VARI-L COMPANY, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT, effective January 1, 1997, is made and entered into
by and between VARI-L COMPANY, INC. (the "Company") and Xxxxxx X. Xxxxxx
("Employee").
WHEREAS, Employee is currently an employee of the Company and the
Company and Employee wish to enter into this Agreement to set forth the
terms and conditions of employment.
NOW, THEREFORE, in consideration of the mutual covenants and promises
set forth herein, and for other good and valuable consideration, the
parties hereto agree as follows:
I. EMPLOYMENT. The Company hereby employs Employee, and Employee
hereby accepts employment, upon the terms and conditions hereinafter set
forth.
II. TERM. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement is for a period commencing January 1,
1997, and expiring December 31, 1999.
III. DUTIES. Employee is engaged as Vice President of Engineering to
have full authority and complete responsibility for management of the
engineering, research and development and similar activities of the
Company, subject only to the direction of the Chief Scientific Officer and
the Board of Directors. If Employee is elected or appointed a director of
the Company during the term of this Agreement, Employee shall serve in
such capacity or capacities without further compensation; but nothing
herein shall be construed as requiring the Company, or anybody else, to
cause the election or appointment of Employee as a director.
IV. EXTENT OF SERVICES. Employee shall faithfully, industriously,
and to the best of his ability, experience, and talents, perform all of
the duties that may be required of and from him pursuant to this Agreement
for a minimum of forty (40) hours per week. Employee shall not engage in
any other employment during the term of this Agreement. Nothing herein
shall be construed as preventing Employee from (a) investing his assets in
such form or manner as will not require any services on the part of
Employee in the operation of the affairs of the companies in which such
investments are made or (b) serving as a director, advisor, or consultant;
provided, however, that such investments or services may not be in
connection with a business which is in competition with the Company.
V. COMPENSATION AND EMPLOYEE BENEFITS.
A. ANNUAL BASE SALARY. For all services rendered by Employee
under this Agreement, the Company shall pay Employee an initial annual
base salary of at least $90,000, payable in equal biweekly installments.
The amount of such base salary shall be determined at the beginning of
each fiscal year by the Executive Committee of the Board of Directors in
its sole discretion on the basis of merit and the Company's financial
success and progress but in no event shall such base salary be less than
the initial annual base salary indicated above, unless there is an
extraordinary, across-the-board reduction in the Company's officers'
salaries, in which case Employee's salary shall be reduced by a percentage
equal to the lowest percentage reduction taken by any other officer.
B. BONUS COMPENSATION. Employee may receive year-end bonuses
as determined at the beginning of each fiscal year of the Company by the
Board of Directors in its sole discretion on the basis of merit and the
Company's financial success and progress.
C. VACATION. Employee shall be entitled to four weeks of paid
vacation each year but may, upon request, obtain payment in lieu of
accrued but unused vacation.
D. EMPLOYEE BENEFITS. Employee shall be entitled to receive
all of the rights, benefits, and privileges of the Company's employees
under any retirement, pension, profit-sharing, insurance, health and
hospital, and other employee benefit plans which may be now in effect or
hereafter adopted by the Company.
E. WORKING FACILITIES. Employee shall be furnished with a
private office and such other facilities and services suitable to
Employee's position and adequate for the performance of the duties
required by this Agreement.
F. EXPENSES. Subject to limits which may be imposed by the
President or the Executive Committee of the Board of Directors, Employee
is authorized to incur reasonable expenses in connection with his
responsibilities in conducting the business of the Company, including
expenses for entertainment, travel, and similar items. The Company will
reimburse Employee for all such expenses upon the presentation by
Employee, from time to time, of an itemized account of such expenditures.
G. AUTOMOBILE. Employee shall provide Employee with an
automobile and shall reimburse Employee for insurance, maintenance, fuel
and repairs associated with such automobile. The Company will reimburse
Employee for all such expenses upon the presentation by Employee, from
time to time, of an itemized account of such expenditures or Employee may
pay such expenses with a Company credit card.
VI. PROPRIETARY INTERESTS OF COMPANY
Employee and the Company recognize that the Company is in a
highly competitive business in a highly technical industry. The parties
acknowledge that the success or failure of the Company depends largely on
the development and use of certain proprietary and confidential
information and trade secrets, including without limitation, information
concerning any of the Company's patented components, research and
development projects and in patent process components, and personal
relationships with present and potential customers, suppliers,
contractors, and governmental agencies; as well as technology, procedures,
systems, and techniques relating to the products developed or distributed
by the Company (hereinafter collectively referred to as "Confidential
Information"). Confidential Information is a substantial asset of the
Company. Confidential Information will be disclosed to Employee in the
normal course of the Company's operations. Employee acknowledges that
Confidential Information is extremely valuable to the Company and must be
protected from unauthorized use by the Company's competitors or other
persons. Therefore, Employee agrees not to disclose or use, whether for
the benefit of Employee or any other person, at any time during or after
his employment, any Confidential Information.
Employee recognizes that, during the term of his employment with
the Company, he may develop new products, technology, processes, devices,
inventions, or methods of production, including but not limited to
computer hardware, software or "firmware," and may enhance, improve or
perfect existing products, technology, processes, devices, inventions or
methods of production (hereinafter collectively referred to as
"Inventions"). As partial consideration for the salary, and other
benefits provided by the Company to the Employee, Employee hereby agrees
that his entire work product while in the employ of the Company, including
any Inventions, is the exclusive property of the Company. Employee also
agrees to cooperate fully with the Company and to do whatever acts are
reasonably necessary in order to obtain United States or foreign letters
patent or copyrights, or both, and to vest the entire right and title
thereto in the Company. Employee further agrees that the Company shall
have the royalty- free right to use in its business, and to make, use, and
sell such Inventions whether or not patentable, regardless of whether they
are conceived or made by the Employee during the hours which he is
employed by the Company or with the use of or assistance of the Company's
facilities, materials or personnel.
Except as required in his duties to the Company, Employee will
never, directly or indirectly, use, disseminate, disclose, lecture upon,
or publish articles concerning any Confidential Information without the
prior written consent of the Company.
Upon termination of his employment with the Company, all
documents, records, notebooks, and similar repositories of or containing
Confidential Information, including copies thereof, then in Employee's
possession, whether prepared by Employee or others, will be left with the
Company, and no copies thereof will be retained by the Employee.
It is agreed that any breach of this section of the Agreement
will cause immediate irreparable harm to the Company and monetary damages
would be difficult if not impossible to ascertain. Therefore, the parties
agree that upon any breach or threatened breach of any covenant in this
section that the Company may obtain from the district court for the City
and County of Denver, Colorado, or any other court of competent
jurisdiction, and appropriate restraining order, preliminary injunction or
other form of equitable relief with respect thereto. Nothing contained
herein shall affect the right of the Company to seek and obtain monetary
damages in addition to or substitution for such equitable relief.
VII. NONCOMPETE. During the term of this Agreement and for a period
of one year after termination, the Employee will not, directly or
indirectly, own, manage, operate, control, be employed by, participate in,
or be connected in any manner with the ownership, management, operation,
or control of any business which is similar to the type of business
conducted by the Company and which conducts such business or sells its
products within and to the same market as the Company's market at the time
of the termination or expiration of this Agreement. Employee certifies
that his employment with the Company will not breach a previous employment
agreement. Employee agrees not to engage in the unauthorized use of the
proprietary assets of others during the term of his employment by the
Company. Employee agrees not to enter into any other employment
agreement, oral or written, which will run concurrently, in whole or in
part, with Employee's employment by the Company. It is agreed that any
breach of this section of the Agreement will cause immediate irreparable
harm to the Company and monetary damages would be difficult if not
impossible to ascertain. Therefore, the parties agree that upon any
breach or threatened breach of any covenant in this section that the
Company may obtain from the district court for the City and County of
Denver, Colorado, or any other court of competent jurisdiction, an
appropriate restraining order, preliminary injunction or other form of
equitable relief with respect thereto. Nothing contained herein shall be
construed as prohibiting the Company from pursuing any other available
remedies for such breach or threatened breach, including the recovery of
damages, costs, and attorney fees.
The foregoing agreement not to compete shall not be held invalid
because of the scope of the territory or the actions restricted thereby,
or the period of time within which such agreement is operative; but any
judgment by a court of competent jurisdiction may define the maximum
territory and action subject to, and restricted by, this paragraph and the
period of time during which such agreement is enforceable.
Notwithstanding the foregoing, in the event of a CHANGE OF
CONTROL, as hereinafter defined, not recommended by a majority of the
Board of the Company as constituted prior to the CHANGE OF CONTROL Date,
this noncompete agreement shall terminate upon the CHANGE OF CONTROL date.
VIII.TERMINATION OF EMPLOYMENT.
A. TERMINATION BY MUTUAL AGREEMENT. The Company and Employee
may agree to terminate this Agreement on terms and conditions mutually
acceptable to them as of the date of termination.
B. DEATH. In the event of Employee's death, the Company shall
pay to any beneficiary designated by Employee or, if no such beneficiary
has been designated, to his estate, an amount equal to the then annual
base salary for one (1) year, together with any bonuses which the
Company's board of directors shall determine in its sole discretion to be
due and payable to Employee. If Employee's beneficiary or estate receives
any proceeds from any life insurance policies paid for by the Company, the
payments of annual base salary and bonuses which be reduced by the amount
of such proceeds from such life insurance policies.
C. DISABILITY. If Employee becomes disabled during the term
of employment, the Company, at its option, may thereafter, upon written
notice to Employee or Employee's personal representative, terminate the
employment. Employee shall thereafter be eligible to receive disability
benefits under the Company's standard employee disability insurance policy
like any other employee.
D. INVOLUNTARY TERMINATION. If prior notice is given of any
Involuntary Termination as defined herein, Employee, if requested by the
Company, shall continue to render his services and shall be paid the then
annual base salary up to the date of such Involuntary Termination, any
bonuses which the Company's Board of Directors shall determine in its sole
discretion to be due and payable to Employee, and the Severance Amount as
provided herein.
E. DEFINITIONS. All the terms defined in this Section shall
have the meanings given below throughout this Agreement.
1. "CHANGE OF CONTROL" shall be deemed to have occurred
if:
a. any "person," including a "group" as determined
in accordance with Section 13(d)(3) of the Securities Exchange Act of 1934
(the "Exchange Act"), becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities;
b. as a result of, or in connection with, any tender
offer or exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the foregoing
transactions (a "Transaction"), the persons who were directors of the
Company before the Transaction shall cease to constitute a majority of the
Board of Directors of the Company or any successor to the Company;
c. the Company is merged or consolidated with
another corporation and, as a result of the merger or consolidation, less
than 80% of the outstanding voting securities of the surviving or
resulting corporation is then owned in the aggregate by the former
stockholders of the Company;
d. a tender offer or exchange offer is made and
consummated for the ownership of securities of the Company representing
50% or more of the combined voting power of the Company's then outstanding
voting securities; or
e. the Company transfers substantially all of its
assets to another corporation which is not a wholly-owned subsidiary of
the Company.
2. "DISABILITY" shall mean mental or physical illness or
condition rendering Employee incapable of performing Employee's normal
duties with the Company.
3. "INVOLUNTARY TERMINATION" shall mean any termination
except:
a. VOLUNTARY TERMINATION;
b. termination by mutual agreement; or
c. any termination as a result of death, DISABILITY,
or normal retirement pursuant to a retirement plan to which Employee was
subject prior to any CHANGE OF CONTROL.
4. "SEVERANCE AMOUNT" is equal to:
a. in the case of an INVOLUNTARY TERMINATION which
occurs after a CHANGE OF CONTROL, an amount equal to Employee's Annual
Base Salary for one year, payable immediately upon termination; and
b. in the case of an INVOLUNTARY TERMINATION which
does not occur after a CHANGE OF CONTROL, an amount equal to Employee's
Annual Base Salary for one year, payable on regular bi- weekly payroll
dates, for a one-year period;
5. "VOLUNTARY TERMINATION" shall mean any termination
which results from a resignation or an early retirement by the Employee.
6. "VOTING SECURITIES" shall mean any securities which
ordinarily possess the power to vote in the election of directors without
the occurrence of any pre-condition or contingency other than the passage
of time.
F. SECTION 280G PAYMENT REDUCTION. It is the intention of the
parties that the SEVERANCE AMOUNT payments under this Agreement shall not
constitute "excess parachute payments" within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended, and any regulations
thereunder. If the independent accountants acting as auditors for the
Company prior to the date of a CHANGE OF CONTROL (or another accounting
firm designated by them) determine that the SEVERANCE AMOUNT payments
under this Agreement may constitute "excess parachute payments," the
payments may be reduced to the maximum amount which may be paid without
the payments being "excess parachute payments." The determination shall
take into account (i) whether the payments are "parachute payments" under
Section 280G and, if so, (ii) the amount of payments under this Agreement
that constitutes reasonable compensation under Section 280G. Nothing
contained in this Agreement shall prevent the Company after a CHANGE OF
CONTROL from agreeing to pay Employee compensation or benefits in excess
of those provided in this Agreement.
G. MEDICAL AND DENTAL BENEFITS AFTER TERMINATION. If
Employee's employment by the Company or any subsidiary or successor of the
Company is terminated because of DISABILITY, VOLUNTARY TERMINATION, or
INVOLUNTARY TERMINATION, then to the extent that Employee or any of
Employee's dependents may be covered under the terms of any medical and
dental plans of the Company (or any subsidiary) for active Employees
immediately prior to the termination, Employee may, at his option,
continue coverage under such medical and dental plans, or equivalent plans
offered by the Company, for himself and those dependents until the later
of Employee's death or the death of Employee's spouse, if any, at the time
of Employee's death. The coverages may be procured directly by the
Company (or any subsidiary, if appropriate) apart from, and outside of the
terms of, the plans themselves; provided that Employee and Employee's
dependents comply with all of the conditions of the medical or dental
plans. In consideration for the Company's efforts in procuring these
benefits, Employee shall pay the entire cost of such coverage, including
what is typically considered the employer's portion.
IX. LIFE INSURANCE.
A. STANDARD GROUP LIFE INSURANCE. The Company shall provide
Employee with personal life insurance in accordance with the Company's
Group Life Insurance Policy, which currently provides life insurance
benefits for each employee in the amount of twice their annual salary up
to the maximum amount provided in the policy. In addition, the Company
will procure, or reimburse Employee for the cost of $200,000 in term life
insurance on Employee's life payable to a beneficiary chosen by Employee.
B. KEY MAN LIFE INSURANCE. Employee hereby consents to the
purchase by the Company, at the Company's option, of one or more Key Man
life insurance policies on Employee's life naming the Company or its
designee as beneficiary (the "Key Man Policies"); provided, however, that
the Company shall not be required to obtain such insurance. Employee
agrees that he shall take any reasonable actions which may be requested by
the Company, and otherwise fully cooperate with the Company, in its
efforts to purchase and maintain the Key Man Policies. The Key Man
Policies will be owned by the Company and the proceeds made payable to the
Company or its designee. If purchased by the Company, the Key Man
Policies shall be for the purpose of providing funds necessary to obtain a
replacement for Employee and for any other reasonable business purpose as
may determined by the Company in amounts sufficient to accomplish their
intended purpose.
X. DIRECTORS AND OFFICERS INSURANCE. The Company shall procure
Directors and Officers liability insurance coverage on all directors and
officers in such an amount as the Company deems reasonable and necessary
under the circumstances.
XI. NOTICES. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing and delivered in person
or sent by registered or certified mail to Employee's residence in the
case of Employee or to its principal office in the case of the Company.
XII. WAIVER. The waiver of any provision of this Agreement shall not
operate or be construed as a waiver of any other provision of this
Agreement. No waiver shall be valid unless in writing and executed by the
party to be charged therewith.
XIII.SEVERABILITY/MODIFICATION. In the event that any clause or
provision of this Agreement shall be determined to be invalid, illegal or
unenforceable, such clause or provision may be severed or modified to the
extent necessary, and, as severed and/or modified, this Agreement shall
remain in full force and effect.
XIV. ASSIGNMENT. Except for a transfer by will or by the laws of
descent or distribution, Employee's right to receive payments or benefits
under this Agreement shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise. In the event of any
attempted assignment or transfer contrary to this paragraph, the Company
shall have no liability to pay any amount so attempted to be assigned or
transferred.
Employee acknowledges that the services to be rendered under
this Agreement are unique and personal. Accordingly, Employee may not
assign such duties or obligations under this Agreement.
XV. SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of the Company, its successors and assigns (including, without
limitation, any company into or with which the Company may merge or
consolidate). The Company agrees that it will not effect the sale or
other disposition of all or substantially all of its assets unless either
(i) the person or entity acquiring the assets or a substantial portion of
the assets shall expressly assume by an instrument in writing all duties
and obligations of the Company under this Agreement or (ii) the Company
shall provide, through the establishment of a separate reserve for the
payment in full or all amounts which are or may reasonably be expected to
become payable to Employee under this Agreement.
XVI. ENTIRE AGREEMENT. This instrument contains the entire agreement
concerning the employment arrangement between the parties and shall, as of
the effective date hereof, supersede all other such agreements between the
parties provided however, that, nothing in this Agreement shall prevent
the Company from granting additional or special compensation or benefits
to Employee after the date of execution of this Agreement. This Agreement
may not be amended except by an agreement in writing signed by both
parties.
XVII.GOVERNING LAW AND JURISDICTION. This Agreement shall be
interpreted, construed, and enforced under the laws of the State of
Colorado. The courts and authorities of the State of Colorado shall have
sole jurisdiction and venue over all controversies which may arise with
respect to this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year indicated above.
THE COMPANY:
VARI-L COMPANY, INC.
By:/s/Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx,
President
EMPLOYEE:
/s/Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
