefor and such other supporting information
as Employer may reasonably require.
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SECTION
4. TERMINATION OF EMPLOYMENT
4.1
Death of
Executive. Executive’s employment hereunder shall immediately
terminate upon his death, upon which Employer shall not thereafter be obligated
to make any further payments hereunder other than amounts (including salary,
expense reimbursement, etc.) accrued as of the date of Executive’s
death.
4.2 Disability
of Executive. If Executive is unable, for any reason due to
his physical, mental or emotional illness or condition to perform substantially
his normal duties hereunder with reasonable accommodation as required under
applicable laws, for a period of 120 consecutive days, or 180 days within a
period of 12 consecutive months, then Employer shall have the right to suspend
Executive’s employment upon written notice to Executive at any time during the
continuation of such inability, in which event Employer shall not thereafter be
obligated to make any further payments hereunder other than amounts (including
salary, expense reimbursement, etc.) accrued under this Agreement as of the date
of such suspension. If, after the suspensions, the disability shall
continue for more than 360 days (including therein the 120 day or 180 day
period, as the case may be), the Employer shall have the right to terminate the
Executive.
4.3
Termination
for Cause. Executive’s employment
hereunder shall terminate immediately upon notice that the Employer is
terminating Executive for “Cause” (as defined herein), in which event Employer
shall not thereafter be obligated to make any further payments hereunder other
than amounts (including salary, expense reimbursement, etc.) accrued under this
Agreement as of the date of such termination. As used herein, “Cause”
shall include the following:
(i) fraud
committed in connection with Executive’s employment, theft or misappropriation
or embezzlement of the funds of the Employer or any of its affiliates
(hereinafter referred to collectively with the Employer as the “Employer
Companies”);
(ii) conviction
of any felony, crime involving fraud or misrepresentation, or of any other crime
the effect of which would adversely affect any of the Employer
Companies;
(iii) willful
breach of Executive’s material obligations under this Agreement, which breach
(if curable) is not cured within 30 days after written notice to Executive is
provided by Employer;
(iv) repeated
and consistent failure of Executive to be present at work during normal business
hours more frequently than executive’s practice during his employment by the
Company;
(v) willful
violation of any express direction or any material rule or regulation
established by the Employer including, without limitation, Employer’s Corporate
Code of Business Conduct and Code of Ethics which violation (if curable) is not
cured within 30 days after written notice to Executive is provided by Employer;
or
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(vi) willful
misconduct in the performance of, or willful neglect of, Executive’s duties
hereunder, which (if curable) is not cured within 30 days after written notice
to Executive is provided by Employer.
Any notice required to be given by
Employer pursuant to Sections 4.3(iii), (v) or
(vi) above shall state the specific nature of the claimed breach and, if
such breach is curable, the manner in which Employer reasonably requires such
breach (if curable) to be cured.
4.4
Resignation for Good Reason;
Termination without Cause; Resignation without Good Reason.
(a) Prior
to the end of the Initial Term, in the event (i) Executive resigns for Good
Reason (as defined below) or (ii) Employer terminates Executive’s employment
other than (A) for Cause as specified in Section 4.3, (B) due
to the death of Executive, or (C) due to the disability of Executive as
specified in Section
4.2, then Employer shall continue to pay on regularly scheduled payroll
dates Executive’s then current salary as severance payments (the “Severance Payments”)
commencing on the date provided below and continuing until the number of salary
installments remaining in the Initial Term are paid (the “Severance Period”);
provided, however, that the
obligation to make Severance Payments for Executive is subject to Executive’s
execution and non-revocation of a release of all employment and related claims
against Employer, and its officers, directors and stockholders. Such
release shall be provided to Executive on or prior to the date of his
termination of employment (“Termination Date”)
and must be executed on or before the 21st day
following receipt of such release. Provided such release is not
revoked within seven days following execution, severance payments shall commence
on the first regularly scheduled payroll date following the 29th day
after the Termination Date. Each salary installment payment shall be
a separate payment for purposes of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”). Termination of employment for purposes
of this Section 4.4 shall mean separation from service as defined in Treas. Reg.
section 1.409A-1(h). The remedy in this Section 4.4(a) shall
be Executive’s sole remedy for the Employer’s termination of Executive without
Cause or Executive’s resignation for Good Reason.
(b) In
the event that prior to the end of the Initial Term (i) Executive resigns
without Good Reason or (ii) Employer terminates Executive’s employment (A) for
Cause as specified in Section 4.3, (B) due
to the death of Executive, or (C) due to the disability of Executive as
specified in Section
4.2, then Executive shall not be eligible to receive any Severance
Payments.
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(c) As
used herein, “Good
Reason” shall mean the occurrence of any of the following without
Executive’s prior consent: (i) the Employer’s breach of any material provision
of this Agreement, (ii) a material reduction in Executive’s Base Salary, (iii) a
material change in the location of Executive’s principal place of employment,
provided that any relocation must exceed 30 miles in the location or (iv) an
assignment to Executive of any title or duties materially inconsistent with his
position, duties, responsibilities and status with the Employer as set forth in
this Agreement; provided, however, that in no
event shall Executive’s resignation be for “Good Reason” unless (A) an event or
circumstance set forth in clauses (i) through (iv) shall have occurred and
Executive provides the Employer with written notice thereof within 30 days after
the Executive has knowledge of the occurrence or existence of such event or
circumstance, which notice specifically identifies the event or circumstance
that Executive believes constitutes Good Reason, (B) the Employer fails to
substantially cure or correct the circumstance or event so identified within 30
days after receipt of such notice, and (C) the Executive resigns within 90 days
after the date of delivery of the notice referred to in clause (A)
above.
(d) Notwithstanding
anything to the contrary herein, if, on the date that Executive’s employment
terminates in accordance with Section 4.4(a), and
the Employer or any entity considered to be a single employer with the Employer
as provided in Treas. Reg. section 1.409A-1(g) has stock which is publicly
traded on an established securities market or otherwise (separately or jointly a
“Publicly Traded Company”), then any Code Section 409A Severance Pay Amounts, as
defined below, shall not be made or commence to be made before the first
business day following the six-month anniversary of the Executive’s Termination
Date. Any salary installment payments which are Code Section 409A
Severance Pay Amounts that otherwise would have been made in such six-month
period shall accumulate without interest and be paid in one lump sum on the
first business day following the six-month period. To the extent
severance amounts to be paid to Executive prior to the six-month anniversary of
his Termination Date are not paid within a short-term deferral period as defined
in Treas. Reg. section 1.409A-1(b)(4) and to the extent not paid in a short-term
deferral period exceed two time the lesser of (i) the sum of the Executive’s
annualized compensation based upon his annual rate of pay for the calendar year
preceding the calendar year of his termination of employment (adjusted for any
increase during such year that was expected to continue indefinitely if such
termination of employment had not occurred) or (ii) the Code section 401(a)(17)
limit for the year in which termination of employment occurs, such amounts are
Code Section 409A Severance Payment Amounts.
SECTION
5. RESTRICTIVE COVENANTS
5.1
Confidentiality.
(a) Executive
shall not, either during or after his employment with Employer, directly or
indirectly use, publish or otherwise disclose or divulge to any third party any
trade secrets, confidential or proprietary information of any of the Employer
Companies, other than as required by law or in the ordinary course of Employer
business (including without limitation any such information concerning
customers, vendors, services, products, software, processes, pricing policies,
business plans or records, any technical or financial information or data, or
any information relating to the history or prospects of the Employer Companies
or any of their stockholders).
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(b) Executive
shall not, either during or after his employment with Employer, directly or
indirectly copy, reproduce or remove from the premises of Employer, except in
the ordinary course of Employer’s business, trade secrets, confidential or
proprietary information of Employer (in any medium) or any documents, files or
records of Employer (including without limitation software, source code, program
documentation, new product plans, invoices, customer correspondence, business
cards, orders, computer records, or mailing, telephone or customer
lists). All such documents, files and records, and all other
memoranda, notes, files, records, lists and other documents made, compiled or
otherwise acquired by Executive in the course of his employment with Employer
are and shall remain the sole property of the Employer Companies and all
originals and copies thereof shall be delivered to the Employer Companies upon
termination of employment for whatever reason.
5.2
Inventions
and Discoveries. The parties agree that any idea, invention,
design, discovery, development, technique, improvement, source code, data or
other work product related to Employer’s business as then conducted, or as
reasonably anticipated to be conducted (whether patentable or subject to
copyright, or not, and hereinafter collectively called “Discovery”), that
Executive has made or may make, discover, invent, develop or reduce to practice
during the term of his employment shall be the sole and complete property of
Employer. The provisions of this Section shall also apply, to the
maximum extent permitted by Section 2870 of the California Labor Code, to
Discoveries that are conceived by Executive based on knowledge
acquired in the course of Executive’s employment by the Company, Employer during
or after regular working hours, whether on or off the job, and whether or not
within the specific realm of Executive’s duties. Executive agrees
that he shall have no proprietary interest in any work product developed or used
by Executive and arising out of his employment by Employer. Executive
shall upon receipt of written demand from Employer, during the period of this
Agreement and continuing for a period of one year after the termination hereof
for any cause, give, grant, assign or transfer to Employer, any right, title or
interest of Executive in and to any Discovery without additional compensation to
Executive. To the end that the provisions of this Section may be
effectively carried out, Executive agrees that he shall promptly and fully
inform Employer of any Discovery which he now has or may hereafter have,
whereupon Employer shall, at its own cost and expense, take such action as it
may consider appropriate. In the event Employer determines to obtain
copyright protection for any of Executive’s work product, or to prepare and
prosecute applications for letters patents, whether in the United States or any
foreign country, Executive shall, at Employer’s sole expense, fully and
completely cooperate with Employer as may be reasonably required, including, but
not limited to, assisting in the preparation of all documents required to obtain
patents or copyright protection and in the enforcement by Employer of its rights
to the Discoveries.
5.3
Injunctive
and Other Relief. Executive acknowledges and agrees that the
covenants contained herein are fair and reasonable in light of the consideration
paid hereunder and in order to protect the investment made by Employer in the
Acquisition, and that damages alone shall not be an adequate remedy for any
breach by Executive of his covenants contained herein and accordingly expressly
agrees that, in addition to any other remedies which the Employer Companies may
have, including damages, the Employer Companies shall be entitled to injunctive
relief in any court of competent jurisdiction for any breach or threatened
breach of any such covenants by Executive. Nothing contained herein
shall prevent or delay Employer from seeking, in any court of competent
jurisdiction, specific performance or other equitable remedies in the event of
any breach or intended breach by Executive of any of his obligations
hereunder.
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5.4
Noncompetition. In
consideration of the compensation to be paid to Executive, during the term of
Executive’s employment, Executive will not, directly or indirectly without the
prior written consent of Employer: (i) engage in, or (ii) control, advise,
manage, assist, perform services for, establish or open, or have any equity
interest (other than ownership of 1.0% or less of the outstanding stock of any
corporation whose securities are listed on any national securities exchange or
have been registered under Section 12(g) of the Securities Exchange Act of 1934,
as amended, or any successor law) in any firm, corporation, or business entity
(whether as an employee, officer, director, agent, security holder, creditor,
consultant or otherwise) that engages in any activity anywhere in the world
which is the same as, similar to, or competitive with the business of
Employer.
5.5
Nonsolicitation. During
the period beginning on the date hereof and ending on the second anniversary of
the termination of Executive’s employment, the Executive will not (i) directly
or indirectly contact, approach, or solicit for the purpose of offering
employment to or hiring (whether as an employee, consultant, agent, independent
contractor or otherwise) any person employed by Employer or any of its
affiliates at any time before the termination of such employment, without the
prior written consent of Employer, or (ii) induce or attempt to induce any
customer, vendor or other business relation of Employer or any of its affiliates
(A) into any business relationship which might materially harm Employer or any
of its affiliates or (B) to refrain from doing business with Employer or any of
its affiliates.
SECTION
6. MISCELLANEOUS
6.1
Prior
Employment. Executive represents and warrants that he is not a
party to any other employment, non-competition or other agreement or restriction
which could interfere with his employment with Employer or Employer’s rights and
obligations hereunder; and that his employment with Employer and the performance
of his duties hereunder will not breach the provisions of any contract,
agreement, or understanding to which he is party or any duty owned by him to any
other person.
6.2
Severability. The
invalidity or unenforceability of any particular provision or part of any
provision of this Agreement shall not affect the other provisions or parts
hereof. If any provision hereof is determined to be invalid or
unenforceable by a court of competent jurisdiction by reason of the duration or
geographical scope of the covenants contained therein, such duration or
geographical scope, or both, may be reduced to a duration or geographical scope
to the minimum extent necessary to cure such invalidity.
6.3
Assignment. This
Agreement shall not be assignable by Executive, and shall be assignable by
Employer to any person or entity which may become a successor-in-interest (by
purchase of assets or equity interests, or by merger, or otherwise) to
Employer. Subject to the foregoing, this Agreement and the rights and
obligations set forth herein shall inure to the benefit of, and be binding upon,
the parties hereto and each of their respective permitted successors, assigns,
heirs, executors and administrators.
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6.4
Notices. All
notices hereunder shall be in writing and shall be sufficiently given if
hand-delivered, sent by documented overnight delivery service or registered or
certified mail, postage prepaid, return receipt requested or by facsimile
(confirmed by U.S. mail), receipt acknowledged, addressed as set forth below or
to such other person and/or at such other address as may be furnished in writing
by any party hereto to the other. Any such notice shall be deemed to
have been given as to the date received, in the case of personal delivery, or on
the date shown on the receipt or confirmation therefor, in all other
cases. Any and all service of process and any other notice in any
such action, suit or proceeding shall be effective against any party if given as
provided in this Agreement; provided, however, that nothing
herein shall be deemed to affect the right of any party to serve process in any
other manner permitted by law.
(a) If
to Employer:
Kulicke
and Xxxxx Industries, Inc.
0000
Xxxxxxxx Xxxxx
Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: General
Counsel
Facsimile: (000)
000-0000
With a copy (which shall not
constitute notice) to:
Drinker
Xxxxxx & Xxxxx LLP
0000
Xxxxxxxxx Xxxxx
Xxxxxx,
XX 00000-0000
Attn: Xxxxxx
X. Xxxxxx, Esq.
Telephone:
(000) 000-0000
Facsimile: (000)
000-0000
(b) If
to Executive:
00000 Xxx Xxxx Xxxxxx
Xxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
6.5
Entire
Agreement and Modification. This Agreement constitutes the
entire agreement between the parties hereto with respect to the matters
contemplated herein and supersedes all prior agreements and understandings with
respect thereto (except with respect to Sections 5.4 and 5.5. Any
amendment, modification, or waiver of this Agreement shall not be effective
unless in writing. Neither the failure nor any delay on the part of
any party to exercise any right, remedy, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further exercise of the
same or of any other right, remedy, power, or privilege with respect to any
occurrence be construed as a waiver of any right, remedy, power, or privilege
with respect to any other occurrence.
6.6
Survival. Section 5 (except for
Section 5.4) shall survive the termination of this Agreement.
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6.7 Governing
Law. This Agreement is made pursuant to, and shall be
construed and enforced in accordance with, the internal laws of the State of
California, without giving effect to otherwise applicable principles of
conflicts of law.
6.8
Headings;
Counterparts. The headings of paragraphs in this Agreement are
for convenience only and shall not affect its interpretation. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed to be an original and all of which, when taken together, shall be deemed
to constitute but one and the same Agreement.
6.9
Further
Assurances. Each of the parties hereto shall execute such
further instruments and take such other actions as any other party shall
reasonably request in order to effectuate the purposes of this
Agreement.
6.10
Third
Party Beneficiary. The Employer Companies shall be third party
beneficiaries of this Agreement and shall have the right to enforce the terms
hereof against the Executive.
[Signature
page follows]
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IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above
written.
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KULICKE
& XXXXX INDUSTRIES, INC.
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By:
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/s/ Xxxxxxx Xxxxxx
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Name:
Xxxxxxx Xxxxxx
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Title: Senior
Vice President and Chief Financial Officer
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EXECUTIVE
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/s/ Xxxxx Xxxxxxxxxx
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Xxxxx
X. Xxxxxxxxxx
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[signature page to Xxxxxxxxxx
Employment Agreement]
