Exhibit 10.7
EMPLOYMENT AGREEMENT
This Employment Agreement (the "AGREEMENT") dated as of December
15, 1998 is entered into between PACIFIC CIRCUITS, INC., a Washington
corporation (the "COMPANY"), and Xxxx Xxxxxxxx (the "EMPLOYEE").
In consideration of the promises, covenants and agreements
contained herein, and for other good and valuable consideration the adequacy and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
SECTION 1. DEFINITIONS AND USAGE.
1.1 DEFINITIONS. As used in this Agreement:
"CAUSE" means the Employee has (i) been convicted of, or
entered a plea of no contest to, a felony or other crime involving moral
turpitude, (ii) committed a material act of fraud or dishonesty, (iii)
materially breached his fiduciary duties to the Company in a manner which
results in a material financial or reputational loss to the Company, (iv)
failed to perform in a material manner his properly assigned duties after
at least one written warning specifically advising the Employee of his
failure and providing him with ten days to resume performance in
accordance with his assigned duties, or (v) materially breached his other
obligations under this Agreement and has failed to remedy such failure
within ten days after receipt of written notice from the Company.
"DISABILITY" means a condition pursuant to which the
Employee becomes incapacitated due to physical or mental illness and, in
the good faith determination of the Board, is unable to perform his
duties and responsibilities hereunder and such condition continues, or,
in the opinion of a physician selected by the Board, is reasonably likely
to continue, for six consecutive months or for periods aggregating six
months during any twelve-month period.
"EFFECTIVE DATE" means the date of the consummation of the
transactions contemplated by the Stock Purchase Agreement.
"GOOD REASON" means a material breach by the Company of
this Agreement or a material reduction by the Company of the Employee's
duties, responsibilities or status within the Company, in each case after
the Employee has given the Company written notice of such breach or
reduction and a reasonable opportunity to cure.
"STOCK PURCHASE AGREEMENT" means the Stock Purchase
Agreement, dated as of December 15, 1998, among Circuit Holdings LLC,
Xxxxx and the other stockholders of the Company.
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1.2 USAGE.
(a) References to an individual or entity are also
references to its assigns and successors in interest (by means of merger,
consolidation or sale of all or substantially all the assets of such
individual or entity, as the case may be).
(b) References to a document are to it as amended,
waived and otherwise modified from time to time and references to a
statute or other governmental rule are to it as amended and otherwise
modified from time to time (and references to any provision thereof shall
include references to any successor provision).
(c) References to Sections are to sections hereof,
unless the context otherwise requires.
(d) The definitions set forth herein are equally
applicable both to the singular and plural forms and the feminine,
masculine and neuter forms of the terms defined.
(e) The term "including" and correlative terms shall be
deemed to be followed by "without limitation" whether or not followed by
such words or words of like import.
(f) The term "hereof" and similar terms refer to this
Agreement as a whole.
Section 2. TITLE; TERM. The Company hereby employs the
Employee as its Chief Operating Officer, and the Employee shall serve in such
capacity for a period beginning on the Effective Date and ending on December 31,
2001 (the "TERM"). Unless either party provides written notice in accordance
with the provisions hereof at least 30 days prior to the end of the Term, the
Term shall be extended for one year; PROVIDED, that the Term may be extended
pursuant to this Section 2 no more than twice.
Section 3. DUTIES. During the Term, the Employee shall have
supervision and control over and responsibility for such duties as are assigned
to the Employee from time to time by the Chief Executive Officer and as are
consistent with the Employee's position, and shall report to the Chief Executive
Officer. The Employee shall be required to devote substantially all of his
business time and energies to the business of the Company.
Section 4. COMPENSATION AND BENEFITS.
4.1 BASE SALARY. As compensation for services rendered
pursuant to this Agreement, the Company shall pay the Employee a salary (the
"BASE SALARY") at the per annum rate set forth on Schedule A attached hereto,
payable in periodic installments.
4.2 EMPLOYEE BENEFITS. The Employee shall be entitled to
participate in the retirement, health and welfare benefit programs available
generally to senior executives of the Company. The Employee acknowledges that
pursuant to the terms of the Stock Purchase Agreement, the Company's qualified
Profit Sharing Plan will be amended to exclude the
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Employee as an eligible participant in employer profit sharing contributions
made in plan years after plan year 1998.
4.3 VACATION AND OTHER LEAVE TIME. The Employee shall be
entitled during each year of the Term to three weeks of vacation time without
reduction in pay (which vacation time shall be pro-rated for any partial year
that the Employee is employed during the Term). The Employee shall be entitled
to time off for sick and personal leave and all legal holidays without reduction
in pay, in accordance with policies established by the Company.
4.4 ANNUAL INCENTIVE COMPENSATION. The Employee shall be
eligible to participate in the Pacific Circuits, Inc. Cash Incentive
Compensation Plan and for 1999 shall be awarded not less than the number of
units awarded thereunder set forth on Schedule A attached hereto, subject to the
terms of such plan.
4.5 STOCK OPTIONS. The Employee shall be eligible to
participate in the Pacific Circuits, Inc. Management Stock Option Plan and shall
be awarded not less than the number of stock options awarded thereunder on the
Effective Date set forth on Schedule A attached hereto, subject to the terms of
such plan.
4.6 RETENTION BONUS. The Employee shall be eligible to
participate in the retention bonus plan to be established by the Company
pursuant to the terms of the Stock Purchase Agreement and shall be awarded a
retention bonus under such plan in the amount set forth on Schedule A attached
hereto, subject to the terms of such plan.
Section 5. REIMBURSEMENT OF EXPENSES. The Company shall
reimburse the Employee for his reasonable and necessary out-of-pocket
expenditures incurred on behalf of the Company and in furtherance of the
Employee's duties hereunder, subject to reasonable record keeping and expense
guidelines established by the Company for all senior executives.
Section 6. CONFIDENTIAL INFORMATION. The Employee will hold in
strict confidence and not disclose to any person or entity without the express
prior authorization of the Company, any confidential proprietary information,
and manufacturing and marketing data, techniques, processes, formulas,
developmental or experimental work, work in progress, business methods, and
trade secrets relating to the products, services, customers, sales or business
affairs of the Company. The Employee further agrees that he will not make use
of any of the above at any time after termination of his employment so long as
such information is maintained confidential and secret by the Company. The
Employee acknowledges that all work product and inventions generated by the
Employee on behalf of the Company during the Employee's employment is the
property of the Company and the Employee hereby agrees to assign all right,
title and interest thereto to the Company. The preceding sentence shall not
apply to an invention that qualifies fully under Wash. Rev. Code Section
49.44.140(l). Upon termination of employment, the Employee shall deliver to the
Company all documents, records, notebooks, work papers and all similar
repositories containing any confidential and proprietary information concerning
the Company or any subsidiary, whether prepared by the Employee, the Company or
anyone else, received by the Employee in his capacity as an officer or employee
and not in respect of shares of the Company owned directly or indirectly.
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Section 7. CERTAIN COVENANTS. In consideration of his
employment hereunder, the Employee agrees as follows:
7.1 The Employee agrees that he will not (i) at any time
during or after the Term, make any claim that the Employee has any
ownership right or interest, of any kind or nature whatsoever, in or to
any products, methods, practices, processes, discoveries, ideas,
improvements, devices, creations, business plans or systems, or
inventions relating to the business of Company or any subsidiary, (ii)
during the Term and for a period of 18 months thereafter (the "RESTRICTED
PERIOD"), for himself or on behalf of or in conjunction with any third
party, hire any person who is then an employee of Company or its
subsidiaries or induce or entice any employee of Company or its
subsidiaries to leave his employment, or (iii) during the Restricted
Period, directly or indirectly, on his own behalf or in the service or on
behalf of others, solicit, divert or appropriate, or attempt to solicit,
divert or appropriate any customers of the Company or its subsidiaries.
7.2 During the Restricted Period, the Employee will not
directly or indirectly, own, manage, operate, control or participate in
the ownership, management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or have any
financial interest in, any business which is in competition with the
Company or any of its affiliates in any geographic areas where such
business is being conducted during such period. In the event that the
Employee's employment terminates pursuant to Section 8.2, the "Restricted
Period" for purposes of this Section 7.2 shall be twelve months following
the Employee's termination of employment.
7.3 In the event any court or arbitrator shall refuse to
enforce any portion of the covenants in this Section 7, then such
unenforceable portion shall be deemed eliminated and severed from said
covenant for the purpose of said court's proceedings to the extent
necessary to permit the remaining portions of the covenants to be
enforced.
Section 8. TERMINATION OF EMPLOYMENT.
8.1 TERMINATION BY THE COMPANY FOR CAUSE OR BY THE EMPLOYEE
OTHER THAN FOR GOOD REASON. The Company may terminate the Term and this
Agreement for Cause at any time without prior notice to the Employee. The
Employee may terminate the Term and this Agreement other than for Good Reason at
any time upon three months' notice to the Board. Upon termination of the
Employee's employment (i) by the Company for Cause or (ii) by the Employee other
than for Good Reason, the Company shall have no further obligations to the
Employee hereunder.
8.2 TERMINATION BY THE COMPANY WITHOUT CAUSE OR BY THE EMPLOYEE
FOR GOOD REASON. The Company may elect to terminate the Term and this Agreement
without Cause and the Employee may terminate the Term and this Agreement for
Good Reason. In the event that the Employee's employment is terminated under
this Section 8.2, the Employee shall be entitled to receive (a) the continued
payment of his Base Salary until the first anniversary of the date of
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termination; provided, however, that any amount of severance payable under this
Section 8.2 shall be reduced by any other compensation received by the Employee
prior to the first anniversary of the date of termination, and (b) the
continuation for a period of one year of welfare benefits to the Employee and
his family on a basis substantially equivalent to those which would have been
provided to them in accordance with the welfare plans, programs and arrangements
of the Company had the Employee's employment not terminated; provided, however,
that such benefit continuation shall cease in the event that the Employee and
his family obtain comparable welfare benefit coverage from any subsequent
employer. On or prior to the date that the Company commences payment or
continuation of benefits under this Section 8.2, the Employee shall execute and
deliver a release of claims in favor of the Company in form and substance
satisfactory to the Company and all applicable revocation periods shall expire.
8.3 TERMINATION DUE TO DEATH OR DISABILITY. This Agreement
shall terminate automatically upon the Employee's death and may be terminated in
the discretion of the Company in the event of Employee's Disability and, upon
either such termination, the Company shall have no further obligations to the
Employee hereunder. In the event of termination due to Disability, the Employee
shall be entitled to long-term disability benefits under any such policy
maintained by the Company in which the Employee participates at the time of
termination.
Section 9. TAX MATTERS.
9.1 WITHHOLDING. All payments required to be made by the
Company hereunder to the Employee or his estate or beneficiaries shall be
subject to the withholding of such amounts as the Company may reasonably
determine should be withheld pursuant to any applicable federal, state or local
law or regulation now applicable or that may be enacted and become applicable in
the future.
9.2 TAX CONSEQUENCES. The Company shall have no obligation to
any person entitled to the benefits of this Agreement with respect to any tax
obligation any such person may incur as a result of or attributable to this
Agreement or arising from any payments made or to be made hereunder. Nothing
contained herein shall be construed as a warranty or representation of any kind
by the Company to the Employee with respect to the tax consequences of matters
contemplated by this Agreement.
Section 10. NOTICES. All notices given pursuant to this
Agreement shall be in writing and shall be made by hand-delivery, first-class
mail (registered or certified, return receipt requested), telecopier, or
overnight air courier guaranteeing next business day delivery to the relevant
address specified in this Section 10. Except as otherwise provided in this
Agreement, each such notice shall be deemed given: (a) at the time delivered,
if personally delivered or mailed; (b) when receipt is acknowledged, if
telecopied; and (c) the next business day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next business day delivery.
Pacific Circuits, Inc.
00000 X.X. 00xx Xxxxx
Xxxxxxx, XX 00000
Attn.: Board of Directors
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Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Shearman & Sterling
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to Employee, to the address set forth on the
signature page hereof.
Any party may change its address by written notice to the other party hereto
given in the manner provided above.
Section 11. WAIVER. No waiver of any default under this
Agreement shall constitute or operate as a waiver of any subsequent default, and
no delay, failure or omission in exercising or enforcing any right, privilege or
option hereunder shall constitute a waiver, abandonment or relinquishment
thereof. No waiver of any provision hereof by any party hereto shall be deemed
to have been made unless or until such waiver shall have been reduced to a
writing signed by the party making such waiver. Failure by any party to enforce
any of the terms, covenants or conditions of this Agreement for any length of
time or from time to time shall not be deemed to waive or decrease the rights of
such party to insist thereafter upon strict performance by the other parties.
Section 12. AMENDMENTS. This Agreement may not be amended or
terminated other than by a written instrument signed by each of the parties
hereto. No amendment to this Agreement or interpretation hereof or any waiver
or modification of any of the provisions hereof may be made on behalf of Company
without the approval of its Board of Directors.
Section 13. INJUNCTIVE RELIEF. The Employee acknowledges that
in the event of his breach of any provision in Section 6 or 7 hereof, the
Company will be without an adequate remedy at law. The Employee therefore
agrees that in the event of such a breach, the Company may elect to institute
and prosecute proceedings in any court of competent jurisdiction to enforce
specific performance or to enjoin the continuing breach, by seeking or obtaining
any such relief, and the Company will not be precluded from seeking or obtaining
any other relief to which it may be entitled.
Section 14. ARBITRATION. Subject to the Company's right to
pursue injunctive relief pursuant to Section 13, any dispute about the
validity, interpretation, effect or alleged violation of this Agreement (an
"arbitrable dispute") must be submitted to confidential arbitration in
Seattle, Washington. Arbitration shall take place before an experienced
employment arbitrator licensed to practice law in Washington and selected in
accordance with the Model Employment Arbitration Procedures of the American
Arbitration Association. Arbitration shall be the exclusive remedy of any
arbitrable dispute. Should any party to this
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Agreement pursue any arbitrable dispute by any method other than arbitration,
the other party shall be entitled to recover from the party initiating the
use of such method all damages, costs, expenses and attorneys' fees incurred
as a result of the use of such method. Notwithstanding anything herein to
the contrary, nothing in this Agreement shall purport to waive or in any way
limit the right of any party to seek to enforce any judgment or decision on
an arbitrable dispute in a court of competent jurisdiction.
Section 15. SUCCESSORS AND ASSIGNS. This Agreement shall inure
to the benefit of and be binding upon the respective successors and assigns of
the parties hereto.
Section 16. GOVERNING LAW. This agreement shall be governed by
and construed in accordance with the laws of the State of Washington, without
giving regard to the conflict of laws principles thereof.
Section 17. SECTION HEADINGS. Section headings are for
convenience of reference only and shall not affect the meaning of any provision
of this Agreement.
Section 18. ENTIRE AGREEMENT. This Agreement supersedes all
prior agreements between or among any of the parties hereto with respect to the
subject matter contained herein, and this Agreement together with the other
agreements referred to herein embodies the entire understanding among the
parties relating to such subject matter.
Section 19. SEVERABILITY. The invalidity or unenforceability of
any provision of this Agreement in any circumstance shall not affect the
validity or enforceability of such provision in any other circumstance or the
validity or enforceability of any other provision of this Agreement, and, except
to the extent such provision is invalid or unenforceable, this Agreement shall
remain in full force and effect. Any provision in this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be effective only to the extent of such prohibition or unenforceability without
invalidating or affecting the remaining provisions hereof in such jurisdiction,
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first written above.
PACIFIC CIRCUITS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Secretary
EMPLOYEE
/s/ Xxxx X. Xxxxxxxx
---------------------------------------
Xxxx Xxxxxxxx
Print Address: 00000 X.X. Xxxxxxx
Xxxxxx, XX 00000
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Schedule A
COMPENSATION
BASE SALARY: $133,500
CASH INCENTIVE COMPENSATION PLAN 1999 AWARD: 11.5
(in number of units awarded for 1999)
MANAGEMENT STOCK OPTION PLAN: 660
(in number of options granted on the
Effective Date)
RETENTION BONUS: $1,650,000
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