EXHIBIT 10.35
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 Hatch Masuda
("Executive").
RECITALS
WHEREAS, Executive is the Senior Vice President, Design and Product
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 Senior Vice
President, Design and Product Development 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
14 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 14, 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 all of his working time and attention to the affairs of the Company in
order to perform the duties of the Senior Vice President, Design and Product
Development of the Company. Executive shall report directly to the Chief
Executive Officer and President of the Company and shall perform such reasonable
tasks and carry out such reasonable responsibilities as the Company's Board of
Directors (the "Board") or the Chief Executive Officer and President 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 $192,000, 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) 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
preceding the date hereof, and the Company shall bear the full cost of providing
such insurance coverage.
(c) EXPENSES. The Company shall reimburse Executive for all
reasonable expenses incurred by him in the course of conducting his duties
hereunder.
(d) VACATION. Executive shall be entitled to a minimum of
three weeks paid vacation per year.
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(e) 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.
(a) NON-COMPETITION; NON-SOLICITATION. During the "Restricted
Period" (as hereinafter defined), Executive agrees not to, directly or
indirectly, alone or as a partner, officer, director, employee, consultant,
agent, independent contractor, member or stockholder of any company or person,
engage in any business activity, including but not limited to any business
activity related to the design, sourcing, manufacture, marketing or sale of
consumer electronic products in the "Restricted Area" (as hereinafter defined)
which is directly or indirectly in competition with the products being designed,
sourced, manufactured, marketed or sold by the Company or any subsidiary or
which is directly or indirectly detrimental to the business of the Company or
any subsidiary; provided, however, that the record or beneficial ownership by
Executive of five percent (5%) of the publicly traded capital stock of any such
company or person for investment purposes shall not be deemed to be in violation
of this Section 5(a) so long as Executive is not an officer, director, employee
or consultant of such company or person.
Executive further agrees that, during the "Non-Solicitation Period" (as
hereinafter defined), Executive shall not in any capacity, either separately,
jointly or in association with others, directly or indirectly do any of the
following: (a) recruit, solicit, induce or otherwise influence any employee,
director, officer, consultant, agent, supplier, customer, prospect, proprietor,
partner, stockholder, lender, joint venturer, investor, lessor or any other
person or entity that had a business relationship with the Company or any
subsidiary at any time during the two (2) years prior to the date of such
solicitation, to discontinue, reduce or modify such relationship with the
Company or any subsidiary; or (b) employ or seek to employ any person or agent
who is then employed or retained by the Company or any subsidiary (or who was so
employed or retained at any time within the two (2) years prior to the date
Executive employs or seeks to employ such person).
The "Restricted Period" shall mean the period of two (2) years after
the date on which Executive's employment with the Company under this Agreement
is terminated. The "Restricted Area" shall mean the United States of America,
Mexico, South America, Central America and the Caribbean.
Executive acknowledges and agrees that the covenants provided for in
this Section 5(a) are reasonable and necessary in terms of time, area and line
of business to protect the Company's legitimate business interests in protecting
its "Trade Secrets" (as hereinafter defined). Executive further acknowledges and
agrees that such covenants are reasonable and necessary in terms of time, area
and line of business to protect the Company's other legitimate business
interests,
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which include its interests in protecting its (x) valuable "Confidential
Information" (as hereinafter defined), (y) substantial relationships with
specific customers throughout the United States of America, Mexico, South
America, Central America and the Caribbean and (z) customer goodwill associated
with its ongoing business by way of its marketing throughout the United States
of America, Mexico, South America, Central America and the Caribbean. Executive
hereby expressly authorizes the enforcement of the covenants provided for in
this Section 5(a) by (w) the Company, (x) any assignee of the Company, (y) any
affiliate of the Company and (z) any successor to the business of the Company.
To the extent that the covenant provided for in this Section 5(a) may later be
deemed by a court to be too broad to be enforced with respect to its duration or
with respect to any particular activity or geographic area, the court making
such determination shall have the power to (and the parties contemplate that
such court will) reduce the duration or scope of the provision, and to add or
delete specific words or phrases to or from the provision. The provision as
modified shall then be enforced.
(b) NON-DISCLOSURE. During the term of this Agreement and
during the periods described in the last sentence of this paragraph, Executive
shall (i) receive and hold all Company Information in trust and in strictest
confidence, (ii) protect the Company Information from disclosure and shall in no
event take any action causing, or fail to take any action necessary to prevent,
any Company Information to lose its character as Company Information or as
property of the Company, and (iii) not, directly or indirectly, use, disseminate
or otherwise disclose any Company Information to any third party without the
prior written consent of the Company, which may be withheld in the Company's
absolute discretion. The provisions of this paragraph shall survive the
termination of this Agreement (x) for a period of five years with respect to
Confidential Information and (y) with respect to Trade Secrets, for so long as
any such information qualifies as a Trade Secret under applicable law.
"Company Information" shall mean Confidential Information and Trade
Secrets. "Confidential Information" shall mean confidential data and
confidential information relating to the business and/or products of the Company
and its subsidiaries (which does not rise to the status of a Trade Secret under
applicable law) which is or has been disclosed to Executive or of which
Executive became aware as a consequence of or through the performance of its
obligations under this Agreement and which has value to the Company and its
subsidiaries and is not generally known to competitors of the Company and its
subsidiaries. Confidential Information shall not include any data or information
that (i) has been voluntarily disclosed to the general public by the Company or
its subsidiaries, (ii) has been independently developed and disclosed to the
general public by others or (iii) otherwise enters the public domain through
lawful means. "Trade Secrets" shall mean information of the Company and its
subsidiaries, including, but not limited to, technical or non-technical data,
formulas, designs, styles, specifications, configurations, concepts, techniques,
procedures, production methods, customer lists, compilations, programs,
financial data, financial plans, product or service plans or lists of actual or
potential customers or suppliers, which (i) derives economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons or entities which can obtain
economic value from its disclosure or use, and (ii) is the subject of efforts
that are reasonable under the circumstances to maintain its secrecy.
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(c) INJUNCTION. The parties hereto hereby acknowledge that a
breach or violation by Executive of any or all of the covenants and agreements
contained in this Section 5 may cause irreparable harm and damage to the Company
in a monetary amount which may be virtually impossible to ascertain. As a
result, Executive acknowledges and agrees that the Company shall be entitled to
an injunction from any court of competent jurisdiction without having to post a
bond and restraining any breach or violation of any or all of the covenants and
agreements contained in this Section 5 by Executive, either directly or
indirectly, and that such right to injunction shall be cumulative and in
addition to whatever other rights or remedies that the Company may possess
hereunder, at law or in equity. Nothing contained in this Section 5 shall be
construed to prevent the Company from seeking and recovering from Executive
damages sustained by it as a result of any breach or violation by any of them of
any of the covenants or agreements contained in this Section 5.
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 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
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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 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
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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. INVENTIONS AND PATENTS. Executive agrees that all inventions,
innovations or improvements in the Company's method of conduction its business
(including new contributions, improvements, ideas and discoveries, whether
patentable or not) conceived or made by him during his employment with the
Company belong to the Company. Executive will promptly disclose such inventions,
innovations or improvements to the Board and perform all actions reasonably
requested by the Board to establish and confirm such ownership.
10. 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.
11. 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.
12. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of Florida.
13. 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: Hatch Masuda
_____________________________
_____________________________
14. 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).
15. 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 15,
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
15 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 15, 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 15 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 15 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/ XXXX XXXXXX
----------------------------------------------
Name: Xxxx Xxxxxx
Title: Chairman, Chief Executive Officer and
President
EXECUTIVE:
/S/ HATCH MASUDA
-------------------------------------------------
Hatch Masuda
