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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), to be effective as of the
Effective Time (as defined in an Agreement and Plan of Merger (the "Acquisition
Agreement") dated as of the date hereof (as it may be amended) among Hadco
Corporation, a Massachusetts corporation ("Hadco"), Hadco Acquisition Corp. II,
a Delaware corporation ("Sub"), and Continental Circuits Corp., a Delaware
corporation ("Continental")), by and between Hadco and Xxxxxxxxx X. XxXxxxx,
III, an individual ("Employee").
Whereas, Employee is currently the chief executive officer and
president of Continental; and
Whereas, the Acquisition Agreement contemplates the acquisition by Sub
of all of the outstanding capital stock of Continental, with a subsequent merger
of Sub into Continental, and the renaming of the Surviving Corporation (as
defined in the Acquisition Agreement) to be Hadco Phoenix, Inc. ("Hadco
Phoenix"); and
Whereas, in connection with the acquisition, Employee has agreed to
serve as an employee of Hadco upon the terms and conditions set forth herein.
Now, therefore, in consideration of the premises and for good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES. Hadco agrees to employ Employee on a
full-time basis, subject to the terms and conditions provided herein, and
Employee agrees to accept such full-time employment upon said terms and
conditions. Employee's initial title shall be Senior Vice President, Hadco
Phoenix, in which capacity Employee shall have general responsibility for the
activities and operations of Hadco Phoenix and all of its direct wholly-owned
subsidiaries, subject to the direction and control of Hadco's chief executive
officer. Although Employee understands that his duties will include a
substantial amount of business travel, during the entire term of employment, he
shall be based in the Phoenix, Arizona, area, unless otherwise agreed between
the parties in the future. Employee's employment shall be subject to the
standard terms, conditions, and policies applicable to all Hadco employees, as
such terms, conditions and policies may exist from time to time.
2. TERM. The term of employment under this Agreement (the "Term") shall
commence on the Effective Time and shall continue for a period of two years,
unless earlier terminated as set forth in Section 5 below.
3. COMPENSATION.
a. BASE SALARY. Hadco agrees to pay Employee a base salary, before
deducting all applicable withholdings, at the annual rate of $235,000
(the "Base Salary"), which shall be payable in accordance with Hadco's
standard executive payroll policies as they may be revised from time to
time. The Base Salary may be increased during the Term hereof at the
discretion of the chief executive officer of Hadco.
b. BONUS. Employee shall be eligible to participate in the bonus
programs of Hadco applicable to senior executives, as such programs may
exist from time to time.
c. STOCK OPTIONS. Employee shall be granted non-qualified stock
options to purchase 40,000 shares of Hadco common stock, pursuant to
and subject to the terms and provisions of Hadco's Non-Qualified Stock
Option Plan of November 29, 1995, at the fair market value of such
stock as of the last business day immediately preceding the Effective
Time. Such option shall be evidenced by a Stock Option Agreement in the
form customarily utilized by Hadco for such grants.
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d. BENEFITS. Employee shall be accorded such benefits as are
customarily enjoyed by senior executives of Hadco.
4. INVESTMENT. Employee agrees to purchase from Hadco, on the Effective
Time, 40,000 shares of Hadco common stock at the fair market value of such stock
(measured as the average between the high and low trading prices of Hadco's
common stock on the last business day immediately preceding the Effective Time),
which shares will not have been registered under the Securities Act of 1933, as
amended. Employee understands and agrees that such shares will not be salable on
the open market, and Employee represents and warrants that he is purchasing such
shares for investment purposes and not with a view to distribution, and that he
is an "Accredited Investor" (as such term is defined in Regulation D of the
Securities Act of 1933, as amended). Employee agrees that certificates
representing such shares shall bear appropriate restrictive legends, and further
agrees that the shares may be subject to a stop transfer order until such time
as transfer of the shares may be effected without violation of state or federal
securities laws.
5. SEVERANCE. If, during the Term hereof, Employee's employment is
terminated by Hadco without cause, or is terminated by Employee for Good Reason
(as defined herein), Employee shall be paid his full Base Salary for the
remainder of the Term. For purposes of this Agreement, the following definitions
shall apply:
(a) CAUSE. Hadco shall have "cause" to terminate
Employee's employment in the event of (i) Employee's willful
and continued failure to substantially perform his duties
(other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for
substantial performance is delivered by Hadco which demand
specifically identifies the manner in which Employee has not
substantially performed his duties, or (ii)(x) Employee shall
have been guilty of any act or acts of dishonesty constituting
a felony, or (y) Employee shall have violated any provision of
any confidentiality, nondisclosure, assignment of invention,
noncompetition or similar agreement entered into by him in
connection with his employment by Hadco. For purposes of this
subsection, no act or failure to act on the part of Employee
shall be deemed "willful" unless done or omitted to be done by
Employee not in good faith and without reasonable belief that
his action or omission was in the best interest of Hadco.
(b) GOOD REASON. "Good Reason" shall mean, without
Employee's consent, the occurrence of the following:
(i) any significant diminution in Employee's
position, duties, responsibilities, power,
title or office;
(ii) any reduction in Employee's annual base
salary; or
(iii) any requirement by Hadco that the
location at which Employee performs his
principal duties be outside a radius of 30
miles from Phoenix.
6. NON-COMPETITION; NON-SOLICITATION.
a. NON-COMPETE. Employee agrees that he will not,
during the Term, directly or indirectly, engage in (whether as an
officer, employee, consultant, director, proprietor, agent, partner or
otherwise) or have any ownership interest in, or participate in the
financing, operation, management or control of, any person, firm,
corporation or business that engages in competition with Hadco or any
of its subsidiaries or affiliates in the business of manufacture or
sale of printed circuit boards or of other electronic interconnect
products, or in the development of technologies for such businesses.
The territory to which this restriction shall apply shall be worldwide.
It is agreed that ownership of no more than 1% of the outstanding
voting stock of a publicly traded corporation shall not constitute a
violation of this provision.
b. CONFIDENTIAL INFORMATION. Employee acknowledges that
Employee may receive, or contribute to the production of, Confidential
Information. For purposes of this Agreement, Employee
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agrees that "Confidential Information" shall mean information or
material proprietary to Hadco or any of its direct or indirect
subsidiaries or designated as Confidential Information by Hadco and not
generally known by non-Hadco personnel, which Employee develops or of
or to which Employee may obtain knowledge or access through or as a
result of Employee's relationship with Hadco or any of its direct or
indirect subsidiaries (including information conceived, originated,
discovered or developed in whole or in part by Employee). Confidential
Information includes, but is not limited to, the following types of
information and other information of a similar nature (whether or not
reduced to writing) related to Hadco's business: discoveries,
inventions, ideas, concepts, research, development, processes,
procedures, "know-how", formulae, marketing techniques and materials,
marketing and development plans, business plans, customer names and
other information related to customers, price lists, pricing policies,
methods of operation, financial information, employee compensation, and
computer programs and systems. Confidential Information also includes
any information described above which Hadco or any of its direct or
indirect subsidiaries obtains from another party and which Hadco treats
as proprietary or confidential, or designates as Confidential
Information, whether or not owned by or developed by Hadco. Employee
acknowledges that the Confidential Information derives independent
economic value, actual or potential, from not being generally known to,
and not being readily ascertainable by proper means by, other persons
who can obtain economic value from its disclosure or use. Information
publicly known without breach of this Agreement that is generally
employed by the trade at or after the time Employee first learns of
such information, or generic information or knowledge which Employee
would have learned in the course of similar employment or work
elsewhere in the trade, shall not be deemed part of the Confidential
Information. Employee further agrees:
(1) To furnish Hadco on demand, at any time during or
after employment, a complete list of the names and addresses of all
present, former and potential suppliers, customers and other contacts
gained while an employee of Hadco in Employee's possession, whether or
not in the possession or within the knowledge of Hadco.
(2) That all notes, memoranda, electronic storage,
documentation and records in any way incorporating or reflecting any
Confidential Information shall belong exclusively to Hadco, and
Employee agrees to turn over all copies of such materials in Employee's
control to Hadco upon request or upon termination of Employee's
employment with Hadco.
(3) That while employed by Hadco and thereafter
Employee will hold in confidence and not directly or indirectly reveal,
report, publish, disclose or transfer any of the Confidential
Information to any person or entity, or utilize any of the Confidential
Information for any purpose, except in the course of Employee's work
for Hadco.
(4) That any idea in whole or in part conceived of or
made by Employee during the term of his employment, consulting, or
similar relationship with Hadco which relates directly or indirectly to
Hadco's current or planned lines of business and is made through the
use of any of the Confidential Information or any of Hadco equipment,
facilities, trade secrets or time, or which results from any work
performed by Employee for Hadco, shall belong exclusively to Hadco and
shall be deemed a part of the Confidential Information for purposes of
this Agreement. Employee hereby assigns and agrees to assign to Hadco
all rights in and to such Confidential Information whether for purposes
of obtaining patent or copyright protection or otherwise. Employee
shall acknowledge and deliver to Hadco, without charge to Hadco (but at
its expense) such written instruments and do such other acts, including
giving testimony in support of Employee's authorship or inventorship,
as the case may be, necessary in the opinion of Hadco to obtain patents
or copyrights or to otherwise protect or vest in Hadco the entire right
and title in and to the Confidential Information.
c. NON-SOLICITATION. During the Term and for a period of one
year thereafter, Employee agrees that he shall not (for the purpose of
or which results in competition with Hadco or any of its affiliates or
subsidiaries) either solicit any persons or companies who were
customers, clients, suppliers or business patronage of Hadco during the
Term or prior thereto or of any of its predecessors, affiliates or
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subsidiaries or use any Confidential Information; nor will he solicit
for any purpose the employment of any employees of Hadco or any of its
affiliates or subsidiaries during the Term or for a period of one year
thereafter.
d. INJUNCTIONS. It is agreed that the restrictions contained
in this Section 6 are reasonable, but it is recognized that damages in
the event of the breach of any of the restrictions will be difficult or
impossible to ascertain; and, therefore, Employee agrees that, in
addition to and without limiting any other right or remedy Hadco may
have, Hadco shall have the right to an injunction against Employee
issued by a court of competent jurisdiction enjoining any such breach
without showing or proving any actual damage to Hadco.
e. PART OF CONSIDERATION. Employee also agrees, acknowledges,
covenants, represents and warrants that he is fully and completely
aware that, and further understands that, the foregoing restrictive
covenants are an essential part of the consideration for Hadco entering
into this Agreement and that Hadco is entering into this Agreement in
full reliance on these acknowledgments, covenants, representations and
warranties.
f. TIME AND TERRITORY REDUCTION. If the period of time and/or
territory described above are held to be in any respect an unreasonable
restriction, it is agreed that the court so holding may reduce the
territory to which the restriction pertains or the period of time in
which it operates or may reduce both such territory and such period, to
the minimum extent necessary to render such provision enforceable.
g. APPLICABILITY TO SUBSIDIARIES. As used in this Section,
Hadco shall mean and include Hadco Corporation and all or its direct or
indirect subsidiaries.
h. SURVIVAL. The obligations described in this Section 6 shall
survive any termination of this Agreement, except for a termination
under Section 14 hereof, or any termination of the employment
relationship created hereunder.
7. GOVERNING LAW AND VENUE. Arizona law shall govern the construction
and enforcement of this Agreement and the parties agree that any litigation
pertaining to this Agreement shall be in courts located in Maricopa County,
Arizona.
8. CONSTRUCTION. The language in all parts of this Agreement shall in
all cases be construed as a whole according to its fair meaning and not strictly
for nor against any party. The Section headings contained in this Agreement are
for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. All terms used in one number or gender shall
be construed to include any other number or gender as the context may require.
The parties agree that each party has reviewed this Agreement and has had the
opportunity to have counsel review the same and that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not apply in the interpretation of this Agreement or any amendment or any
exhibits thereof.
9. NONDELEGABILITY OF EMPLOYEE'S RIGHTS AND HADCO ASSIGNMENT RIGHTS.
The obligations, rights and benefits of Employee hereunder are personal and may
not be delegated, assigned or transferred in any manner whatsoever, nor are such
obligations, rights or benefits subject to involuntary alienation, assignment or
transfer. This Agreement shall be assigned automatically to any entity merging
with or acquiring Hadco or its business.
10. SEVERABILITY. If any term or provision of this Agreement is
declared by a court of competent jurisdiction to be invalid or unenforceable for
any reason, this Agreement shall remain in full force and effect, and either (a)
the invalid or unenforceable provision shall be modified to the minimum extent
necessary to make it valid and enforceable or (b) if such a modification is not
possible, this Agreement shall be interpreted as if such invalid or
unenforceable provision were not a part hereof.
11. ATTORNEYS' FEES. Except as otherwise provided herein, if any party
hereto institutes an action or other
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proceeding to enforce any rights arising out of this Agreement, the party
prevailing in such action or other proceeding shall be paid all reasonable costs
and attorneys' fees by the non-prevailing party, such fees to be set by the
court and not by a jury and to be included in any judgment entered in such
proceeding.
12. NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed duly given, upon receipt, if either personally
delivered, sent by certified mail, return receipt requested, or sent by a
nationally-recognized overnight courier service, addressed to the parties as
follows:
IF TO HADCO: Hadco Corporation
00X Xxxxx Xxxxxxx
Xxxxx, XX
Attention: Chief Executive Officer
With a copy to: Xxxxx, Xxxxxxx &Thibeault, LLP
Attention: Xxxxxxx X. Xxxxxxx
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
IF TO EMPLOYEE: Xxxxxxxxx X. XxXxxxx, III
Hadco Phoenix Inc.
0000 Xxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
or to such other address as either party may provide to the other in accordance
with this Section.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof (i.e., Employee's
employment by Hadco) and supersedes all prior or contemporaneous employment
agreements and understandings or agreements in regard to Employee's employment.
Employee hereby acknowledges and agrees that as of the Effective Time the
Employment Agreement dated as of August 1, 1997 by and between Continental and
Employee and the letter agreement dated May 8, 1997 by and between Continental
and Employee and any all other agreements between Continental and Employee are
hereby terminated and shall be of no further force or effect, except that all
confidentiality obligations and non-disclosure obligations of Employee to
Continental shall nonetheless survive. No modification or addition to this
Agreement shall be valid unless in writing, specifically referring to this
Agreement and signed by all parties hereto. No waiver of any rights under this
Agreement shall be valid unless in writing and signed by the party to be charged
with such waiver. No waiver of any term or condition contained in this Agreement
shall be deemed or construed as a further or continuing waiver of such term or
condition, unless the waiver specifically provides otherwise.
14. OTHER PROVISIONS. The parties agree that if the Acquisition
Agreement terminated under Section 8.1 thereof, this Agreement shall be null and
void with no liability by any party to any other party by reason of this
Agreement becoming so null and void.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
February 15, 1998.
HADCO: EMPLOYEE:
Hadco Corporation.
a Massachusetts corporation
By: ______________________________ _________________________________
Xxxxxxxxx X. XxXxxxx, III
Title: ____________________________
