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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of ______________ ___, 1998, by and between MODTECH HOLDINGS, INC., a Delaware
corporation (the "Holding Company"), and Xxxxxxx X. Xxxxxx, an individual
residing in the State of California ("Executive").
WHEREAS, the Holding Company desires to retain the services of Executive
on the terms and conditions herein provided, and Executive is willing to provide
such services on such terms and conditions;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants of the parties contained herein, the parties agree as follows:
1. Effective Date. This Agreement shall be effective as of the closings
of the mergers contemplated in that Agreement and Plan of Reorganization and
Merger between Modtech, Inc. and SPI Holdings, Inc., a Colorado corporation,
dated September 28, 1998 (the "Merger Closings"). payment is guaranteed by the
Holding Company.
2. Term. This Agreement shall continue in full force and effect for a
period which shall commence on the date of the Merger Closings and shall
continue until December 31, 2003 (the "Term"), unless sooner terminated as
hereinafter provided or extended by the mutual agreement of the parties. On that
date, and each anniversary thereafter, this Agreement shall automatically be
renewed for a period of one year, unless either party shall have given the other
prior written notice of their intent not to renew this Agreement.
3. Employment. Executive shall serve as the Chief Operating Officer and
Chief Financial Officer of the Holding Company and shall have such
responsibilities, duties and authority customarily associated with such
position, including day-to-day responsibility for the management of the Holding
Company's financial affairs and operations, and oversight of the financial
affairs and operations of its direct and indirect subsidiaries (the
"Subsidiaries"), subject to the supervision of the Chief Executive Officer and
the President. Executive shall devote such of his working time and effort to the
business and affairs of the Holding Company and its Subsidiaries as may
reasonably be required of him in the discharge of the duties and
responsibilities of such office. Executive shall at all times perform his duties
and obligations faithfully and diligently and to the best of Executive's
ability.
4. Compensation.
(a) Base Salary. As compensation for the services provided by
Executive hereunder, during the Term of this Agreement, the Holding Company
shall pay Executive an annual salary of not less than $200,000 per year ("Base
Salary"). Executive's salary shall be reviewed by the Holding Company's Board of
Directors from time to time at its discretion but not less often than annually,
and Executive shall receive such salary increases as the Holding Company's Board
of Directors shall determine; provided that Executive's annual salary payable
for each ensuing twelve
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(12) month period shall in all events be increased at the end of each succeeding
twelve (12) month period at a rate equal to the increase, if any, in the
Consumer Price Index for Urban Wage Earners and Clerical Workers (Los
Angeles-Long Beach-Anaheim), as published by the Bureau of Labor Statistics of
the U.S. Department of Labor, during the preceding twelve (12) months, plus
three percent (3%). All such salary shall be payable in equal installments in
conformity with the Holding Company's normal payroll period, but not less
frequently than monthly.
(b) Bonus. In addition to the minimum salary payable to Executive
as provided in Section 3(a) above, Executive shall be entitled to receive, for
each full or partial calendar year during the Term hereof, a bonus which shall
be calculated and paid as provided in Exhibit A attached hereto.
5. Benefits and Vacations.
(a) Benefits. Executive shall be entitled to participate in any
employee benefit plans, arrangements and perquisites substantially equivalent to
those in which Executive was participating or otherwise deriving benefit from
immediately prior to the beginning of the term of this Agreement, and the
Holding Company and its Subsidiaries will not, without Executive's prior written
consent, make any changes in such plans, arrangements or perquisites which would
materially adversely affect Executive's rights or benefits thereunder, except to
the extent that such changes are made applicable to all senior executive
employees of the Holding Company or its Subsidiaries eligible to participate in
such plans, arrangements and perquisites on a non-discriminatory basis. Without
limiting the generality of the foregoing, Executive shall be entitled to
participate in or receive benefits under all plans relating to, any pension
plans, profit sharing plans, any non-qualified deferred compensation plans and
related "rabbi" trusts, life insurance plans, disability benefit plans, vacation
and holiday pay plans, medical, dental and welfare plans, and other present or
successor plans and practices of the Holding Company and its Subsidiaries for
which senior executive officers are eligible, and to all payments and other
benefits under any such plan or practice subsequent to the term of this
Agreement as a result of participation in such plan or practice during the term
of this Agreement.
(b) Vacations and Holidays. Executive shall be entitled to the
number of paid vacation days in each calendar year, and to compensation for
earned but unused vacation days, determined by the Holding Company from time to
time for its senior executive officers, but not less than four (4) weeks in each
year of the Term hereof. Executive shall also be entitled to all paid holidays
given by the Holding Company to its executives and key management employees.
6. Expenses. During the Term hereof, Executive shall be entitled to
receive prompt reimbursement of all reasonable expenses incurred by Executive
(in accordance with the policies and procedures from time to time adopted by the
Board of Directors of the Holding Company for its senior executive officers) in
performing the services contemplated hereunder, provided that Executive properly
accounts therefor in accordance with the Holding Company's policy.
7. Termination.
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(a) Executive's employment hereunder shall terminate immediately
upon death.
(b) In the event that Executive shall be unable to perform the
services contemplated hereunder by reason of disability, illness or other
incapacity, such failure to so perform such duties shall not be grounds for
terminating the employment of Executive by the Holding Company; provided,
however, that the Holding Company may terminate Executive's employment hereunder
should the period of such incapacity exceed six (6) consecutive months
("Disability"). Any such termination shall not be considered to be for "Cause"
as defined in subparagraph (c) immediately below.
(c) Executive's employment hereunder may be terminated by the
Holding Company prior to the expiration of the Term, with or without Cause,
immediately upon delivery by the Holding Company of a written notice of
termination.
(d) For the purposes of this Agreement, "Cause" means (i) the
willful and continued failure by Executive to substantially perform Executive's
duties hereunder, other than any such failure resulting from Executive's
incapacity due to physical or mental illness, after a demand for substantial
performance is delivered to Executive by the Board of Directors of the Holding
Company (the "Board") which specifically identifies the manner in which the
Board believes that Executive has not substantially performed such duties and
Executive has not diligently and in good faith taken reasonable steps to comply
with such demand within 30 days of his receipt of the same, or (ii) the willful
engaging by Executive in gross misconduct materially and demonstrably injurious
to the Holding Company. For purposes of this subparagraph, no act, or failure to
act, on Executive's part shall be considered "willful" merely because it was the
result of bad judgment or negligence; rather, such act or failure to act must
have been done, or omitted to have been done, by Executive other than in good
faith and without reasonable belief that Executive's action or omission was in
the best interests of the Holding Company. Notwithstanding the foregoing,
Executive's employment shall not be deemed to have been terminated for "Cause"
unless and until there shall have been delivered to Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice to Executive and an opportunity for
Executive, together with Executive's counsel, to be heard before the Board),
finding that in the good faith opinion of the Board Executive was guilty of
conduct described above in clauses (i) or (ii) of this subparagraph and
specifying the particulars thereof in detail. In the event that Executive is
terminated for Cause, the Holding Company shall pay Executive's salary through
the date of termination, any bonuses which have been earned by Executive through
the date of termination after deducting any amounts lawfully owing from
Executive to the Holding Company, and shall thereafter have no further
obligation to Executive, except to the extent that Executive may be entitled to
exercise any of the options granted to Executive as contemplated in Section 4(c)
above or otherwise.
(e) Executive shall be entitled to terminate his employment with
the Holding Company hereunder for "Good Reason". For purposes of this Agreement,
any termination of employment under any one or more of the following
circumstances shall be for "Good Reason":
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(i) Without Executive's express written consent, the
assignment to Executive of any duties inconsistent with Executive's
positions, duties, responsibilities and status with the Holding
Company, or a change in Executive's reporting responsibilities,
titles or offices as in effect upon the execution hereof, or any
removal of Executive from or any failure to re-elect Executive to
the Holding Company's Board of Directors or any other of
Executives's positions, except in connection with the termination of
Executive's employment for Cause, Disability or as a result of
death;
(ii) The reduction by the Holding Company in Executive's Base
Salary, as the same may thereafter be increased from time to time,
or the failure by the Holding Company to increase such Base Salary
each successive year, as specified in Section 4(a) hereof;
(iii) The failure by the Holding Company to continue
Executive's participation in the bonus and other compensation plans
and incentive plans specified in Section 4(b) hereof;
(iv) The failure by the Holding Company to continue
Executive's participation in any benefit plan, pension plan,
qualified retirement plan, life insurance plan, vacation plan,
holiday plan, car lease plan, medical expense, health and accident
plan or disability plan, or expense reimbursement arrangement
specified in Sections 5 and 6 hereof, or the taking of any action by
the Holding Company (prompt notice of which shall be provided to
Executive) which would adversely affect Executive's participation in
(including increasing Executive's costs of such participation), or
materially reduce Executive's benefits under, any of such plans, or
which would deprive Executive of any other fringe or personal
benefits under any of such plans; provided, however, that
notwithstanding the provisions of this Section 7(e)(iv), the Holding
Company's providing benefits of a type or amount different than as
provided for hereinabove shall not be deemed a violation of this
subparagraph if required by law;
(v) The relocation of the Holding Company's principal
executive offices to a location outside of Riverside County or
Orange County, California, or the requirement by the Holding Company
that Executive be based anywhere other than at the Holding Company's
principal executive offices or the location where Executive is based
at the time of execution hereof, except for required travel on the
Holding Company's business to an extent substantially consistent
with Executive's business travel obligations in effect immediately
prior to the execution hereof; or, in the event Executive consents
to any such relocation of the Holding Company's principal executive
offices or change in the location where Executive is based, the
failure by the Holding Company (A) to pay (or promptly reimburse
Executive for) all reasonable moving expenses incurred by Executive
relating to a change of Executive's principal residence in
connection with such relocation, and (B) to
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indemnify Executive against any loss (defined as Executive's cost of
terminating any lease for such residence, if it is leased, or if
Executive owns such residence the difference between the actual sale
price of such residence and the higher of Executive's aggregate
investment in such residence or the fair market value of such
residence as determined by any real estate appraiser designated by
Executive and reasonably satisfactory to the Holding Company)
realized in the lease termination or sale of Executive's principal
residence in connection with any such change of residence, and (C)
to reimburse Executive for the amount of any federal, state and
local income taxes for which Executive becomes liable by a reason of
Executive's receipt of any amounts under this subparagraph;
(vi) Any purported termination of Executive's employment by
the Holding Company which is not effected pursuant to a Notice of
Termination satisfying the requirements of subparagraph 7(f) below;
or
(vii) a determination by Executive made in good faith that, as
a result of a detrimental change in circumstances significantly
affecting Executive's position, Executive is unable properly to
carry out all of the authorities, powers, functions, duties and
responsibilities attached to Executive's position and contemplated
by Section 3, and the situation is not remedied within 30 days after
receipt by the Holding Company of written notice from Executive of
such determination.
(f) Any termination of Executive's employment by the Holding
Company for Disability or Cause, or by Executive for Good Reason, shall be
communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon,
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated, and shall set forth the date upon which such termination is to become
effective ("Date of Termination").
8. Compensation on Certain Terminations. If Executive terminates
Executive's employment during the term of this Agreement for Good Reason or if
Executive is otherwise terminated except for Cause then:
(a) Severance Payment. Holding Company or its successor, shall pay
to Executive the two (2) times the average of his Base Salary and bonuses for
the two (2) preceding taxable years that Executive has been employed by the
Holding Company (predecessor or its successor) or such lesser number of years in
the event Executive shall have been employed with the Holding Company
(predecessor or its successor) less than two (2) years ("Severance Payment"). In
the event of Executive's death, the Severance Payment shall be made to his
estate or beneficiaries, as the case may be. The Severance Payment shall be made
in full in cash within 30 days following the Date of Termination. Executive is
not required to mitigate the amount of the Severance Payment by seeking other
employment or otherwise, nor shall any compensation earned by Executive in other
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employment or otherwise reduce the amount of the Severance Payment. The
Severance Payment will NOT be reduced if the remaining term of this Agreement is
less than two years.
(b) Stock Options. All stock options, warrants and similar rights
relating to capital stock of the Holding Company held by Executive shall
immediately become fully vested and exercisable. The terms of such warrants,
options and rights shall be extended to the third anniversary of Executive's
termination of employment.
(c) Benefits. The Holding Company will cause to be continued life,
medical, dental and disability coverage substantially equivalent to the coverage
maintained by the Holding Company or its Subsidiaries for Executive prior to his
termination at no premium cost to the Executive. Such coverage shall cease upon
the expiration two years from the Date of Termination. Nothing in Section 8(a)
or 8(b) shall deprive Executive of any rights, payments, benefits or service
credit for benefits after termination of employment which were earned pursuant
to any provision of this Agreement or any plan or practice of the Holding
Company on or prior to such termination including, without limitation, any
pension or welfare benefits and any rights under the Holding Company's pension,
deferred compensation or stock option or other benefit plans.
If the Holding Company elects not to renew this Agreement following the
expiration of its then current term, it shall pay Executive on expiration of the
then current term a severance payment equal to one-half of the then current
annual Base Salary, plus one half of the most recently completed year's bonus.
In addition, the Holding Company will cause to be continued life, medical,
dental and disability coverage substantially equivalent to the coverage
maintained by the Holding Company or its Subsidiaries for Executive prior to his
termination at no premium cost to the Executive for a period of six months.
9. Indemnification. The Holding Company shall indemnify Executive to
the fullest extent permitted by the General Corporation Law of the State of
Delaware, as amended from time to time, for all amounts (including, without
limitation, judgments, fines, settlement payments, expenses and attorneys' fees)
incurred or paid by Executive in connection with any action, suit, investigation
or proceeding arising out of or relating to the performance by Executive of
services for, or the acting by Executive as a director, officer or employee of,
the Holding Company, or any subsidiary of the Holding Company or any other
Person at the Holding Company's request. Nothing in this Section 9 or elsewhere
in this Agreement is intended to prevent the Holding Company from indemnifying
Executive to any greater extent than is required by this Section 9.
10. Proprietary Information. Executive acknowledges that certain
technological and other information may from time to time be disclosed to
Executive by the Holding Company during the continuance hereof. Executive hereby
acknowledges that all such information and technology, whether currently
existing or hereafter developed by the Holding Company through or involving the
services and efforts of Executive hereunder, shall at all times consist of and
be preserved by Executive as valuable trade secrets and confidential information
which is proprietary to and owned exclusively by the Holding Company, and that
Executive does not have, and shall not have or hereafter acquire, any rights in
or to any of such information and technology, including without
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limitation any patents, inventions, discoveries, know-how, trademarks or
tradenames used or adopted by the Holding Company in connection with the design,
development, manufacture, marketing, sale or installation of any products which
at any time during the continuation hereof may be offered and sold or licensed
by the Holding Company. Executive further warrants and agrees that he shall not
at any time, whether during the continuance of this Agreement or after its
expiration or earlier termination, whether by Executive or by the Holding
Company, in any manner or form, directly or indirectly, use, disclose,
duplicate, license, sell, reveal, divulge, publish or communicate any portion of
any such information or technology, nor use, disclose, duplicate, license, sell,
reveal, divulge, publish or communicate any other confidential information
concerning the Holding Company, or any customers or other products of the
Holding Company, to any person, firm or entity.
11. Competition. During the Term hereof, Executive shall not, without
the Holding Company's prior written consent, directly or indirectly engage in
any business activity, or have any interest in any person, firm or other entity
engaged in any business activity, in which the Holding Company at the time is
engaged or is planning to engage. During the Term hereof and for a period of
twenty-four (24) months thereafter, Executive shall not directly or indirectly:
(a) divert or take away or solicit or attempt to divert or take away any of the
Holding Company's customers, including without limitation those customers with
whom Executive became acquainted while retained by the Holding Company; (b)
employ, or knowingly permit any business entity controlled by Executive to
employ, any person who during the period of twelve (12) months immediately
preceding such time has been employed by the Holding Company; (c) solicit or
otherwise seek to induce any employee of the Holding Company to leave his or her
employment with the Holding Company; or (d) undertake planning for or
organization of any business activity that will injure the Holding Company's
business, or conspire with employees of the Holding Company for the purpose of
organizing any such injurious business activity.
12. General Provisions.
(a) Any notice, request, demand or other communication required or
permitted hereunder shall be deemed to be properly given when personally served
in writing, when deposited in the United States mail, postage prepaid, or when
communicated to a public telegraph Holding Company for transmittal, addressed to
the Holding Company or Executive at their respective last known address. Either
party may change its address by written notice given in accordance with this
subparagraph.
(b) This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective executors, administrators,
successors and assigns; provided, however, that Executive may not assign any or
all of Executive's rights or duties hereunder without the prior written consent
of the Holding Company.
(c) This Agreement is made and entered into, is to be performed
primarily within, and shall be governed by and construed in all respects in
accordance with the laws of the State of California.
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(d) Captions and Paragraph headings used herein are for
convenience only and are not a part of this Agreement and shall not be used in
construing it.
(e) Should any provision of this Agreement for any reason be
declared invalid, void, or unenforceable by a court of competent jurisdiction,
the validity and binding effect of any remaining portions shall not be affected,
and the remaining portions of this Agreement shall remain in full force and
effect as if this Agreement had been executed with said provision eliminated.
(f) The Holding Company shall indemnify Executive to the fullest
extent permitted by applicable law with respect to any claims arising from the
performance by Executive of his duties hereunder during the Term of this
Agreement.
(g) This Agreement contains the entire agreement of the parties,
and supersedes any and all other agreements, either oral or in writing, between
the parties hereto with respect to the employment of Executive by the Holding
Company. Each party to this Agreement acknowledges that no representations,
inducements, promises or agreements, oral or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not embodied herein or
therein, and that no other agreement, statement or promise not contained herein
or therein shall be relied upon or be valid or binding. This Agreement may not
be modified or amended by oral agreements, but only by an agreement in writing
signed by the Holding Company on the one hand, and by Executive on the other
hand.
(h) In the event of any litigation between Executive and the
Holding Company concerning the rights or obligations of any party under this
Agreement, the non-prevailing party shall pay the reasonable costs and expenses,
including attorneys' fees, of the prevailing party in connection therewith.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
"Executive"
______________________________________________
Xxxxxxx X. Xxxxxx
Modtech Holdings, Inc.
By: __________________________________________
Xxxx X. Xxxxxx, Chief Executive Officer
By: __________________________________________
Xxxxxxx Van Den Bossche, President
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EXHIBIT A
BONUS PLAN
The annual incentive bonus plan shall be the same as the annual bonus plan
currently utilized by Modtech, which is described in the Memorandum to
Compensation Committee attached hereto as Schedule 1.
