EXHIBIT 10.12
MICROWAVE POWER DEVICES, INC.
00 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
As of December 2, 1999
Mr. Xxxxxx Xxxxx
c/o Microwave Power Devices, Inc.
00 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Dear Xx. Xxxxx:
Microwave Power Devices, Inc., a Delaware corporation (the
"Company"), hereby agrees to employ you and you hereby agree to accept such
employment under the following terms and conditions:
1. Term of Employment.
(a) Except for earlier termination as provided in Section 9 below,
your employment under this Agreement shall be for an initial term commencing on
the date hereof (the "Effective Date") and terminating on December 31, 2002 (the
"Initial Term"),
(b) After the Initial Term, this Agreement shall be automatically
renewed for successive renewal terms of one year each, unless prior to the end
of any such renewal term either party shall have given to the other party at
least 90 days' prior written notice of its intention not to renew this
Agreement.
2. Compensation.
(a) You shall be compensated for all services rendered by you
under this Agreement at the rate of $300,000 per annum (such salary, as it may
from time to time be increased, is hereinafter referred to as the "Base
Salary"), payable in such manner as is consistent with the Company's payroll
practices for executive employees. Prior to each anniversary of the Effective
Date, the Board of Directors shall review your performance, the earnings of the
Company during the prior year and the Company's economic prospects for the
coming year and shall consider in its sole discretion whether to increase the
Base Salary payable to you hereunder.
(b) With respect to the Company's fiscal year ending December
31, 2000, and with respect to each subsequent fiscal year of the Company during
the term of this Agreement, you shall be eligible to receive an incentive bonus
in accordance with the terms of the Company's Executive Incentive Bonus Plan, if
any, adopted by the Compensation Committee of the Board of Directors with
respect to such fiscal year.
(c) As of the date hereof you have been granted stock options
to purchase up to 300,000 shares of the Company's Common Stock at an exercise
price of $7.00 per share pursuant to the Company's 1999 Stock Option Plan. You
shall also be eligible for future stock option grants as determined by the
Compensation Committee of the Board of Directors.
3. Duties.
(a) You shall serve as the Chairman of the Board, President
and Chief Executive Officer of the Company, subject to the direction and control
of the Board of Directors
2
of the Company. You shall also be a member of the Board of Directors of the
Company. Your principal office shall be located in the vicinity of Long Island,
New York.
(b) You shall devote such of your business time, energies and
attention to the business and affairs of the Company and its subsidiaries as may
be reasonably required to enable you to fulfill the responsibilities of Chief
Executive Officer of the Company.
(c) You shall, except as otherwise provided herein, be subject
to the Company's rules, practices and policies applicable to the Company's
senior executive employees.
4. Benefits. You shall be entitled to such benefits, if any, as are
generally provided by the Company to its senior executive employees including,
without limitation, personal leave, sick leave, and holiday leave to the extent
such leaves are provided to all senior executive employees. You also shall have
the benefit of any life and medical insurance plans, pensions and other similar
plans as the Company may have or may establish from time to time for its senior
executive employees. The foregoing, however, shall not be construed to require
the Company to establish any such plans or to prevent the Company from modifying
or terminating any such plans, and no such action or failure thereof shall
affect this Agreement. In addition, you shall be entitled to twenty work days'
paid vacation per year. The Company shall also provide you with the use of a
luxury automobile and $5,000 per year for personal tax and financial planning
services.
5. Expenses. The Company will reimburse you for reasonable expenses,
including travel expenses, incurred by you in connection with the business of
the Company upon the presentation by you of appropriate substantiation for such
expenses.
3
6. Restrictive Covenants.
(a) During such time as you shall be employed by the Company,
and for a period of two years thereafter, you shall not, without the written
consent of the Board of Directors, directly or indirectly become associated
with, render services to invest in, represent, advise or otherwise participate
as an officer, employee, director, stockholder, partner, agent of or consultant
for, any business which is conducted in any of the jurisdictions in which the
Company's business is conducted and which is competitive with the business in
which the Company is engaged at the time your employment with the Company
ceases; provided, however, that: (1) nothing herein shall prevent you from
acquiring up to 3% of the securities of any company listed on a national
securities exchange or quoted on the NASDAQ quotation system, provided your
involvement with any such company is solely that of a stockholder; and (2) if
your employment hereunder shall be terminated by the Company without Just Cause
(as defined below) therefor having been given by you, then the foregoing
noncompetition agreement shall, at the election of the Company, be effective for
a period of up to two years after such termination provided the Company shall
pay you during such period at a per annum rate equal to your Base Salary in
effect at the time of such termination. In the event the Company is making
payments to you pursuant to clause (2) of the immediately preceding sentence,
the Company shall have the right to terminate such payments at any time upon 30
days' prior written notice to you, in which event the foregoing noncompetition
agreement shall terminate on the 30th day following your receipt of such notice.
(b) The parties hereto intend that the covenant contained in
this Section 6 shall be deemed a series of separate covenants for each country,
state, county and city in
4
which the Company's business is conducted. If, in any judicial proceeding, a
court shall refuse to enforce all the separate covenants deemed included in this
Section 6 because, taken together, they cover too extensive a geographic area,
the parties intend that those of such covenants (taken in order of the
countries, states, counties and cities therein which are least populous) which
if eliminated would permit the remaining separate covenants to be enforced in
such proceeding shall, for the purpose of such proceeding, be deemed eliminated
from the provisions of this Section 6.
7. Confidentiality, Non-Interference and Proprietary Information.
(a) Confidentiality. In the course of your employment by the
Company hereunder, you will have access to confidential or proprietary data or
information of the Company and its operations. You will not at any time divulge
or communicate to any person nor shall you direct any Company employee to
divulge or communicate to any person (other than to a person bound by
confidentiality obligations similar to those contained herein and other than as
necessary in performing your duties hereunder) or use to the detriment of the
Company or for the benefit of any other person, any of such data or information.
The provisions of this Section 7(a) shall survive your employment hereunder,
whether by the normal expiration thereof or otherwise. The term "confidential or
proprietary data or information" as used in this Agreement shall mean
information not generally available to the public including, without limitation,
personnel information, financial information, customer lists, supplier lists,
trade secrets, information regarding operations, systems, services, knowhow,
computer and any other processed or collated data, computer programs, pricing,
marketing and advertising data.
5
(b) Non-Interference. You agree that you will not at any time
after the termination of your employment by the Company, for your own account or
for the account of any other person, tortiously interfere with the Company's
relationship with any of its suppliers, customers or employees.
(c) Proprietary Information and Disclosure. You agree that you
will at all times promptly disclose to the Company (which, for the purposes of
this Section 7, shall include the Company and any subsidiaries and affiliates of
the Company), in such form and manner as the Company may reasonably require, any
inventions, improvements or procedural or methodological innovations, programs
methods, forms, systems, services, designs, marketing ideas, products or
processes (whether or not capable of being trade-marked, copyrighted or
patented) conceived or developed or created by you during or in connection with
your employment hereunder and which relate to the business of the Company and
any subsidiaries or affiliates ("Intellectual Property"). You agree that all
such Intellectual Property shall be the sole property of the Company. You
further agree that you will execute such instruments and perform such acts as
may reasonably be requested by the Company to transfer to and perfect in the
Company all legally protectible rights in such Intellectual Property.
(d) Return of Property. All written materials, records and
documents made by you or coming into your possession during your employment
concerning any products, processes or equipment, manufactured, used, developed,
investigated or considered by the Company or otherwise concerning the business
or affairs of the Company, shall be the sole property of the Company, and upon
termination of your employment, or upon request of the Company during your
employment, you shall promptly deliver same to the Company. In addition, upon
6
termination of your employment, or upon request of the Company during your
employment, you will deliver to the Company all other Company property in your
possession or under your control, including, but not limited to, financial
statements, marketing and sales data, patent applications, drawings and other
documents, and all Company credit cards and automobiles.
8. Equitable Relief. With respect to the covenants contained in
Sections 6 and 7 of this Agreement, you agree that any remedy at law for any
breach of said covenants may be inadequate and that the Company shall be
entitled to specific performance or any other mode of injunctive and/or other
equitable relief to enforce its rights hereunder or any other relief a court
might award.
9. Earlier Termination. Your employment hereunder shall terminate
prior to the expiration of the Initial Term (or any renewal term, in the event
of renewal) on the following terms and conditions:
(a) This Agreement shall terminate automatically on the date
of your death.
(b) This Agreement shall be terminated if you are unable to
perform your duties hereunder for 90 days (whether or not continuous) during any
period of 360 consecutive days by reason of physical or mental disability. The
disability shall be deemed to have occurred on the 90th day of your absence or
lack of adequate performance.
(c) This Agreement shall terminate immediately upon the
Company's sending you written notice terminating your employment hereunder for
"Just Cause," which shall mean (i) an act or acts of fraud or dishonesty by you
which results in the personal enrichment of
7
you or another person or entity at the expense of the Company; (ii) your
admission, confession or conviction of (X) any felony (other than third degree
vehicular infractions), or (Y) of any other crime or offense involving misuse or
misappropriation of money or other property; (iii) your continued material
breach of any obligations under this Agreement 30 days after the Company has
given you notice thereof in reasonable detail, if such breach has not been cured
by you during such period; or (iv) your gross negligence or willful misconduct
with respect to your duties or gross misfeasance of office.
(d) This Agreement shall terminate immediately upon the Company's
sending you written notice terminating your employment hereunder (without Just
Cause therefor having been given by you) for any reason or for no reason. In the
event of any termination of this Agreement pursuant to this Section 9(d), or in
the event the Company gives you notice pursuant to Section 1(b) of its intention
not to renew this Agreement, the Company's sole obligation to you shall be (i)
to pay you one year's worth of Base Salary in effect as of the date of
termination of your employment hereunder, (ii) to pay you the amount, if any,
you would have been entitled to receive pursuant to Section 2(b) of this
Agreement with respect to the fiscal year of the Company in which your
employment was terminated and (iii) to continue for one year the benefits
provided in the second sentence and in the last sentence of Section 4 of this
Agreement. The amounts payable pursuant to clauses (i) and (ii) of the
immediately preceding sentence shall be paid to you as and when such amounts
would have been due had your employment continued. In addition, in the event of
the termination of this Agreement pursuant to this Section 9(d), or in the event
the Company gives you notice pursuant to Section 1(b) of its intention not to
renew this Agreement, you shall be credited with one year's additional vesting
for all stock options then held by you.
8
Compensation under this Section 9(d) shall not be payable in the event you
receive compensation under Section 4 of the Change of Control Agreement.
(e) Except as specifically set forth in Section 9(d) above,
upon termination or non-renewal of this Agreement, the Company's obligations
hereunder shall cease.
10. Change of Control. You shall be entitled to the payments and
benefits provided in (i) the Change of Control Agreement attached hereto as
Exhibit A (the "Change of Control Agreement") and (ii) the Parachute Gross Up
Agreement attached hereto as Exhibit B.
11. Representation and Warranty. The execution, delivery and
performance of this Agreement by you will not conflict with or result in a
violation of any agreement to which you are a party or any law, regulation or
court order applicable to you.
12. Entire Agreement; Modification. This Agreement constitutes the
full and complete understanding of the parties with respect to your employment
arrangements. No representations, inducements, promises, agreements or
understandings, oral or otherwise, have been made by either party to this
Agreement, or anyone acting on behalf of either party, which are not set forth
herein, and any others are specifically waived. This Agreement may not be
modified or amended except by an instrument in writing signed by the party
against which enforcement thereof may be sought.
13. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining
9
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction.
14. Waiver of Breach. The waiver of either party of a breach of any
provision of this Agreement, which waiver must be in writing to be effective,
shall not operate as or be construed as a waiver of any subsequent breach,
15. Notices. All notices hereunder shall be in writing and shall be
sent by express mail or by certified or registered mail, postage prepaid, return
receipt requested, if to you, to your residence as listed in the Company's
records, and if to the Company, to its address set forth at the head of this
Agreement, attention of Secretary with a copy to Proskauer Rose LLP, 0000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention of Xxxxxxx X. Xxxxx, Esq.
16. Assignability; Binding Effect. This Agreement shall not be
assignable by you without the written consent of the Board of Directors of the
Company. This Agreement shall be binding upon and inure to the benefit of you,
your legal representatives, heirs and distributees, and shall be binding upon
and inure to the benefit of the Company, its successors and assigns.
17. Governing Law. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be construed and
governed in accordance with the laws of the State of New York, without regard to
the conflicts or choice of law provisions thereof.
10
18. Headings. The headings of this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
19. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
20. Disputes. In the event of any dispute under this Agreement, the
non-prevailing party shall pay all legal fees and expenses of the prevailing
party.
If this letter correctly sets forth our understanding, please sign
the duplicate original in the space provided below and return it to the Company,
whereupon this shall constitute the employment agreement between you and the
Company effective and for the term as stated herein.
MICROWAVE POWER DEVICES, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------
Xxxxxxx X. Xxxxx
Agreed as of the date Controller
first above written:
/s/ Xxxxxx Xxxxx
--------------------
Xxxxxx Xxxxx
11
