Exhibit 10.6
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made as of June 7, 2001
(the "Effective Date"), by and between Dense-Pac Microsystems, Inc., a
California corporation (the "Company") and Xxxxxx X. Xxxxx (the "Executive").
RECITALS
WHEREAS, Executive has provided services to the Company since January 25,
1999;
WHEREAS, the services and ability of Executive have constituted a major
factor in the growth and development of the Company;
WHEREAS, the Company wishes to continue to employ Executive, to make secure
for itself the experience, abilities and services of Executive, and to prevent
the loss of such experience, services and abilities; and
WHEREAS, Executive wishes to accept such continued employment on the terms
and conditions hereafter set forth;
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto, each intending to
be legally bound, do hereby agree as follows:
1. Employment. The Company shall employ Executive, and Executive shall
perform services for and continue in the employment of the Company, for an
initial period of two (2) years commencing on the Effective Date and ending two
(2) years thereafter, whereupon Executive's employment hereunder shall
automatically be extended from year to year thereafter, until either the Company
or Executive gives the other party at least one hundred and twenty (120) days
written notice prior to the then-applicable "Expiration Date" (as hereinafter
defined) of its or his desire to terminate this Agreement, unless such
employment shall have been sooner terminated as hereinafter set forth. For
purposes of this Agreement (i) the term "Employment Period" shall mean the
initial two (2) year period and all extensions thereof, if any, as aforesaid,
and (ii) the term "Expiration Date" shall mean the date two (2) years from the
Effective Date or the date this Agreement is last in effect in the event that
the Employment Period is extended on and after the date two (2) years from the
Effective Date.
2. Position and Duties. Executive shall serve the Company at its Garden
Grove location, or at any other location within the-five miles of the Garden
Grove location, in the capacity of President and Chief Executive Officer of the
Company, or in such other position consistent with Executive's previously
(during the two years preceding the date of this Agreement) rendered duties and
obligations as the Board of Directors of the Company ("Board") may designate
from time to time, and shall be accountable to, and shall have such other
executive powers, duties and responsibilities, consistent with such capacity.
Executive shall perform and discharge, faithfully, diligently and to the best of
his ability, such duties and responsibilities. Executive shall devote all of his
working time and efforts to the business and affairs of the Company.
3. Compensation.
(a) Salary. During the Employment Period, Executive shall receive a
salary (the "Salary") payable at the rate of $200,000 per annum. The Board may
increase such Salary from time to time without the Executive's consent, which
increase shall constitute an amendment to this Agreement. In no event shall the
Executive's Salary be adjusted or decreased below the Executive's then current
Salary without the Executive's written consent. The Salary shall be payable
biweekly or in accordance with the Company's current payroll practices, less all
required deductions. The Salary shall be pro-rated for any period of service
less than a full year.
(b) Expenses. During the Employment Period, Executive shall be entitled
to receive prompt reimbursement for all reasonable business expenses incurred by
him on behalf of the Company.
(c) Fringe Benefits. During the Employment Period, Executive shall be
entitled to participate in or receive benefits under any life or disability
insurance, health, pension, retirement and accident plans or arrangements made
generally available by the Company to its executives, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. In accordance with the Company policy, Executive shall also be
entitled to no less then 25 days of personal time off (PTO) with pay, in any
fiscal year during the Employment Period as well as all paid holidays given by
the Company to its executives.
(d) Options. Through the Employment Period Executive shall be entitled to
participate in any applicable option grant of the Company. Upon a Change of
Control (as defined below), 100 % of all unvested options issued under any of
the Company's Stock Plans to Executive shall immediately vest, and all such
vested options shall immediately be exercisable. The amount of vesting and
acceleration of the option's exercisability in the preceding sentence is
separate from, and to the extent applicable in addition to, any vesting or
acceleration that may apply to options granted Executive under any of the
Company's Stock Plans. Notwithstanding anything to the contrary in any Stock
Option Plan of the Company concerning the exercise of options by a person who is
no longer an employee of the Company, the Company agrees that following any
resignation or termination as a result of a Change of Control, for purposes of
exercising options, Executive will continue to be treated as an "Employee" as
defined under each of the applicable Stock Plans through which Executive has
been granted options with respect to the time within which Executive's options
must be exercised.
(e) Automobile. Without limiting the generality of the foregoing during
the Employment Period Executive shall be furnished with an automobile allowance
of $500 per month.
4. Termination and Compensation Thereon.
(a) Termination Date. The term "Termination Date" shall mean the earlier
of (i) the Expiration Date; or (ii) if Executive's employment is terminated (x)
by his death, the date of his death, or (y) for any other reason, the date on
which such termination is to be effective pursuant to the notice of termination
given by the party terminating the employment relationship.
(b) Death. Executive's employment hereunder shall terminate upon his
death. In such event, the Company shall pay to such person as Executive shall
have designated in a notice filed with the Company, or, if no such person shall
have been designated, to his estate, a lump sum amount equal to the Salary that
would have been due to Executive had this Agreement been in effect from the date
of his death until the Expiration Date.
(c) Incapacity. If in the reasonable judgment of the Board, as a result
of Executive's incapacity due to physical or mental illness or otherwise,
Executive shall for at least six consecutive months during the term of this
Agreement been unable to perform his duties under this Agreement on a full-time
basis, the Company may terminate Executive's employment hereunder by notice to
Executive. In such event, the Company shall continue to pay Executive his Salary
(at the rate in effect as of the Termination Date) and extend to him the
applicable fringe benefits referred to in Section 3(c), 3(d) and 3(e) hereof,
until the Expiration Date. Any dispute between the Board and Executive with
respect to the Executive's incapacity shall be settled by reference to a
competent medical authority mutually agreed to by the Board and Executive, whose
decision shall be binding on all parties.
(d) Change of Control. For purposes of this Agreement "Change of Control"
is defined as any of the following: (i) the sale on a single or series of
transactions of all or substantially all the assets of the Company, or (ii) a
transaction or series of transactions which results in any person or entity or a
group (as defined under Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended from time to time (the "Act")) becoming the beneficial owner (within
the meaning of Rule 13d-3 under the Act), of shares of common stock of the
Company (or in the case of any merger, consolidation or reorganization, of the
surviving or new entity) constituting in excess of 40% of the voting rights of
all outstanding shares of common stock of the Company (or in the case of any
merger, consolidation or reorganization, of the surviving or new entity),
including for purposes of this calculation, common stock, as to what there is
then deemed to be a beneficial owner (within the meaning of said Rule 13d-3), or
(iii) a change in the composition of the board of directors of the Company
occurring within a two-year period, as a result of which fewer than a majority
of the directors are "Incumbent Directors" (for purposes of a Change of Control,
Incumbent Directors shall mean directors of the Company who (x) are directors of
the Company as of the Effective Date of this Agreement, or (y) are elected, or
nominated for election, to the board of directors with the affirmative vote of
at least a majority of the Incumbent Directors at the time of such election or
nomination, but shall not include an individual whose director election or
nomination is in connection with an actual or threatened proxy contest relating
to the election of directors to the Company's board of directors)). If a Change
of Control occurs and this Agreement or Executive's employment is terminated
during the period six months prior to such Change of Control or the period
eighteen months following said Change of Control, by either the Company, or its
successors or assigns, or by the executive, other than for Cause pursuant to
Section 4(e), then the Company, including its successors or assigns, shall:
(A) Within thirty (30) days after the Termination Date, pay to Executive
(or in the event of Executive's subsequent death, such person as Executive shall
have designated in a notice filed with the Company, or, if no such person shall
have been designated, (to his estate) a lump sum amount equal to the Executive's
unpaid Salary from the Termination Date through the Expiration Date, which
amount shall be paid in addition to the Salary due and payable under Section 4
(g) below;
(B) Until the Expiration Date, continue to extend to the Executive all of
the expenses, h g e benefits and options set forth in Section 3(b), 3(c), 3(d)
and 3(e) above.
The obligations of the Company, its successors, or assigns pursuant to this
Section 4(d) shall survive any termination of this Agreement or Executive's
employment (other than for Cause pursuant to Section 4(e)), or any resignation
of such employment by Executive.
(e) Termination by the Company. The Company may terminate Executive's
employment hereunder for "Cause." For purposes of t h s Agreement, Cause shall
mean (i) Executive's willful failure to materially perform and discharge his
duties and responsibilities hereunder, (ii) willfuI breach of any fiduciary
duties Executive may have with the Company or any subsidiary or affiliate
thereof, or (iii) a felony conviction. If the Company pursuant to this Section
4(e) terminates Executive's employment for Cause, then the Company shall have no
further obligations to Executive under this Agreement after the Termination
Date, except for unpaid Salary and benefits to Executive accrued through the
Termination Date. If the Company terminates the Executive's employment prior to
the Expiration Date, unless for Cause, then the Company shall pay to the
Executive the Executive's unpaid Salary from the Termination Date through the
Expiration Date, payable biweekly or in accordance with the Company's current
payroll practices, less all required deductions, as well as continue from the
Termination Date through the Expiration Date all of the benefits to Executive
under Section 3(c), 3(d) and 3(e).
(f) Not applicable
(g) Severance Pay. Except for termination of Executive's Employment by
voluntary resignation (other then a change of control as defined in section
4(d)) or for Cause pursuant to Section 4(e), and subject to each of Sections
5(d) and 5(e), in the event the Company terminates the employment of Executive
during the Employment Period, or upon the expiration of the Employment Period if
the company provides notice of non-renewal, Executive shall be entitled to the
additional consideration of, and the Company shall pay Executive, his then
current Salary and continue his benefits under Section 3(c), 3(d) and 3(e) as in
effect on the Termination Date for a period of twenty four (24) months following
the Expiration Date, commencing on the Expiration Date. In addition (subject to
forfeiture under Sections 5(d) and 5(e)), 100 % of all unvested options issued
under any of the Company's Stock Plans to Executive shall vest as of the
termination date, and all such vested options shall immediately be exercisable.
The amount of vesting and acceleration of the option's exercisability in the
preceding sentence is separate from, and to the extent applicable in addition
to, any vesting or acceleration that may apply to options granted Executive
under any of the Company's Stock Plans. Notwithstanding anything to the contrary
in any Stock Option Plan of the Company concerning the exercise of options by a
person who is no longer an employee of the Company, the Company agrees that for
purposes of exercising options, Executive will continue to be treated as an
"Employee" as defined under each of the applicable Stock Plans through which
Executive has been granted options with respect to the time within which
Executive's options must be exercised.
(h) Out-Placement Assistance. Except for termination of Executive
Employment for Cause pursuant to Section 4(e), or the voluntary termination by
Executive of his Employment six months before or eighteen months following a
Change of Control, upon the termination of Executive's employment, the Company
will provide, at its sole expense, executive-level out-placement services to
Executive at the out-placement provider of Executive's reasonable choice for a
period not to exceed twenty four (24) months following Executive's Termination
Date.
5. Proprietary Rights and Non-Competition. Executive acknowledges that
the Company is engaged in a continuous program of research, development and
production in connection with its business, present and future and hereby
covenants as follows:
(a) Confidentiality. Executive will maintain in confidence and will not
disclose or use, either during or after the Employment Term, any proprietary or
confidential information or know-how belonging to the Company ("Proprietary
Information" hereinafter defined), whether or not in written form, except to the
extent required to perform duties on behalf of the Company. For purposes of t h
~ s Agreement, "Proprietary Information" shall mean any information, not
generally known to the relevant trade or industry, which was obtained from the
Company, or which was learned, discovered, developed, conceived, originated or
prepared by Executive in connection with this Agreement. Such Proprietary
Information includes, without limitation, software, technical and business
information relating to the Company's inventions or products, research and
development, production processes, manufacturing and engineering processes,
machines and equipment, finances, customers, marketing and production and future
business plans, information belonging to customers or suppliers of the Company
disclosed incidental to Executive's performance under this Agreement, and any
other information which is identified as confidential by the Company, but only
so long as the same is not generally known in the relevant trade or industry.
(b) Inventions.
(i) Definition of Inventions. For purposes of this Agreement,
"Inventions" shall mean any new or useful art, discovery, contribution, finding
or improvement, -whether or not patentable, and all related know-how. Inventions
shall include, without limitation, all designs, discoveries, formulae,
processes, manufacturing techniques, semiconductor designs, computer software,
inventions, improvements and ideas.
(ii) Disclosure and Assignment of Inventions. Executive will promptly
disclose and describe, in confidence, to the Company all Inventions which he may
solely or jointly conceive, develop, or reduce to practice during the Employment
Term (A) which relate at the time of conception, development, or reduction to
practice of the Invention to the Company's business or actual or demonstrably
anticipated research or development, or ((euro)3) which were developed, in whole
or in part, in the Company's time or with the use of any of the Company's
equipment, supplies, facilities or trade secret information, or (C) which
resulted from any work performed by Executive for the Company (the "Company's
Inventions"). Executive hereby assigns all of his right, title and interest
world-wide in the Company's Inventions and in all intellectual property rights
based upon the Company's Inventions; provided, however, that Executive does not
assign or agree to assign any Inventions, whether or not relating in any way to
the Company's business or demonstrably anticipated research and development,
which were made by him prior to the date of this Agreement, or which were
developed by him prior to the independently during the term of this Agreement
and not under the conditions stated in Section 5 (b)(ii) above. Any provision in
this Agreement requiring Executive to assign his rights in all Inventions to the
Company shall not apply to an invention that qualifies fully under the
provisions of California Labor Code section 2870. Executive shall bear the full
burden of proving that any invention claimed by Executive as his own qualifies
fully under California Labor Code section 2870.
(c) Documents and Materials. Upon termination of this Agreement or any
other time upon the Company's request, Executive will promptly deliver to the
Company without retaining any copies, all documents and other materials
furnished to him by the Company, prepared by him for the Company, or otherwise
relating to the Company's business, including, without limitation, all written
and tangible material in his possession incorporating any Proprietary
Information.
(d) Competitive Employment and Loss of Severance Benefits. During the
Employment Term, or from the Effective Date through the Termination Date, as
applicable, and for a period of twenty four (24) months thereafter
(collectively, the "Extended Term"), Executive will not engage in any
employment, consulting, or other activity in any business competitive with
either the Company or its subsidiaries without the Company's written consent,
which consent shall not be unreasonably withheld. Should Executive compete, or
make substantive preparations to compete, with the Company or its subsidiaries
during the Extended Term, then, in addition to any other rights that the Company
may have at law or in equity, the Company's obligations to Executive under
Section 4(g) shall be deemed excused, waived, and of no further force or legal
affect. Should Executive engage in activity in violation of this Section 5(d),
then Executive agrees that the value of any and all benefits provided to
Executive pursuant to Section 4(g) shall be returned, repaid, or forfeited, as
applicable, by Executive to the Company.
(e) Non-solicitation and Loss of Severance Rights. During the Extended
Term, Executive will not solicit or encourage, or cause others to solicit or
encourage, any employees of the Company to terminate their employment with the
Company. Should Executive solicit, or assist others in soliciting, employees of
the Company to terminate employment with the Company during the Extended Term,
then, in addition to any other rights that the Company may have at law or in
equity, the Company's obligations to Executive under Section 4(g) shall be
deemed excused, waived, and of no further force or legal affect. Should
Executive engage in activity in violation of this Section 5(e), then Executive
agrees that the value of any and all benefits provided to Executive pursuant to
Section 4 (g) shall be returned or repaid, as applicable, by Executive to the
Company.
(f) Acts to Secure Proprietary Rights.
(i) Further Acts. Executive agrees to perform, during and after the
Employment Term, all acts deemed necessary or desirable by the Company to
assist, at the Company's expense, in perfecting and enforcing the full benefits,
enjoyment, rights and title throughout the world in the Company's Inventions.
Such acts may include, without limitation, execution of documents and assistance
or cooperation in the registration and enforcement of applicable patents and
copyrights or other legal proceedings. Company agrees that with respect to any
post employment consultant assistance requested from Executive, beyond the
aggregate of two hours, that Company shall reasonably compensate Executive for
the reasonable value of his services and to reimburse him for his expenses
incurred in connection with such services.
(ii) Appointment of Attorney-In-Fact. In the event that the Company is
unable, for any reason whatsoever, to secure Executive's signature to any lawful
and necessary document required to apply for or execute any patent, copyright or
other applications with respect to any of the Company's Inventions (including
improvements, renewals, extensions, continuations, divisions or continuations in
part thereof), Executive hereby irrevocably appoints the Company and its duly
authorized officers and agents as his agents and Attorneys-in-fact to execute
and file any such application and to do all other lawfully permitted acts to
further the prosecution and issuance of patents, copyrights or other rights
thereon with the same legal force and effect as if executed by intending hereby
to create a so-called "durable power'' which will survive any subsequent
disability.
(g) No Conflicting Obligations. Executive's performance of h s Agreement
does not breach and will not breach any agreement to keep in confidence
proprietary information, knowledge or data acquired by him.
(h) Corporate Opportunities. Executive agrees that he will first present
to the Board, for its acceptance or rejection on behalf of the Company, any
opportunity to create or invest in any company which is or will be involved in
high density packaging, system design, or manufacturing of rapid innovative
solutions, which comes to his attention and in which he, or any affiliate, might
desire to participate. If the Board rejects the same or fails to act thereon in
a reasonable time, Executive shall be free to invest in, participate or present
such opportunity to any other person or entity.
(i) Specific Performance. Executive acknowledges that a breach of any of
the promises or agreements contained herein could result in irreparable and
continuing damage to the Company for which there may be no adequate remedy at
law, and the Company shall be entitled to seek injunctive relief and or a decree
for specific performance, and such other relief as may be proper (including
monetary damages if appropriate).
6. Amendments. No amendment to this Agreement or any schedule hereto
shall be effective unless it shall be in writing and signed by each party
hereto.
7. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally or sent by telecopy
or three days after being mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shalI be specified by like notice):
If to the Company, to it at:
Dense-Pac Microsystems, Inc.
0000 Xxxxxxx Xxx
Xxxxxx Xxxxx, XX 00000
Attention: Corporate Secretary
If to Executive, to him at;
XXXXXX
XXXXXX
8. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto pertaining to the subject matter hereof and supersedes
all prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties.
9. Arbitration. In the event of a dispute between the parties as to the
meaning or interpretation of this Agreement, or the performance of either party
hereunder, except for equitable relief, the parties shall submit the matter to
binding arbitration in Orange County, California, to the American Arbitration
Association, which is expressly permitted and required hereby to include the
reasonable costs of arbitration, including reasonable attorney fees, of the
prevailing party, in its decision. The decision of the arbitrator shall be final
and may be entered as a judgment in any court of competent jurisdiction.
10. Miscellaneous. The invalidity and unenforceability of any term or
provision hereof shall not affect the validity or enforceability of any other
tern or provision hereof. The headings in this Agreement are for convenience of
reference only and shall not alter or otherwise -affect the meaning hereof. This
Agreement may be executed in any number of counterparts which together shall
constitute one instrument and shall be governed by and construed in accordance
with the laws (other than the conflict of laws rules) of the State of California
and shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
IN WITNESS WHEREOF, the parities hereto have executed the Agreement as of
the date first written above.
EXECUTIVE
/s/ Xxxxxx Xxxxx
--------------------------------
Xxxxxx X. Xxxxx
DENSE-PAC MICROSYSTEMS, INC.
/s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx
Chairman of the Board
