EMPLOYMENT, NONDISCLOSURE AND NON-COMPETE AGREEMENT
EMPLOYMENT, NONDISCLOSURE AND NON-COMPETE AGREEMENT
("Agreement") made and entered into as of this 21st day of January,
1998 by and between XXXXXXXXXX ELECTRONICS, LTD., a Delaware
corporation with its principal place of business located at 00X000
Xxxxxxxxx Xxxx, XxXxx, XX 00000 (the "Employer"), and Xxxxxx X.
Xxxxxxxxxx, an individual whose current residence is located at 000
Xxxxxxxxx, Xxxxxxxx, XX 00000 ("Employee").
RECITALS
WHEREAS, the Employer desires to employ Employee as its Vice
President and General Manager, Solid State and Components Division
upon the terms and conditions stated herein; and
WHEREAS, Employee desires to be so employed by the Employer at
the salary and benefits provided for herein; and
WHEREAS, Employee acknowledges and understands that during the
course of his employment, Employee has and will become familiar with
certain confidential information of the Employer which provides
Employer with a competitive advantage in the marketplace in which
it competes, is exceptionally valuable to the Employer, and is vital
to the success of the Employer's business; and
WHEREAS, the Employer and Employee desire to protect such
confidential information from disclosure to third parties or its use
to the detriment of the Employer; and
WHEREAS, the Employee acknowledges that the likelihood of
disclosure of such confidential information would be substantially
reduced, and that legitimate business interests of the Employer
would be protected, if Employee refrains from competing with the
Employer and from soliciting its customers and employees during and
following the term of the Agreement, and Employee is willing to
covenant that he will refrain from such actions.
NOW THEREFORE, in consideration of the promises and of the
mutual covenants and agreements hereinafter set forth, the parties
hereto acknowledge and agree as follows:
ARTICLE ONE
NATURE AND TERM OF EMPLOYMENT
1.01 Employment. The Employer hereby agrees to employ Employee
and Employee hereby accepts employment as the Employer's Vice
President and General Manager, Solid State and Components Division.
1.02 Term of Employment. Employee's employment pursuant to
this Agreement shall commence on January 26, 1998, or such earlier
date as may be agreed upon by Employee and the Employer and, subject
to the other provisions of this Agreement, the term of such
employment (the "Employment Term") shall continue indefinitely on
an "at will" basis.
1.03 Duties. Employee shall perform such managerial duties and
responsibilities in connection with the Company's Solid State and
Components Division or its successor, and such other duties and
responsibilities as may be assigned by the President/COO, or such
other person as the Employer may designate from time to time and
Employee will adhere to the policies and procedures of the Employer,
including, without limitation, its Code of Conduct, and will follow
the supervision and direction of Employer's President/COO or such
other person as the Employer may designate from time to time in the
performance of such duties. Employee agrees to devote his full
working time, attention and energies to the diligent and
satisfactory performance of his duties hereunder and to developing
and improving the business and best interests of the Company.
Employee will use all reasonable efforts to promote and protect the
good name of the Company and will comply with all of his
obligations, undertakings, promises, covenants and agreements as set
forth in this Agreement. Employee will not, during the Employment
Term or during any period during which Employee is receiving
payments pursuant to Article 2 and/or Section 5.04, engage in any
activity which would have, or reasonably be expected to have, an
adverse affect on the Employer's reputation, goodwill or business
relationships or which would result, or reasonably be expected to
result, in economic harm to the Employer.
ARTICLE TWO
COMPENSATION AND BENEFITS
For all services to be rendered by Employee in any capacity
hereunder (including as an officer, director, committee member or
otherwise of the Employer or any parent or subsidiary thereof or any
division of any thereof) on behalf of the Employer, the Employer
agrees to pay Employee so long as he is employed hereunder, and the
Employee agrees to accept, the compensation set forth below.
2.01 Base Salary. During the term of Employee's employment
hereunder, the Employer shall pay to Employee an annual base salary
("Base Salary") of One Hundred Fifteen Thousand and 00/100 Dollars
($115,000.00), payable in installments as are customary under the
Employer's payroll practices from time to time. The Employer at its
sole discretion may, but is not required to, review and adjust the
Employee's Base Salary from year to year; provided, however, that,
except as may be expressly consented otherwise in writing by
Employee, Employer may not decrease Employee's Base Salary. No
additional compensation shall be payable to Employee by reason of
the number of hours worked or by reason of hours worked on
Saturdays, Sundays, holidays or otherwise.
2.02 Incentive Plan. During the term of the Employee's
employment hereunder, the Employee shall be a participant in the SBU
Incentive Plan, as modified from time to time (the "Annual Incentive
Plan"). The Employee's "target bonus percentage" for purposes of
the Annual Incentive Plan shall be fifty percent (50%) for calendar
year 1998 (as if paid for a full year). Such bonus shall be paid
strictly in accordance with the Annual Incentive Plan. For calendar
year 1999 and thereafter, Employee's bonus shall be determined and
paid strictly in accordance with the Annual Incentive Plan as
modified or reduced by Employer at its discretion, and for any
partial fiscal year the bonus shall be computed and paid only for
the portion of the fiscal year Employee is employed hereunder.
2.03 Other Benefits. Employer will provide Employee such
benefits (other than bonus, severance and incentive compensation
benefits) as are generally provided by the Employer to its other
employees, including but not limited to, health/major medical
insurance, dental insurance, disability insurance, life insurance,
sick days and other employee benefits (collectively "Other
Benefits"), all in accordance with the terms and conditions of the
applicable Other Benefits Plan. Nothing in this Agreement shall
require the Employer to maintain any benefit plan nor prohibit the
Employer from modifying any such plan as it sees fit from time to
time. It is only intended that Employee shall be entitled to
participate in any such plan offered for which he may qualify under
the terms of any such plan as it may from time to time exist, in
accordance with the terms thereof.
2.04 Disability. Any compensation Employee receives under any
disability benefit plan provided by Employer during any period of
disability, injury or illness shall be in lieu of the compensation
which Employee would otherwise receive under Article Two during such
period of disability, injury or sickness.
2.05 Withholding. All salary, bonus and other payments
described in this Agreement shall be subject to withholding for
federal, state or local taxes, amounts withheld under applicable
benefit policies or programs, and any other amounts that may be
required to be withheld by law, judicial order or otherwise.
ARTICLE THREE
CONFIDENTIAL INFORMATION
RECORDS AND
REPUTATION
3.01 Definition of Confidential Information. For purposes of
this Agreement, the term "Confidential Information" shall mean all
of the following materials and information (whether or not reduced
to writing and whether or not patentable) to which Employee receives
or has received access or develops or has developed in whole or in
part as a direct or indirect result of his employment with Employer
or through the use of any of Employer's facilities or resources:
(1) Marketing techniques, practices, methods, plans, systems,
processes, purchasing information, price lists, pricing
policies, quoting procedures, financial information,
customer names, contacts and requirements, customer
information and data, product information, supplier
names, contacts and capabilities, supplier information
and data, and other materials or information relating to
the manner in which Employer, its customers and/or
suppliers do business;
(2) Discoveries, concepts and ideas, whether patentable or
not, or copyrightable or not, including without
limitation the nature and results of research and
development activities, processes, formulas, techniques,
"know-how," designs, drawings and specifications;
(3) Any other materials or information related to the
business or activities of Employer which are not
generally known to others engaged in similar businesses
or activities or which could not be gathered or obtained
without significant expenditure of time, effort and
money; and
(4) All inventions and ideas which are derived from or relate
to Employee's access to or knowledge of any of the above
enumerated materials and information.
The Confidential Information shall not include any materials or
information of the types specified above to the extent that such
materials or information are publicly known or generally utilized
by others engaged in the same business or activities in the course
of which Employer utilized, developed or otherwise acquired such
information or materials and which Employee has gathered or obtained
(other than on behalf of the Employer) after termination of his
employment with the Employer from such other public sources by his
own expenditure of significant time, effort and money after
termination of his employment with the Employer. Failure to xxxx
any of the Confidential Information as confidential shall not affect
its status as part of the Confidential Information under the terms
of this Agreement.
3.02 Ownership of Confidential Information. Employee agrees
that the Confidential Information is and shall at all times remain
the sole and exclusive property of Employer. Employee agrees
immediately to disclose to Employer all Confidential Information
developed in whole or part by him during the term of his
employment with Employer and to assign to Employer any right, title
or interest he or she may have in such Confidential Information.
Without limiting the generality of the foregoing, every invention,
improvement, product, process, apparatus, or design which Employee
may take, make, devise or conceive, individually or jointly with
others, during the period of his employment by the Employer,
whether during business hours or otherwise, which relates in any
manner to the business of the Employer either now or at any time
during the period of his employment), or which may be related to
the Employer in connection with its business (hereinafter
collectively referred to as "Invention") shall belong to and be the
exclusive property of the Employer and Employee will make full and
prompt disclosure to the Employer of every Invention. Employee will
assign to the Employer, or its nominee, every Invention and Employee
will execute all assignments and other instruments or documents and
do all other things necessary and proper to confirm the Employer's
right and title in and to every Invention; and Employee will perform
all proper acts within his power necessary or desired by the
Employer to obtain letters patent in the name of the Employer (at
the Employer's expense) for every Invention in whatever countries
the Employer may desire, without payment by the Employer to Employee
of any royalty, license fee, price or additional compensation.
3.03. Non Disclosure of Confidential Information. Except
as required in the faithful performance of Employee's duties
hereunder (or as required by law), during the term of his
employment with Employer and for a period after the termination of
such employment until the Confidential Information no longer meets
the definition set forth above of Confidential Information with
respect to Employee, Employee agrees not to directly or indirectly
reveal, report, publish, disseminate, disclose or transfer any of
the Confidential Information to any person or entity, or utilize for
himself or any other person or entity any of the Confidential
Information for any purpose (including, without limitation, in the
solicitation of existing Employer customers or suppliers), except
in the course of performing duties assigned to him by Employer.
Employee further agrees to use his best endeavors to prevent the
use for himself or others, or dissemination, publication, revealing,
reporting or disclosure of, any Confidential Information.
3.04 Protection of Reputation. Employee agrees that he or she
will at no time, either during his employment with the Employer or
at any time after termination of such employment, engage in conduct
which injures, xxxxx, corrupts, demeans, defames, disparages,
libels, slanders, destroys or diminishes in any way the reputation
or goodwill of the Employer, its subsidiaries, or their respective
shareholders, directors, officers, employees, or agents, or the
services provided by the Employer or the products sold by the
Employer, or its other properties or assets, including, without
limitation, its computer systems hardware and software and its data
or the integrity and accuracy thereof.
3.05 Records and Use of Employer Facilities. All notes, data,
reference materials, memoranda and records, including, without
limitation, data on the Employer's computer system, computer
reports, products, customers and suppliers lists and copies of
invoices, in any way relating to any of the Confidential Information
or Employer's business shall belong exclusively to Employer, and
Employee agrees to maintain them in a manner so as to secure their
confidentiality and to turn over to Employer all copies of such
materials (in whole or in part) in his possession or control at the
request of Employer or, in the absence of such a request, upon the
termination of Employee's employment with Employer. Upon
termination of Employee's employment with Employer, Employee shall
immediately refrain from seeking access to Employer's (a) telephonic
voice mail, E-mail or message systems, (b) computer system and (c)
computer data bases and software. The foregoing shall not prohibit
Employee from using Employer's public Internet (not intranet) site.
ARTICLE FOUR
NON-COMPETE AND NON-SOLICITATION COVENANTS
4.01 Non-Competition and Non-Solicitation. Employee
acknowledges that it may be very difficult for him to avoid using
or disclosing the Confidential Information in violation of Article
Three above in the event that he or she is employed by any person
or entity other than the Employer in a capacity similar or related
to the capacity in which he or she is employed by the Employer.
Accordingly, Employee agrees that he or she will not, during the
term of employment with Employer and for a period of one (1) year
after the termination of such employment, irrespective of the time,
manner or cause of such termination, directly or indirectly (whether
or not for compensation or profit):
(1) Engage in any business or enterprise the nature of which
is directly competitive with that of the Employer (a
"Prohibited Business"); or
(2) Participate as an officer, director, creditor, promoter,
proprietor, associate, agent, employee, partner,
consultant, sales representative or otherwise, or promote
or assist, financially or otherwise, or directly or
indirectly own any interest in any person or entity
involved in any Prohibited Business; or
(3) Canvas, call upon, solicit, entice, persuade, induce,
respond to, or otherwise deal with, directly or
indirectly, any individual or entity which, during
Employee's term of employment with the Employer, was or
is a customer or supplier, or proposed customer or
supplier, of the Employer whom Employee called upon or
dealt with, or whose account Employee supervised, for the
following:
(a) to purchase (with respect to customers) or sell
(with respect to suppliers) products of the types or
kinds sold by the Employer or which could be
substituted for (including, but not limited to,
rebuilt products), or which serve the same purpose
or function as, products sold by the Employer (all
of which products are herein sometimes referred to,
jointly and severally, as "Prohibited Products"), or
(b) to request or advise any such customer or supplier
to withdraw, curtail or cancel its business with the
Employer; or
(4) For himself or for or through any other individual or
entity call upon, solicit, entice, persuade, induce or
offer any individual who, during Employee's term of
employment with the Employer, was an employee or sales
representative or distributor of the Employer, employment
by, or representation as sales agent or distributor for,
any one other than the Employer, or request or advise any
such employee or sales agent or distributor to cease
employment with or representation of the Employer, and
Employee shall not approach, respond to, or otherwise
deal with any such employee or sales representative or
distributor of Employer for any such purpose, or
authorize or knowingly cooperate with the taking of any
such actions by any other individual or entity.
4.02 Obligation independent Each obligation of each
subparagraph and provision of Section 4.01 shall be independent of
any obligation under any other subparagraph or provision hereof or
thereof.
4.03 Public Stock Nothing in Section 4.01, however, shall
prohibit Employee from owning (directly or indirectly through a
parent, spouse, child or other relative or person living in the same
household with Employee or any of the foregoing), as a passive
investment, up to 1% of the issued and outstanding shares of any
class of stock of any publicly traded company.
4.04 Business Limitation If, at the termination of Employee's
employment and for the entire period of twelve (12) months prior
thereto his duties and responsibilities are limited by the Employer
so that he or she is specifically assigned to, or responsible for,
one or more divisions, subsidiaries or business units of the
Employer, then subparagraphs (1) through (3) of Section 4.01 shall
apply only to any business which competes with the business of such
divisions, subsidiaries or business units.
4.05 Area Limitation If at the termination of Employee's
employment and for the entire period of twelve (12) months prior
thereto he or she has responsibility for only a designated
geographic area, then subparagraphs (1) through (3) of Section 4.01
shall apply only within such area.
ARTICLE FIVE
TERMINATION
5.01 Termination of Employee for Cause. The Employer shall
have the right to terminate Employee's employment at any time for
"cause." Prior to such termination, the Employer shall provide
Employee with written notification of any and all allegations
constituting "cause" and the Employee shall be given five (5)
working days after receipt of such written notification to respond
to those allegations in writing. Upon receipt of the Employee's
response, the Employer shall meet with the Employee to discuss the
allegations.
For purposes hereof, "cause" shall mean (i) an act or acts of
personal dishonesty taken by the Employee and intended to result in
personal enrichment of the Employee, (ii) material violations by the
Employee of the Employee's obligations or duties under, or any terms
of, this Agreement, which are not remedied in a reasonable period
(not to exceed ten (10) days) after receipt of written notice
thereof from the Employer, (iii) any violation by the Employee of
any of the provisions of Articles Three, or Four, or (iv) Employee
being charged, indicted or convicted (by trial, guilty or no contest
plea or otherwise) of (a) a felony, (b) any other crime involving
moral turpitude, or (c) any violation of law which would impair the
ability of the Employer or any affiliate to obtain any license or
authority to do any business deemed necessary or desirable for the
conduct of its actual or proposed business.
5.02 Termination of Employee Because of Employee's Disability,
Injury or Illness. The Employer shall have the right to terminate
Employee's employment if Employee is unable to perform the duties
assigned to him by the Employer because of Employee's disability,
injury or illness, provided however, such inability must have
existed for a total of one hundred eighty (180) consecutive days
before such termination can be made effective. Any compensation
Employee receives under any disability benefit plan provided by
Employer during any period of disability, injury or illness shall
be in lieu of the compensation which Employee would otherwise
receive under Article Two during such period of disability, injury
or sickness.
5.03 Termination as a Result of Employee's Death. The
obligations of the Employer to Employee pursuant to this Agreement
shall automatically terminate upon Employee's death.
5.04 Termination of Employee for any Other Reason. The
Employer shall have the right to terminate Employee's employment at
any time at will for any reason upon ten (10) days prior written
notice to Employee. If Employee's employment is terminated by the
Employer during the Employment Term for any reason other than the
reason set forth in Sections 5.01, 5.02 or 5.03 above, the Employer
shall continue to pay to Employee for a period of six (6) months,
an amount equal to one hundred percent (100%) of his then current
Base Salary in installments on the same dates as the Employer make
payroll payments under its customary practice. Employee shall only
be entitled to receive the bonus pursuant to the Annual Incentive
Plan for the year in which such termination occurs prorated and
accrued to the date of termination. In such case Employee shall not
be entitled to receive, unless otherwise required by law, any
subsequent Other Benefits.
5.05 Termination by Employee. Subject to the provisions of
Articles Three and Four above, Employee may terminate his
employment by the Employer at any time by written notice to
Employer. If Employee's employment is so terminated, the Employer
shall be obligated to continue to pay to Employee his then current
Base Salary and Other Benefits accrued up to and including the date
on which Employee's employment is so terminated, however, Employee
and the Employer acknowledge and agree to the fullest extent
permitted by law, that Employee shall forfeit, and the Employer
shall not be responsible to pay or fund, directly or indirectly, any
accrued but unpaid bonus or award (howsoever described including the
Annual Incentive Plan); accumulated but unpaid sick leave;
accumulated but unpaid vacation time; deferred compensation;
severance pay or benefits; any and all benefits which are accrued
but not vested under any pension, profit sharing or other qualified
retirement plan and all service credits under each such plan
(subject to any reinstatement of such credits upon future
reemployment with the Employer in accordance with federal law); and
right to post-employment coverage under any health, insurance or
other welfare benefit plan, including rights arising under Title X
of COBRA or any similar federal or state law (except that
continuation coverage rights of Employee's spouse and other
dependents, if any, under such plans or laws shall be forfeited only
with their consent); or any Other Benefits, if any, provided to
Employee under any policy, program or plan of the Employer not
specifically described above, after the date of termination to which
Employee might otherwise be entitled under this Agreement but for
his resignation.
ARTICLE SIX
REMEDIES
6.01 Employee acknowledges that the restrictions contained in
this Agreement will not prevent him from obtaining such other
gainful employment he or she may desire to obtain or cause him any
undue hardship and are reasonable and necessary in order to protect
the legitimate interests of Employer and that violation thereof
would result in irreparable injury to Employer. Employee therefor
acknowledges and agrees that in the event of a breach or threatened
breach by Employee of the provisions of Article Three or Article
Four or Section 1.03, Employer shall be entitled to an injunction
restraining Employee from such breach or threatened breach and
Employee shall lose all rights to receive any payments under Section
5.04. Nothing herein shall be construed as prohibiting or limiting
Employer from pursuing any other remedies available to Employer for
such breach or threatened breach, the rights hereinabove mentioned
being in addition to and not in substitution of such other rights
and remedies. The period of restriction specified in Article Four
shall xxxxx during the time of any violation thereof, and the
portion of such period remaining at the commencement of the
violation shall not begin to run until the violation is cured.
6.02 Survival. The provisions of this Article Six and of
Articles Three and Four shall survive the termination or expiration
of this Agreement.
ARTICLE SEVEN
MISCELLANEOUS
7.01 Assignment. Employee and Employer acknowledge and agree
that the covenants, terms and provisions contained in this Agreement
constitute a personal employment contract and the rights and
obligations of the parties thereunder cannot be transferred, sold,
assigned, pledged or hypothecated, excepting that the rights and
obligations of the Employer under this Agreement may be assigned or
transferred pursuant to a sale of the business, merger,
consolidation, share exchange, sale of substantially all of the
Employer's assets, or other reorganization described in Section 368
of the Code, or through liquidation, dissolution or otherwise,
whether or not the Employer is the continuing entity, provided that
the assignee, or transferee is the successor to all or substantially
all of the assets of the Employer and such assignee or transferee
assumes the rights and duties of the Employer, if any, as contained
in this Agreement, either contractually or as a matter of law.
7.02 Severability. Should any of Employee's obligations under
this Agreement or the application of the terms or provisions of this
Agreement to any person or circumstances, to any extent, be found
illegal, invalid or unenforceable in any respect, such illegality,
invalidity or unenforceability shall not affect the other provisions
of this Agreement, all of which shall remain enforceable in
accordance with their terms, or the application of such terms or
provisions to persons or circumstances other than those to which it
is held illegal, invalid or unenforceable. Despite the preceding
sentence, should any of Employee's obligations under this Agreement
be found illegal, invalid or unenforceable because it is too broad
with respect to duration, geographical or other scope, or subject
matter, such obligation shall be deemed and construed to be reduced
to the maximum duration, geographical or other scope, and subject
matter allowable under applicable law.
The covenants of Employee in Articles Three and Four and each
subparagraph of Section 4.01 are of the essence of this Agreement;
they shall be construed as independent of any other provision of
this Agreement; and the existence of any claim or cause of action
of Employee against the Employer, whether predicated on the
Agreement or otherwise shall not constitute a defense to enforcement
by the Employer of any of these covenants. The covenants of
Employee shall be applicable irrespective of whether termination of
employment hereunder shall be by the Employer or by Employee,
whether voluntary or involuntary, or whether for cause or without
cause.
7.03 Notices. Any notice, request or other communication
required to be given pursuant to the provisions hereof shall be in
writing and shall be deemed to have been given when delivered in
person or three (3) days after being deposited in the United States
mail, certified or registered, postage prepaid, return receipt
requested and addressed to the party at its or his last known
addresses. The address of any party may be changed by notice in
writing to the other parties duly served in accordance herewith.
7.04 Waiver. The waiver by the Employer or Employee of any
breach of any term or condition of this Agreement shall not be
deemed to constitute the waiver of any other breach of the same or
any other term or condition hereof. Failure by any party to claim
any breach or violation of any provision of this Agreement shall not
constitute a precedent or be construed as a waiver of any subsequent
breaches hereof.
7.05 Continuing Obligation. The obligations, duties and
liabilities of Employee pursuant to Articles Three and Four of this
Agreement are continuing, absolute and unconditional and shall
remain in full force and effect as provided herein and survive the
termination of this Agreement.
7.06 No Conflicting Obligations or Use. Employer does not
desire to acquire from Employee any secret or confidential know-how
or information which he may have acquired from others nor does it
wish to cause a breach of any non compete or similar agreement to
which Employee may be subject. Employee represents and warrants
that (i) other than for this Agreement, he is not subject to or
bound by any confidentiality agreement or non disclosure or non
compete agreement or any other agreement having a similar intent,
effect or purpose, and (ii) he is free to use and divulge to
Employer, without any obligation to or violation of any right of
others, any and all information, data, plans, ideas, concepts,
practices or techniques which he will use, describe, demonstrate,
divulge, or in any other manner make known to Employer during the
performance of services
7.07 Attorneys Fees. In the event that Employee has been found
to have violated any of the terms of Articles Three or Four of this
Agreement either after a preliminary injunction hearing or a trial
on the merits or otherwise, Employee shall pay to the Employer the
Employer's costs and expenses, including attorneys fees, in
enforcing the terms of Articles Three or Four of this Agreement.
7.08 Advise New Employers. During Employee's employment with
the Employer and for one (1) year thereafter, Employee will
communicate the contents of Articles Three and Four to any
individual or entity which Employee intends to be employed by,
associated with, or represent which is engaged in a business which
is competitive to the business of Employer.
7.09 Captions. The captions of Articles and Sections this
Agreement are inserted for convenience only and are not to be
construed as forming a part of this Agreement.
EMPLOYEE ACKNOWLEDGES THAT HE OR SHE HAS READ AND FULLY UNDERSTANDS
EACH AND EVERY PROVISION OF THE FOREGOING AND DOES HEREBY ACCEPT AND
AGREE TO THE SAME.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
EMPLOYEE EMPLOYER
/s/ Xxxxxx Xxxxxxxxxx /s/ Xxxxx X. Xxxxxxx
President & COO
