EXHIBIT 10.34
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is dated as of April 15,
1998, by and between Newtech Electronics Industries, Inc. (f/k/a New M-Tech
Corporation), a Florida corporation, with its principal place of business at
00000 X.X. 00xx Xxxxxx, Xxxxx, Xxxxxxx 00000 (the "Company"), and Xxxx Xxxxxx
("Executive").
RECITALS
WHEREAS, Executive is the Chairman, Chief Executive Officer and
President of the Company and has continuously served as a valuable employee of
the Company since its inception.
WHEREAS, of the contributions made by all of the Company's employees
and officers, Executive's leadership, creativity, loyalty and services have
constituted major factors in the extraordinarily successful growth and
development of the Company.
WHEREAS, the Company desires to continue such employment upon certain
terms and conditions. All of the terms, conditions and undertakings of this
Agreement (including, without limitation, Section 8 hereof) were submitted to
and duly approved and authorized in writing by the Company's Board of Directors.
WHEREAS, the Company intends to file with the Securities and Exchange
Commission a Registration Statement on Form S-1 with respect to the Company's
proposed underwritten initial public offering of Common Stock (the "Offering").
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements of the parties contained herein, and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
Company and Executive hereby agree as follows:
AGREEMENT
1. EMPLOYMENT. Executive shall be employed as the Chairman, Chief
Executive Officer and President of the Company.
2. TERM. The term of this Agreement shall commence upon the date of the
consummation of the Offering (the "Commencement Date") and shall terminate as
provided below (the "Term"). Except as otherwise provided in Sections 6, 7 and
13 below, and except for termination for cause, the Term shall be a continuous
two-year period commencing this date and running for a period such that on each
"Anniversary Date," as defined below, one additional year automatically shall be
added. On any Anniversary Date either party may provide written notice to the
other party of that party's intention not to extend the Term of this Agreement
beyond the number of years then remaining in the Term, which number shall always
be two. Such written notice shall be deemed the notice to terminate this
Agreement at the end of the two-year term
then in effect. The "Anniversary Date," as used herein, shall be the first day
of the second year of the Term and the first day of each subsequent year,
including each year beyond the first two years of the Term. It is the intention
of the parties that the Term as of each Anniversary Date automatically shall be
two years, that two years' written notice shall be required to terminate this
Agreement, except as otherwise provided in Sections 6, 7 and 13, and except for
termination for cause, and that said written notice to terminate may only be
given on an Anniversary Date.
3. DUTIES. During the Term, Executive shall use his best efforts and
devote a sufficient amount of his working time and attention to the affairs of
the Company in order to perform the duties of the Chairman, Chief Executive
Officer and President of the Company. Executive shall report directly to the
Board of Directors of the Company (the "Board") and shall perform such
reasonable tasks and carry out such reasonable responsibilities as the Board
shall assign or designate.
4. COMPENSATION. During the Term of this Agreement, the Company shall
compensate Executive as follows:
(a) SALARY. The Company shall pay Executive a base annual
salary of $475,000, to be distributed in equal bi-weekly installments (the "Base
Annual Salary"). The Base Annual Salary shall commence on the Commencement Date
and shall remain in effect for the next consecutive twelve months of the Term.
Thereafter, the Base Annual Salary will increase progressively for each of the
ensuing twelve-month periods ("Fiscal Year") during the Term by an amount at
least equal to the percentage increase in the Miami-Dade County Consumer Price
Index published by the Bureau of Labor Statistics, United States Department of
Labor (the "Index") for the twelve-month period beginning three months before
the beginning of each such Fiscal Year. If at any time at which the
determination of the Base Annual Salary adjustment is required the Index is no
longer published or issued, the parties shall use such other index as is then
generally recognized or accepted for similar determinations of purchasing power.
If the parties are unable to agree on the selection of an index which would most
accurately carry out the intent hereof, or if there is a dispute with respect to
any computations as called for herein, then the issue with respect thereto shall
be determined by arbitration according to the then existing rules of the
American Arbitration Association. Nothing contained herein shall be construed to
prevent the Company from increasing Executive's Base Annual Salary more often
than annually or by a higher amount than required by the Index.
(b) AUTOMOBILE. The Company shall provide Executive with a new
automobile approximately every three years, of make and model comparable to the
automobile which Employee is accustomed to driving, and the Company shall bear
the cost of such automobile and all fuel, maintenance and insurance costs
associated with such automobile.
(c) EMPLOYEE BENEFITS. Executive shall participate in the
Company's 1997 Stock Option Plan and all other insurances, or insurance plans,
and employee benefits and bonuses covering the Company's senior executive
officers as are now or may in the future be in effect. Employee shall be
accorded at least the same level of insurance benefits and coverage, both as to
types and amounts, as he has been accorded for the three months immediately
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preceding the date hereof, and the Company shall bear the full cost of providing
such insurance coverage.
(d) EXPENSES. The Company shall reimburse Executive for all
reasonable expenses incurred by him in the course of conducting his duties
hereunder.
(e) VACATION. Executive shall be entitled to a minimum of four
weeks paid vacation per year.
(f) ADDITIONAL COMPENSATION. Notwithstanding anything to the
contrary contained in this Agreement, Executive shall be entitled to all
benefits, including bonuses, paid or given by the Company to executive officers
of the Company during the Term, and nothing contained in this Agreement shall in
any way be deemed to limit Executive's receipt of or participation in such
benefits, bonuses or benefit plans or to preclude the Company from making
additional payments, in the form of bonuses or otherwise, or conferring
additional benefits upon Executive.
5. RESTRICTIONS. During the term of this Agreement, Executive shall not
use, disclose, confirm, furnish or make accessible to anyone, other than in the
regular course of business of the Company, any knowledge or information of a
confidential or secret nature with respect to the business affairs, assets,
operations, plans or know-how of the Company or its subsidiaries or affiliates.
6. DEATH. If Executive shall die during the Term of this Agreement,
the Term shall terminate on the date thereof, and the Company shall pay
Executive's estate a sum equivalent to one year's Base Annual Salary, as
adjusted pursuant to Section 4(a) above. Such payment shall be paid within 90
days of Executive's death and shall be in addition to any life insurance
benefits payable as the result of Executive's death.
7. DISABILITY. If during the Term Executive is unable to perform the
essential duties of his position, with or without reasonable accommodation, by
reason of illness or incapacity, for a period of 360 consecutive days or more,
the Company may, at its option, upon written notice to Executive, terminate this
Agreement, which termination shall be effective one year from the date of such
written notice. Such termination, however, shall not affect any rights of
Executive to insurance payments due to Executive as a result of the insurance
coverage provided for in Paragraph 4(c). Determination of whether Executive is
disabled shall be determined in accordance with the Company's long-term
disability plan.
8. CHANGE IN CONTROL. This Agreement shall continue in full force and
effect notwithstanding any change in control, merger, consolidation or
reorganization of any kind involving the Company or the sale of all or
substantially all of its assets. It shall be binding upon the Company and
Executive and their respective heirs, executors, administrators, successors and
assigns.
Notwithstanding anything to the contrary contained herein, in
the Company's 1997 Stock Option Plan or the related stock option agreements or
in any of the Company's other
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stock option plans, incentive compensation plans or similar plans or in the
related agreements between the Company and Executive from time to time, if at
any time during the Term there shall be a change in control of the Company, then
Executive shall have the option of terminating this Agreement immediately upon
notice and, in such event: (i) any stock option of the Company granted to
Executive shall be exercisable immediately and the stock of the Company acquired
pursuant to such exercise may be sold by Executive subject to no restrictions by
the Company whatsoever (other than those imposed by federal and state securities
laws); and (ii) the Company shall pay to Executive, at the time of such
termination, a lump sum equal to three times Executive's Base Annual Salary,
adjusted pursuant to Section 4(a) above for the fiscal year in which such
termination occurs. The Company's execution of this Agreement constitutes the
determination in writing of its Board of Directors to provide for the
acceleration of vesting of Executive's stock options pursuant to Section 8(b) of
the Company's 1997 Stock Option Plan and Section 10 of any Stock Option Grant
thereunder. For purposes of this Agreement, a "change in control" shall mean:
(a) (i) (A) The acquisition (other than by
or from the Company), at any time after the date hereof, by any person, entity
or "group," within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934 (the "Exchange Act"), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 15% or more of
either the then outstanding shares of Common Stock or the combined voting power
of the Company's then outstanding voting securities entitled to vote generally
in the election of Directors, which acquisition has not been approved by the
Board; or
(B) Approval by the shareholders of the
Company of (x) a reorganization, merger or consolidation with respect to which
persons who were the shareholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than 50% of the combined voting power entitled to vote generally in the election
of Directors of the reorganized, merged or consolidated company's then
outstanding voting securities, (y) a liquidation or dissolution of the Company
or (z) the sale of all or substantially all of the assets of the Company, unless
the approved reorganization, merger, consolidation, liquidation, dissolution or
sale is subsequently abandoned, which transaction has not been approved by the
Board; AND
(ii) Such change in control results in a diminution
in Executive's compensation, responsibilities or position such that Executive
cannot in good faith continue to fulfill the responsibilities for which he is
employed, as determined by Executive in his sole discretion, and if such change
in control did not occur due to Executive's intentional bulk sale of voting
shares of the Company owned by him directly to such control persons or group; OR
(b) The four (4) individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") or any group of the Incumbent Board
cease for any reason to constitute at least a majority of the Board, provided
that any person becoming a Director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was approved
by a vote of at least a majority of the Directors then comprising the Incumbent
Board (as opposed to an election or nomination of an individual whose initial
assumption of office is in
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connection with an actual or threatened election contest relating to the
election of the Directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of the Incumbent
Board.
Such lump sum payment shall be in lieu of any and all
compensation due to Employee for the years that would otherwise be remaining in
the Term pursuant to Paragraph 2. Upon receipt of said lump sum payment, this
Agreement and all rights and duties of the parties shall be terminated, except
as follows. In consideration for such lump sum payment and for the right to
terminate under the conditions set forth above, Executive agrees to consult with
the Company and its officers if requested to do so for a period of at least
three years from the date of such termination. However, Executive shall be
required to devote only such part of his time to such services as Executive
believes reasonable in Executive's sole discretion, and the time and date such
services are offered shall be determined by Executive so long as that time and
date is within a reasonable period of time after the request. It is expressly
agreed that the Company's rights to avail itself of the advice and consultation
services of Executive shall at all times be exercised in a reasonable manner,
that adequate notice shall be given to Executive in such events, and that
noncompliance with any such request by Executive for good cause, including, but
not limited to, ill health, prior commitments, conflicts of interest or absence
from Miami-Dade County, Florida, shall not constitute a breach or violation of
this Agreement. Executive agrees that, except for reimbursement of all
reasonable expenses incurred by him with respect to such consultation and
advisory services, payable as such consultation and advisory services are
rendered, he shall not be entitled to any further compensation. It is understood
that in furnishing any advisory and consulting services provided herein,
Employee shall not be an employee of the Company but shall act in the capacity
of an independent contractor.
9. WAIVERS. It is understood that either party may waive the strict
performance of any covenant or agreement made herein; however, any waiver made
by either party hereto must be duly made in writing in order to be considered a
waiver, and the waiver of one covenant or agreement shall not be considered a
waiver of any other covenant or agreement unless specifically stated in writing
as aforementioned.
10. SAVINGS PROVISION. The invalidity, in whole or in part, of any
covenant or restriction, or any section, subsection, sentence, clause, phrase or
word, or other provisions of this Agreement, as the same may be amended from
time to time, shall not affect the validity of the remaining portions thereof.
11. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of Florida.
12. NOTICES. If either party desires to give notice to the other in
connection with any of the terms and provisions of this Agreement, such notice
must be in writing and given by personal delivery or by Federal Express, UPS or
other similar courier service, to the recipient at the address set forth below
and shall be deemed effective upon receipt.
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If to the Company: Newtech Electronics Industries, Inc.
00000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
If to Executive: Xxxx Xxxxxx
000 Xxxxx Xxxxxxxxx
Xxxxxx Xxxxx, Xxxxxxx 00000
13. DEFAULT. In the event either party defaults in the performance of
its obligations under this Agreement, the nondefaulting party may, after giving
30 days notice to the defaulting party to provide a reasonable opportunity to
cure such default, proceed to protect its rights by suit in equity, action at
law, or, where specifically provided for herein, by arbitration, to enforce
performance under this Agreement or to recover damages for breach thereof,
including all costs and attorneys' fees, whether settled out of court,
arbitrated or tried (at both trial and appellate levels).
14. CERTAIN REDUCTION OF PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of Executive, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise (a "Payment"), would be nondeductible by the Company for Federal
income tax purposes because of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), then the aggregate present value of amounts
payable or distributable to or for the benefit of Executive pursuant to this
Agreement (such payments or distributions pursuant to this Agreement are
hereinafter referred to as "Agreement Payments") shall be reduced to the Reduced
Amount. The "Reduced Amount" shall be an amount expressed in present value which
maximizes the aggregate present value of Agreement Payments without causing any
Payment to be nondeductible by the Company because of Section 280G of the Code.
Anything to the contrary notwithstanding, if the Reduced Amount is zero and it
is determined further that any Payment which is not an Agreement Payment would
nevertheless be nondeductible by the Company for Federal income tax purposes
because of Section 280G of the Code, then the aggregate present value of
Payments which are not Agreement Payments shall also be reduced (but not below
zero) to an amount expressed in present value which maximizes the aggregate
present value of Payments without causing any Payment to be nondeductible by the
Company because of Section 280G of the Code. For purposes of this Section 14,
present value shall be determined in accordance with Section 280G(d)(4) of the
Code.
(b) All determinations required to be made under this Section
14 shall be made by the Miami, Florida office of Ernst & Young, independent
certified public accountants, or, at Executive's option, any other nationally or
regionally recognized firm of independent public accountants selected by
Executive and approved by the Company, which approval shall not be unreasonably
withheld or delayed (the "Accounting Firm"), which shall provide detailed
supporting calculations both to the Company and Executive within twenty (20)
business days of the date of a change in control (as defined in Section 8 of
this Agreement, as amended from time
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to time) or such earlier time as is requested by the Company and an opinion to
Executive that he has substantial authority not to report any excise tax on his
Federal income tax return with respect to any Payments. Any such determination
by the Accounting Firm shall be binding upon the Company and Executive.
Executive shall determine which and how much of the Payments shall be eliminated
or reduced consistent with the requirements of this Section 14, provided that,
if Executive does not make such determination within ten (10) business days of
the receipt of the calculations made by the Accounting Firm, the Company shall
elect which and how much of the Payments shall be eliminated or reduced
consistent with the requirements of this Section 14 and shall notify Executive
promptly of such election. Within five (5) business days thereafter, the Company
shall pay to or distribute to or for the benefit of Executive such amounts as
are then due to Executive under this Agreement. All fees and expenses of the
Accounting Firm incurred in connection with the determinations contemplated by
this Section 14 shall be borne by the Company.
(c) As a result of the uncertainty in the application of
Section 280G of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Payments will have been made by
the Company which should not have been made ("Overpayment") or that additional
Payments which will not have been made by the Company could have been made
("Underpayment"), in each case consistent with the calculations required to be
made hereunder. In the event that the Accounting Firm, based upon the assertion
of a deficiency by the Internal Revenue Service against Executive, which the
Accounting Firm believes has a high probability of success, determines that an
Overpayment has been made, any such Overpayment paid or distributed by the
Company to or for the benefit of Executive shall be treated for all purposes as
a loan AB INITIO to Executive which Executive shall repay to the Company
together with interest at the applicable federal rate provided for in Section
7872(f)(2) of the Code; provided, however, that no such loan shall be deemed to
have been made and no amount shall be payable by Executive to the Company if and
to the extent such deemed loan and payment would not either reduce the amount on
which Executive is subject to tax under Section 1 and Section 4999 of the Code
or generate a refund of such taxes. In the event that the Accounting Firm, based
upon controlling precedent or other substantial authority, determines that an
Underpayment has occurred, any such Underpayment shall be promptly paid by the
Company to or for the benefit of Executive together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the Code.
* * * *
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Company and Executive have signed this
Agreement as of the day and year first above written.
NEWTECH ELECTRONICS INDUSTRIES, INC.
By:/S/ XXXXXX XXXXXX
---------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President, Finance and
Chief Financial Officer
EXECUTIVE:
/S/ XXXX XXXXXX
---------------------------------------
Xxxx Xxxxxx
