EMPLOYMENT AGREEMENT
This Agreement is entered into as of July 10, 1996, between
Electronic Fab Technology Corp., a Colorado corporation (the "Company"),
and Xxxx Xxxxxxxx ("Executive"), to be effective upon commencement of
Executive's employment by the Company on August 5, 1996.
The parties agree as follows:
A. Employment. The Company agrees to employ
Executive and Executive agrees to be employed by the Company on the
terms set forth in this Agreement.
A. Capacity and Duties. Executive shall be
employed by the Company as its Chief Executive Officer or in such other
executive capacity as the board of directors shall determine. During
his employment, Executive shall perform the duties and bear the
responsibilities commensurate with his position and shall serve the
Company faithfully and to the best of his ability, under the direction
of the Company's board of directors. Executive shall devote his entire
working time, attention and energies to the business of the Company.
His actions shall at all times be such that they do not discredit the
Company or its products and services. Except for his involvement in
personal investments, provided such involvement does not require any
significant services on his part, Executive shall not engage in any
other business activity or activities that require significant personal
services by Executive or that, in the judgment of the board of
directors, may conflict with the proper performance of Executive's
duties hereunder.
A. Compensation.
1. Salary. For all services rendered by
Executive, the Company shall pay Executive during the term of this
Agreement a salary of at least $200,000 per annum, payable in arrears in
the same manner as the Company generally pays its employees' salaries.
The amount of the salary may be increased at the discretion of the
Company's board of directors, although Executive shall not have any
right to an increase.
1. Bonus. Executive may also receive a bonus
of up to 50% of Executive's annual salary as described in Section 3(a)
based upon performance criteria to be established by the board of
directors with respect to each calendar year. If this Agreement is
terminated (other than under Section 5(c) or 5(d)), Executive shall
receive, within 90 days after the end of the calendar year in which such
termination occurs, a pro rata portion of such bonus, if any, that
accrues with respect to such calendar year based on the period during
such year that the Executive was employed by the Company prior to
termination.
1. Benefits. The Company also shall provide
Executive, during the term of this Agreement, with the benefits of such
life and medical insurance plans, profit sharing plans and other
employee fringe benefit plans as shall be provided generally to
employees of the Company and for which Executive may be eligible under
the terms of such plans. Nothing in this Agreement shall require the
Company to adopt or maintain any such employee benefit plans.
1. Stock Options. The Company shall grant to
Executive non-qualified stock options to purchase 200,000 shares of
Company common stock with an exercise price equal to the last closing
sale price of the Company's stock on the Nasdaq National Market on the
business day preceding the date of this Agreement. The vesting schedule
of the options shall be as follows:
a. 50,000 shares shall vest upon the
date Executive's employment commences;
a. 25,000 shares shall vest when the
price of the Company's stock averages $6.00 per share or higher
for 20 out of the last 30 trading days;
a. 25,000 shares shall vest when the
price of the Company's stock averages $8.00 per share or higher
for 20 out of the last 30 trading days;
a. 50,000 shares shall vest when the
price of the Company's stock averages $10.00 per share or higher
for 20 out of the last 30 trading days; and
a. 50,000 shares shall vest when the
price of the Company's stock averages $12.00 per share or higher
for 20 out of the last 30 trading days.
Notwithstanding the vesting schedule set forth above, all options shall
fully vest in the event of a Change in Control, as defined in Section
5(d), or if Executive remains employed with the Company, at the end of
seven years of continuous employment. If employment of the Executive is
terminated for reasons other than set forth in Section 5(c), Executive
or those entitled under his will or by the laws of descent may exercise
the options within three months following the date of termination but
not thereafter. Only options that had become exercisable on or before
the date of termination may be exercised within the three month period.
The stock options granted hereby shall be evidenced by such stock option
certificates or agreements that incorporate provisions of the Company's
stock option plan not inconsistent with the foregoing as the Company
determines to be appropriate. To the extent that the foregoing grants
under the Company's stock option plan require shareholder approval, the
Company shall use its best efforts to obtain such approval at the
Company's next annual meeting of shareholders.
1. Sick Leave, Vacation. During the term of
this Agreement, except as otherwise provided in Section 5(b), Executive
shall be entitled to sick leave consistent with the Company's customary
sick leave policy and to four weeks vacation per year, which shall be
taken at times mutually satisfactory to the Company and Executive.
1. Company Car. The Company shall provide to
Executive for his use during the term of this Agreement a car having a
purchase price not to exceed $35,000. The Company shall pay all
registration and licensing fees and maintenance and insurance costs for
such car.
1. Relocation. Executive shall reside in
Greeley, Colorado while employed with the Company. The Company shall
pay Executive $20,000 as a one-time lump sum payment to defer the costs
of Executive moving to Greeley. Executive shall repay this amount if
Executive is employed by the Company for a period less than one year and
voluntarily resigned from the Company.
1. Expenses. During the term of this
Agreement, the Company shall reimburse Executive for all reasonable
out-of-pocket expenses incurred by Executive in connection with the business
of the Company and in the performance of his duties under this Agreement
upon presentation to the Company of an itemized accounting of such
expenses with reasonable supporting data.
A. Term.
1. General. Unless sooner terminated in
accordance with Section 5, this Agreement shall have a two year term
after the effective date of this Agreement. This Agreement shall
continue thereafter from three-month period to three-month period until
either party gives notice to the other at least 30 days prior to the end
of the original or then current renewal term of his or its intention
that this Agreement shall terminate at the end of such term.
Sections 6, 7, 8 and 9 shall remain in full force and effect for the
periods specified in such sections notwithstanding the termination of
this Agreement.
1. Severance. If this Agreement terminates
(other than due to a termination under Section 5), and (i) the parties
do not enter into a new employment agreement and (ii) Executive does not
remain as an employee of the Company for at least six months after such
termination, then the Company shall (x) pay Executive severance
compensation consisting of a six months' base salary and (y) continue
for six months after termination of Executive's employment by the
Company, to the extent possible under the Company's then-existing
benefit plans, all other benefits that were in place at the time of the
expiration of this Agreement.
A. Termination.
1. Death. If Executive dies during the term
of this Agreement, the Company shall pay his estate the compensation
that would otherwise have been payable to him for the month in which his
death occurs, and this Agreement shall terminate on the last day of such
month.
1. Disability. If during the term of this
Agreement Executive is prevented from performing his duties by reason of
illness or incapacity for a continuous period of 120 days, the Company
may terminate this Agreement on 30 days' prior notice to Executive or
his duly appointed legal representative. For purposes of this
Section 5(b), a period of illness or incapacity shall be deemed
"continuous" notwithstanding Executive's performance of his duties
during such period for continuous periods of less than 15 days in
duration.
1. Cause. The Company may terminate this
Agreement at any time, with notice simultaneous with the termination,
for cause, with the prior approval of the Company's board of directors.
For purposes of this Agreement, cause shall be defined as one or more of
the following:
a. willful misconduct that is
materially injurious to the Company as determined by a majority of
the Company's board of directors (excluding if Executive is then a
director);
a. conduct that would constitute a
felony or other crime of moral turpitude where committed;
a. failure to perform material required
duties and obligations of the Company under this Agreement, which
failure materially, adversely affects the Company and continues
for at least 30 days after notice in writing thereof is given by
the board of directors (excluding Executive); and
a. a material breach by Executive
during the term of this Agreement of Section 6, 7 or 8 below.
1. At the Company's Election. The Company
may terminate this Agreement at any time with the prior approval of the
board of directors, without cause, by giving 30 days' written notice of
termination to Executive. On the effective date of any termination
pursuant to this Section 5(d), the Company shall pay Executive a
severance payment equal to the amount that Executive would have received
had this Agreement remained in effect for the Severance Period (as
defined below) and shall allow Executive to participate during the
Severance Period, at the Company's expense, in such employee welfare
plans as are generally made available during such period to the
Company's employees. The Company shall be deemed to have terminated
Executive's employment pursuant to this Section 5(d) if Executive
terminates such employment after a material reduction of his
responsibilities, other benefits or the facilities or assistance at his
disposal (other than a reduction that is part of an overall change for
the Company's employees, is not disproportionately detrimental to
Executive and occurs before any Change in Control (as defined below)) or
a change of more than 15 miles in location of the principal executive
offices of the Company or of Executive's primary office.
a. In order to receive a severance
payment under this Section 5(d), the Executive must (A) resign
from the Board of Directors, if he is then a member of it, and
(B) sign a release, in form and substance reasonably satisfactory
to the Company, fully releasing the Company (and its officers,
directors, shareholders, employees and agents) from any claim or
cause of action that the employee may have against the Company or
such other persons relating in any way to this Agreement, the
Executive's employment by the Company or any other aspect of the
Executive's relationship with the Company, through the date of
such release. The release shall be signed at such times as are
reasonably requested by the Company in order for the release to be
fully effective under state and federal age discrimination laws
and other laws that may impose similar requirements, and shall
prohibit Executive from making any communications or taking other
acts that may injure the business, goodwill or reputation of the
Company or its officers, directors, shareholders, employees or
agents. The Company may defer making severance payments until
such time as any revocation periods set forth in the release have
expired.
a. For purposes of this Section 5(d):
(A) if no Change in Control (as defined below)
shall have occurred before a termination under this Section 5(d),
the Severance Period shall be the greater of one year or what
would have been the remaining term of this Agreement had it not
been terminated; and
(B) if a Change in Control shall have occurred
before a termination under this Section 5(d), then the Severance
Period shall be the greater of one year or what would have been
the remaining term of this Agreement had it not been terminated.
A "Change of Control" shall be deemed to have occurred if
(i) a person (as such term is used in Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) becomes the
beneficial owner (as defined in Rule 13d-3 under the 0000 Xxx) of shares
of the Company or the Company's successor having 30% or more of the
total number of votes that may be cast for the election of directors of
the Company without the prior approval of at least a majority of the
members of the Company's board of directors unaffiliated with such
person (unless such person beneficially owned shares with at least 15%
of such votes on the date of this Agreement), or (ii) individuals who
constitute the directors of the Company at the beginning of a 24-month
period cease to constitute at least 2/3 of all directors at any time
during such period, unless the election of any new or replacement
directors was approved by a vote of at least a majority of the members
of the Company's board of directors in office immediately prior to such
period and of the new and replacement directors so approved.
Notwithstanding the foregoing, no Change in Control will be deemed to
have occurred if Executive or any group of which Executive is a member
is the person whose acquisition constituted the Change in Control.
1. General Provisions Regarding Severance.
Any payment pursuant to Section 4(b) or 5(d) shall be paid, at the
Company's election, either in equal monthly installments over a six-month
period (for a payment under Section 4(b)) or the Severance Period
(for a payment under Section 5(d)) or in one lump sum (in which case the
Company shall pay to Executive in a lump sum its estimated cost of
providing employee benefits over the remaining period and the Company's
obligation to provide such benefits under Section 4(b) shall terminate).
Any such payment shall be "grossed up," if necessary, so that Executive
is left after the payment of any excise tax imposed under Sections 280G
and 4999 of the Internal Revenue Code of 1986 (or any successor statute)
in connection with any benefits received upon termination with the
amount he would have had if such excise tax had not been imposed on
Executive.
A. Confidential Information.
1. Confidentiality. Executive acknowledges
that the trade secrets, know-how and proprietary processes of the
Company and its confidential business plans, strategies, concepts,
prospects and financial data (collectively, "Confidential Information")
are valuable, unique assets of the Company. Executive shall not, during
or after the term of this Agreement, disclose any of the Confidential
Information (unless already generally known to and available for use by
the public other than as a result of a violation by Executive of this
Section 6 or as required by law) to any person or entity for any
purpose, nor shall Executive use or permit the use of any Confidential
Information except, in either case, as is required for Executive to
perform his duties as an employee of the Company.
1. Surrender or Destruction. Executive will,
upon termination of his employment with the Company, deliver to the
Company all records, forms, contracts, studies, reports, appraisals,
financial data, lists of names or other customer data, and any other
articles or papers, computer tapes and materials that have come into his
possession by reason of his employment with the Company, whether or not
prepared by him, and he shall not retain memoranda or copies of any of
those items.
A. Covenants Not to Compete or Interfere.
1. Scope. In view of the unique and valuable
executive services that Executive has been retained to render to the
Company and Executive's current and future knowledge of the customers,
trade secrets and other proprietary information relating to the business
of the Company and its customers and suppliers, Executive agrees that
during the period he is an employee of the Company and for one year
after any termination of this Agreement by the Company for cause or any
voluntary termination by Executive of his employment by the Company, he
will not Participate In (as defined below) the business of electronic
contract manufacturing within the United States of America.
1. Definition. For purposes of this
Section 7, "Participate In"means "directly or indirectly, for his own
benefit or for, with or through any other person, firm or corporation,
own, manage, operate, control, lend money to or participate in the
ownership, management, operation or control of, or be connected as a
director, officer, employee, partner, consultant, agent, independent
contractor or otherwise with, or acquiesce in the use of his name in."
Notwithstanding the foregoing, Executive shall not be deemed to
Participate In a business merely because he owns less than 5% of the
outstanding stock of a corporation (measured in voting power or equity),
if, at the time of its acquisition by Executive, such stock is listed on
a national securities exchange or is reported on Nasdaq. If any
restriction contained in this Section 7 is deemed to be invalid, illegal
or unenforceable by reason of its duration, geographical scope or
otherwise, then such provision shall be deemed reduced in extent,
duration, geographical scope or otherwise by the minimum reduction
necessary to cause the restriction to be enforceable.
1. Noninterference. During the period
specified in Section 7(a) of this Agreement, Executive shall not
(i) directly or indirectly cause or attempt to cause any employee of the
Company to leave the employ of the Company, (ii) in any way interfere
with the relationship between the Company and any employee, customer or
supplier, (iii) directly or indirectly hire any employee of the Company
to work for any organization of which Executive is an officer, director,
employee, consultant, independent contractor or owner of an equity or
other financial interest, or (iv) interfere or attempt to interfere with
any transaction in which the Company was involved during the term of
this Agreement or his employment.
1. Executive Representation. Executive
represents to the Company that at this time he is not a party to any
other employment agreement and is not subject to any other covenant not
to compete.
A. Intellectual Property.
1. Executive agrees to assign to the Company,
or to any person or entity designated by the Company, the entire right,
title and interest of the Executive in and to all inventions, ideas,
discoveries and improvements (collectively, "Inventions"), whether
patented or unpatented, and material subject to copyright, made or
conceived by the Executive, solely or jointly, that arise out of or are
related to research conducted by, for or under the direction of the
Company, or that relate to methods, apparatuses, designs, products,
processes or devices, sold, leased, used or under consideration or
development by the Company at the time of such Invention. Executive
further acknowledges that all copyrightable materials developed or
produced by Executive within the scope of his employment by the Company
constitute works made for hire.
1. Executive shall communicate promptly and
disclose to the Company, in such form as the Company may reasonably
request, all information, details and data pertaining to any such
inventions, ideas, discoveries and improvements described in
paragraph 5(a) above.
A. Injunctive Relief. Upon an actual or threatened
breach by Executive of Section 6 or Section 7 of this Agreement, the
Company shall be entitled to an injunction restraining Executive from
such breach. Nothing in this Agreement shall limit the Company's
ability to obtain any other remedies, including damages for such actual
or threatened breach.
A. Waiver of Breach. A waiver by the Company of a
breach of any provision of this Agreement by Executive shall not be
construed as a waiver of any breach of another provision or subsequent
breach of the same provision.
A. Severability. The invalidity or
unenforceability in any application of any provision in this Agreement
will not affect the validity or enforceability of any other provision or
of such provision in any other application.
A. Notices. All communications, requests, consents
and other notices provided for in this Agreement shall be in writing and
shall be deemed given if and when delivered personally by hand, sent by
facsimile at the appropriate number indicated below with electronic
confirmation of receipt, or mailed by first class mail, postage prepaid,
addressed as follows:
a. If to the Company:
Electronic Fab Technology Corp.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Facsimile No. (000) 000-0000
with a copy to:
Holme Xxxxxxx & Xxxx LLC
0000 Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Facsimile No. (000) 000-0000
a. If to Executive:
or to such other address or facsimile number as either party may
designate by notice pursuant to this Section 12.
A. Governing Law. This Agreement shall be governed
by Colorado law.
A. Assignment. The Company may assign its rights
and delegate its obligations under this Agreement to any affiliate of
the Company or to any acquirer of substantially all of the business of
the Company whether through merger, purchase of assets, purchase of
stock or otherwise. Otherwise, neither party may assign any rights or
delegate any duties under this Agreement. This Agreement shall be
binding upon and inure to the benefit of the parties and their
respective legal representatives, heirs, and permitted successors and
assigns.
A. Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties and supersedes all
prior understandings, agreements or representations by the parties,
written or oral, that relate to the subject matter of this Agreement.
A. Amendments. No provision of this Agreement may
be amended or waived except by an instrument in writing signed by the
party sought to be charged with the amendment or waiver.
Executed as of the date set forth on page 1.
ELECTRONIC FAB TECHNOLOGY CORP.
By Xxxxxx X. Xxxxxxxxxx
Xxxx Xxxxxxxx
Xxxx Xxxxxxxx
