EXHIBIT 10.23
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT dated as of the 23rd day of July, 1998, is by and
between Details Holdings Corp., a California corporation (the "Company"), and
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Xxxx Xxxxxx ("Employee").
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WHEREAS, pursuant to a Stock Contribution and Merger Agreement (the "Stock
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Contribution and Merger Agreement") dated as of the date hereof among the
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Company, Dynamic Circuits, Inc. ("DCI") and the stockholders of DCI, (i) the
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stockholders of DCI are contributing a portion of their shares of common stock,
$.001 par value per share, of DCI (the "DCI Common Stock") to the Company in
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exchange for shares of its voting common stock and options to purchase shares of
its voting common stock, (ii) the stockholders of DCI will receive cash
consideration for their remaining issued and outstanding shares of DCI Common
Stock as merger consideration in connection with the mergers of Details Merger
Corp. I and Details Merger Corp. II with and into DCI and (iii) DCI is making,
or agreeing to make, certain cash payments to the holders of vested and unvested
options to acquire DCI Common Stock (the "DCI Options");
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WHEREAS, the Company desires that Employee continue as Senior Vice
President of Sales of DCI and become a Vice President of the Company, and
Employee desires to accept such employment;
WHEREAS, pursuant to the Stock Contribution and Merger Agreement, options
to purchase DCI Common Stock are being converted into options to purchase shares
of Class A-5 Common Stock, no par value per share, of the Company (the "Class A
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Common Stock") and Class L Common Stock, no par value per share, of the Company
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(the "Class L Common Stock", and together with the Class A Common Stock, the
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"Company Common Stock");
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WHEREAS, Employee currently holds (i) 350,000 shares of DCI Common Stock
(ii) vested options to purchase 28,875 shares of DCI Common Stock (the "Vested
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Options") and (iii) unvested options to purchase 48,125 shares of DCI Common
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Stock (the "Unvested Options"); and
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WHEREAS, Employee and DCI are parties to an employment agreement which they
intend to terminate as of the Closing (as defined below) and concurrently with
the effectiveness of this Agreement;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements set forth below, it is mutually agreed as follows:
1. EMPLOYMENT AND DUTIES
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1.1 Employment. The Company hereby agrees to employ Employee as a Vice
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President and to cause DCI to continue to employ Employee as the Senior Vice
President of Sales of DCI and Employee hereby accepts such employment upon the
terms and conditions set forth herein.
1.2 Services. Employee agrees to perform, in good faith, his employment
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duties as determined from time to time by the Board of Directors of the Company
(the "Board of Directors") and the President of DCI; provided, however, that
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such duties shall be duties customarily performed by a Vice President of the
Company and a Senior Vice President of Sales of DCI. Employee shall report only
to the Board of Directors and the President of DCI. Except to the extent
otherwise permitted under Section 2.1 of the Non-Compete Agreement (as defined
below), Employee shall devote his full time and best efforts to his duties to
the Company and DCI during the term of his employment and shall not be an
officer or director of any other business enterprise without the Company's prior
written consent.
2. TERM.
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The employment of Employee by the Company and DCI shall be for the period
beginning upon the closing under the Redemption and Stock Contribution Agreement
(the "Closing") and expiring on the earlier of (a) October 28, 2000 and (b) the
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date on which termination of employment is effective pursuant to Section 7
hereof (the "Termination Date").
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3. COMPENSATION
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3.1 Initial Base Salary. For all services he may render to the Company
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and its subsidiaries and affiliates during the term of this Agreement, Employee
shall be paid a base salary at an annual rate of $280,000 during the Company's
1998 fiscal year (as increased from time to time, the "Base Salary").
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Employee's Base Salary, which shall not be decreased during the term of this
Agreement, shall be paid in accordance with the normal payroll practices of the
Company.
3.2 Base Salary Increases. At any time the Company increases the base
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salary of Xxx X. Xxxx, Xx. in accordance with his Employment Agreement dated as
of September 1, 1995 (as amended through the date hereof, the "Muse Agreement")
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prior to the Termination Date, the Company shall increase the Base Salary of
Employee by a percentage which is equal to the percentage increase in Xxx Xxxx'x
base salary; provided, however, that Employee's Base Salary may be further
increased from time to time by the Board of Directors in its sole discretion.
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3.3 Expenses. The Company shall reimburse Employee for reasonable and
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necessary business expenses incurred by Employee in the course of his employment
upon presentation by Employee of reasonably detailed statements of expenses for
which reimbursement is claimed.
3.4 Annual Bonus. Xxxxx Xxxxxx and Xxxxx XxXxxxxx will attempt to jointly
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submit to the Board of Directors a bonus program for the senior executives of
the Company which is based on the consolidated performance of the Company. Until
Xxxxx Xxxxxx and Xxxxx XxXxxxxx agree on, and the Board of Directors approves,
such a bonus program, Employee shall be entitled to an annual bonus, payable in
accordance with the current practice of DCI, of 15.07% of the aggregate amount
available under an annual bonus program which shall be instituted by the Company
for the benefit of the senior executives of DCI (the "DCI Stand Alone Annual
Bonus Plan") which, in the aggregate, provides for bonuses consistent with
Exhibit B.
For so long as the DCI Stand Alone Annual Bonus Plan shall be in effect,
Employee shall be entitled to an additional bonus for each fiscal year of the
Company equal to 17.04% of the amount, if any, by which (a) the annual bonus to
which Xxxxxx X. Xxxxxxxx would be entitled under the DCI Stand Alone Annual
Bonus Plan if he were continuously employed by the Company and DCI during such
fiscal year exceeds (b) the sum of (i) the amount of such annual bonus paid or
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payable to Xx. Xxxxxxxx and (ii) the amount of such annual bonus (or similar
bonus) paid to any employee(s) who replace Xx. Xxxxxxxx at DCI.
Amounts payable under this Section 3.4 shall be referred to herein as the
"Annual Bonus."
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3.5 Additional Bonus. Employee is hereby granted 13,892.7542 Class A Cash
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Bonus Units with a Payment Value (as defined in the Bonus Plan) of $1.5725 per
unit and 1,764.1301 Class L Bonus Units with a Payment Value of $363.2381 per
unit under the Company's 1998 Cash Bonus Plan (the "Additional Bonus").
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4. OTHER BENEFITS
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In addition to the compensation payable pursuant to Section 3 hereof,
Employee shall be entitled to, and shall receive:
4.1 Health Benefits, etc. Benefits and conditions of employment which are
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available generally to executives of DCI (including, without limitation,
hospital, surgical, medical, dental or other group health insurance benefits,
life insurance benefits and disability benefits, holidays, company cars and
related expenses and travel insurance).
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4.2 Office. Use of a private office at DCI's executive offices suitable
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for a Vice President of the Company and a Senior Vice President of Sales of DCI
and reasonable secretarial support.
5. VACATION
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Employee shall have the right to three weeks of vacation each year from his
duties as herein prescribed. During such vacation periods, the compensation
payable to Employee pursuant to this Agreement shall be paid.
6. EQUITY PROVISIONS
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6.1 Vested Options. The Vested Options shall be converted into (a) vested
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options to purchase the number of shares of Class A Common Stock set forth on
Schedule 1 with an exercise price per share equal to $1.5762 (the "Vested Class
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A Options"), (b) vested options to purchase the number of shares of Class L
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Common Stock set forth on Schedule 1 with an exercise price per share equal to
$364.0909 (the "Vested Class L Options", and together with the Vested Class A
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Options, the "Vested Replacement Options") and (c) the right to receive a cash
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payment to be made one day prior to the Closing Date (as defined in the
Redemption and Stock Contribution Agreement) in the aggregate amount set forth
on Schedule 1.
6.2 Unvested Options. The Unvested Options shall be converted into (a)
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unvested options to purchase the number of shares of Class A Common Stock set
forth on Schedule 1 with an exercise price per share equal to $1.5762 (the
"Unvested Class A Options"), (b) unvested options to purchase the number of
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shares of Class L Common Stock set forth on Schedule 1 with an exercise price
per share equal to $364.0909 (the "Unvested Class L Options", and together with
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the Unvested Class A Options, the "Unvested Replacement Options", and
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collectively with the Vested Replacement Options, the "Replacement Options") and
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(c) the right to receive deferred cash payments in the aggregate amount set
forth on Schedule 1 (the "Deferred Payments"). The Unvested Replacement Options
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and the right to receive the Deferred Payments shall vest as set forth in
Section 6.5 and 6.6, respectively.
6.3 $61 Options. Effective upon the Closing Date, the Company hereby
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grants options to acquire the number of shares of Class A Common Stock set forth
on Schedule 1 with an exercise price of $61.17 per share (the "$61 Options").
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Of the total number of $61 Options granted to Employee hereunder (a) the $61
Options designated as Vested on Schedule 1 shall be immediately vested and
exercisable and (b) the $61 Options designated as Unvested on Schedule 1 (the
"Unvested $61 Options") shall vest in accordance with the schedule set forth in
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Section 6.5.
6.4 DCI Option Plan. The Replacement Options and the $61 Options are
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being granted under, and are subject to the terms of, the Company's Dynamic
Circuits 1996 Stock
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Option Plan (the "Plan"). The Replacement Options and the $61 Options are also
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subject to the terms set forth on Exhibit A hereto.
6.5 Option Vesting Schedule. For so long as Employee is employed by the
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Company or any of its subsidiaries, and thereafter solely to the extent set
forth in Sections 8.5(b) and 8.6(b), the Unvested Class A Options, the Unvested
Class L Options and the Unvested $61 Options shall vest in accordance with the
following schedule (or as otherwise set forth in Exhibit A hereto): (i) 31%
shall vest in nine equal quarterly installments beginning on August 19, 1998 and
ending on August 19, 2000 and (ii) 69% shall vest in five equal annual
installments beginning on August 19, 1998 and ending on August 19, 2002.
6.6 Deferred Payments Vesting Schedule.
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(1) Vesting. The right to receive Deferred Payments shall vest in
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accordance with the following schedule (or as otherwise set forth in Exhibit A
hereto): (i) 31% shall vest in nine equal quarterly installments beginning on
August 19, 1998 and ending on August 19, 2000 and (ii) 69% shall vest in five
equal annual installments beginning on August 19, 1998 and ending on August 19,
2002.
(2) Timing of Payments. At the end of each month, a payment shall be
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made to Employee in respect of that portion of the Deferred Payments which shall
have vested during such month. The Deferred Payments, once made, shall be
retained by Employee in all circumstances.
(3) Effect of Termination of Employment. The provisions of clauses
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(a) and (b) shall apply equally before and after the Termination Date (without
regard to the reason for termination of employment) except to the extent set
forth in clause (d).
(4) Forfeiture of Future Payments. Notwithstanding the foregoing,
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Employee shall forfeit his rights to, and the Company shall be under no
obligation to make, any further payments to Employee in respect of Deferred
Payments if the Board of Directors determines that there shall have occurred
(before or after the Termination Date) a material violation of the terms of
Section 2 of the Non-Compete Agreement (such determination to be made only if
Employee has failed to cure such violation to the reasonable satisfaction of the
Board of Directors within a reasonable period of time after having been given
ten (10) business days written notice thereof).
6.7 Repurchase of Company Common Stock upon Termination of Employment.
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(1) Repurchase Rights. Upon termination of Employee's employment for
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any reason prior to August 19, 1999, the Company may elect to repurchase all or
any portion of the Company Common Stock originally issued to Employee (whether
held by Employee or any person or entity to whom DCI Common Stock or DCI Options
originally issued, or granted, to Employee were transferred prior to the
Closing) from Employee or any subsequent holder thereof at a cash price per
share equal to the Fair Market Value of such Company Common Stock as of the
Termination Date; provided, however, that if Employee's employment is terminated
by the Company for Cause, (i) the cash price per share of Option Stock shall be
the lesser of the Fair Market Value of such Option Stock as of the Termination
Date and the exercise price per share of Option Stock of the option which was
exercised to acquire such Option Stock and (ii) the cash price per share of
Company Common Stock that is not Option Stock shall be the Fair Market Value of
such Company Common Stock as of the Termination Date); it being understood and
agreed that the "exercise price" per share of Option Stock issued at Closing
shall be deemed to be the applicable exercise price per share of Company Common
Stock set forth on Schedule 1.
For purposes of this Agreement:
(i) "Option Stock" shall mean Company Common Stock issued (A) at
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Closing in respect of DCI Common Stock issued upon exercise of a DCI Option
originally granted on or after August 20, 1998 or (B) upon exercise of a
Replacement Option granted hereunder in respect of a DCI Option originally
granted on or after August 20, 1998; and
(ii) "Fair Market Value" shall mean, as of any date, the closing
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sales price of the Company Common Stock on the principal national
securities exchange on which the Company Common Stock is listed at the time
or, if the Company Common Stock is not so listed, the sales price of the
Company Common Stock as reported on the NASDAQ National Market System as of
4:00 P.M. (New York time) on such date, in either case averaged over a
period of 21 trading days consisting of the day as of which Fair Market
Value is being determined and the 20 consecutive trading days prior to such
day. If at any time the Company Common Stock is not listed on any national
securities exchange or quoted in the NASDAQ National Market System, Fair
Market Value shall be determined in good faith by the Board of Directors or
a duly authorized committee thereof. In the event that Employee objects to
the Board of Directors' determination of Fair Market Value within 20 days
after written notice thereof, a mutually acceptable valuation firm shall be
engaged to determine Fair Market Value. The determination of such firm
shall be final and binding on the Company and Employee, and the fees and
expenses of such firm shall be borne 75% by the Company and 25% by
Employee.
(2) Exercise. The Company may exercise its option to purchase Company
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Common Stock pursuant to Section 6.7(a) by delivery to Employee of a written
notice specifying the number of shares of Company Common Stock to be repurchased
(i) within
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60 days after the Termination Date and (ii) if applicable, thereafter from time
to time within 60 days after the Employee, or any transferee, exercises a
Replacement Option (or any option granted in replacement thereof). Employee and
the Company will use all commercially reasonable efforts to consummate any
repurchase of securities pursuant to this Section 6.7 not later than 45 days
following delivery of such written notice to Employee.
(3) Common Stock. For purposes of this Section 6.7, "Company Common
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Stock" shall be deemed to include any proceeds of Company Common Stock; it being
understood and agreed that the Company's right set forth in this Section 6.7 may
only be exercised once.
6.8 Stockholders Agreement. Employee hereby agrees to be a party to the
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Stockholders Agreement among the Company and its equity holders dated as of
October 28, 1997 (as amended from time to time, the "Stockholders Agreement") as
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a "Manager," and the Company Common Stock, Replacement Options and $61 Options
originally issued or granted to Employee (whether held by Employee or any person
or entity to whom DCI Common Stock or DCI Options originally issued, or granted,
to Employee were transferred prior to the Closing) shall be "Management Stock"
thereunder. The Stockholders Agreement shall terminate according to its terms
and not as a result of any termination of this Agreement.
7. TERMINATION
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7.1 Mutual Agreement. The employment of Employee may be terminated at any
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time by the Company, DCI and Employee by mutual agreement.
7.2 Death or Disability. The employment of Employee (a) shall be
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terminated automatically upon his death and (b) may be terminated at any time by
the Company and DCI upon the physical inability of Employee to perform his
duties hereunder for a period of six (6) consecutive months ("Disability").
7.3 Company for Cause. The employment of Employee may be terminated at
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any time by the Company and DCI upon the occurrence of any of the following
events (each of which shall constitute "Cause"):
(1) Employee's conviction of any crime involving moral turpitude
which is a felony;
(2) repeated insobriety at the work place;
(3) theft of material Company assets;
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(4) from and after August 19, 1999, or, if later, the date on which
Xxxxxxx Xxxxxx'x full time employment with the Company terminates, the event
described in Section 7.4(a)(ii);
(5) material violation of Employee's Non-Compete and Technology
Transfer Agreement dated as of the date hereof (as may be amended or otherwise
modified from time to time, the "Non-Compete Agreement"); or
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(6) the failure to materially perform material duties consistent with
this Agreement reasonably requested by the Board of Directors which, at any time
prior to August 19, 1999 and thereafter for so long as Xxxxxxx Xxxxxx is in the
full time employ of the Company, also has a material adverse effect on the
Company.
In each instance of conduct described in clause (d), (e) or (f), Employee
must be given, prior to termination of employment, ten (10) business days'
written notice of such conduct and a reasonable period of time after such notice
to cure the effects thereof to the reasonable satisfaction of the Board of
Directors. In the event of such cure, Employee's employment will not be
terminated as a result of the conduct and effect so cured.
7.4 Company for Good Reason.
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(1) Subject to clause (b) below, the employment of Employee may be
terminated by the Company and DCI for Good Reason at any time on or prior to
August 19, 1999 and at any time thereafter only for so long as Xxxxxxx Xxxxxx is
in the full time employ of the Company. For purposes of this Agreement, "Good
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Reason" shall mean (i) the failure of Employee to use his best efforts to meet
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the goals reasonably established for Employee by the Board of Directors, (ii)
continued and repeated absence of Employee from his employment during usual
working hours for reasons other than vacation, disability or sickness or (iii)
the failure to materially perform material duties consistent with this Agreement
reasonably requested by the Board of Directors, such determination relating to
(i), (ii) and (iii) to be made by Xx. Xxxxxx in his reasonable discretion for so
long as Xx. Xxxxxx is in the full time employ of the Company or, at any other
time, the Board of Directors in its reasonable discretion.
(2) At least five (5) business days prior to termination of
Employee's employment pursuant to this Section 7.4, Employee must be given
written notice setting forth in reasonable detail the conduct with respect to
which the Company and DCI intend to terminate his employment pursuant to this
Section 7.4. If such notice is given at a time Xx. Xxxxxx is not in the full
time employ of the Company, it shall contain the name and telephone number of a
person designated by the Board of Directors to whom Employee shall communicate
regarding such notice. During such five (5) business day period, Employee may
propose a cure reasonably acceptable to Xx. Xxxxxx (or the designee if Xx.
Xxxxxx is not in the full time employ of the Company) the manner in which he
intends to cure the conduct set
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forth in such notice and if acceptable, Employee's employment will not be
terminated pursuant to this Section 7.4 until he has had a reasonable
opportunity to implement such proposal. Having been given notice of any such
conduct once during the term of his employment, Employee shall not thereafter be
entitled to any additional notice prior to termination of his employment under
this Section 7.4 by reason of such conduct.
7.5 Company without Cause or Good Reason. The employment of Employee may
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be terminated at any time by the Company and DCI other than for Cause, Good
Reason or Disability.
7.6 Employee for Just Cause. The employment of Employee may be terminated
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by Employee upon not less than 30 days' written notice to the Company given
within 30 days of the occurrence of any of the following (each of which shall
constitute "Just Cause"): (a) material violation by the Company of this
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Agreement (including, without limitation, the willful and continued failure of
the Company to timely provide Employee compensation set forth in Section 3), (b)
a change in Employee's title or a material diminution in the nature of
Employee's duties or responsibilities to DCI without his consent or (c)
requiring Employee to relocate from his primary residence in order to perform
his duties hereunder, subject to ordinary and necessary business travel. In the
event of termination of Employee pursuant to this Section 7.6, the Company may
elect to waive the period of notice, or any portion thereof. Any such waiver
shall be given only by a written instrument authorized by the Board of
Directors.
In each instance of conduct described in clause (a), (b) or (c), the
Company must be given, prior to termination of employment, ten (10) business
days' written notice of such breach or material diminution and a reasonable
period of time after such notice to cure the effects thereof to the reasonable
satisfaction of Employee. In the event of such cure, Employee's employment may
not be terminated for Just Cause as a result of the conduct and effect so cured.
7.7 Employee without Just Cause. The employment of Employee may be
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terminated at any time by Employee upon not less than 30 days' prior written
notice to the Company other than for Just Cause. In the event of termination of
Employee pursuant to this Section 7.7, the Company may elect to waive the period
of notice, or any portion thereof. Any such waiver shall be given only by a
written instrument authorized by the Board of Directors.
8. EFFECT OF TERMINATION.
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8.1 Mutual Agreement. If Employee's employment is terminated pursuant to
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Section 7.1, the obligations of the Company and its subsidiaries shall be as set
forth in a written agreement between the Company and Employee. Except as set
forth in such written agreement (a) neither the Company nor any of its
subsidiaries shall have any further obligation to Employee after the Termination
Date other than payment of the Additional Bonus to the
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extent and in the manner set forth in the Company's Cash Bonus Plan and (b)
without limiting the generality of the foregoing, (i) all vested Replacement
Options and $61 Options shall expire 90 days following the Termination Date and
(ii) all unvested Replacement Options and $61 Options shall immediately expire
and be forfeited. Notwithstanding the foregoing, each of the Company and
Employee hereby acknowledge and agree that the terms of such written agreement
shall be the subject of negotiation at the time of the termination of Employee's
employment and that nothing in the preceding sentence is intended to, nor shall
it, establish any expectations for such negotiation.
8.2 Death or Disability. Upon termination of Employee's employment upon
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his death or by the Company for Disability, neither the Company nor any of its
subsidiaries shall have any further obligation to Employee other than as set
forth in Section 6.6 and in clauses (a) and (b) below:
(1) Compensation. The Company shall pay to Employee (or, if
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applicable, his designated beneficiary or, if no beneficiary shall have been
designated by Employee, to his estate), (i) Base Salary earned and unpaid
through the Termination Date, (ii) at the time of the release of the audited
financial statements of the Company for the fiscal year during which termination
on account of death or Disability occurs, an amount equal to (x) the Annual
Bonus that Employee would otherwise have earned for such fiscal year if
termination had not occurred multiplied by (y) a fraction, the numerator of
which is the number of days from the beginning of such fiscal year until the
Termination Date and the denominator of which is 365 and (iii) the Additional
Bonus to the extent and in the manner set forth in the Company's Cash Bonus
Plan. In addition, for 12 months following the Termination Date, the Company
(or, if applicable, its subsidiary) will pay the same share of the premium cost
that it pays for active employees in respect of the participation of Employee
and his eligible dependents in the group health and life insurance plans
described in Section 4.1 hereof, subject, in the case of such group health
plans, to proper election to continue participation of Employee and/or that of
his eligible dependents in such plans under COBRA.
(2) Replacement Options and $61 Options. (i) All vested Replacement
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Options and $61 Options shall expire one year, in the case of termination on
account of death, or six months, in the case of termination on account of
Disability, following the Termination Date and (ii) all unvested Replacement
Options and $61 Options shall immediately expire and be forfeited.
8.3 By the Company for Cause. Upon termination of Employee's employment
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by the Company for Cause:
(1) Compensation. Except as set forth in Section 6.6 and in clause
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(b) below, neither the Company nor any of its subsidiaries shall have any
further obligation to Employee other than (i) payment of his Base Salary through
the Termination Date and (ii) such obligations as are required under COBRA.
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(2) Replacement Options and $61 Options. (i) All vested Replacement
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Options and $61 Options shall immediately expire and be forfeited and (ii) all
unvested Replacement Options and $61 Options shall immediately expire and be
forfeited.
8.4 By the Company for Good Reason. Upon termination of Employee's
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employment by the Company for Good Reason:
(1) Compensation. Except as set forth in Section 6.6 and in clause
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(b) below, neither the Company nor any of its subsidiaries shall have any
further obligation to Employee other than (i) payment of his Base Salary through
the date on which the Noncompetition Period set forth in the Non-Compete
Agreement terminates (or, if earlier, the date on which the Company releases
Employee from his obligations under Section 2.1 thereof), (ii) payment of the
Additional Bonus to the extent and in the manner set forth in the Company's Cash
Bonus Plan and (iii) such obligations as are required under COBRA.
(2) Replacement Options and $61 Options. (i) All vested Replacement
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Options and $61 Options shall expire 90 days following the Termination Date and
(ii) all unvested Replacement Options and $61 Options shall immediately expire
and be forfeited.
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8.5 By the Company without Cause or Good Reason. Upon termination of
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Employee's employment by the Company other than for Cause, Good Reason or
Disability, neither the Company nor any of its subsidiaries shall have any
further obligation to Employee other than as set forth in Section 6.6 and in
clauses (a) and (b) below:
(1) Compensation. Unless and until the Board of Directors determines
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that either of the following events shall have occurred (before or after the
Termination Date): (i) theft of material Company assets or (ii) material
violation of the terms of the Non-Compete Agreement (such determination to be
made only if Employee has failed to cure such violation to the reasonable
satisfaction of the Board of Directors within a reasonable period of time after
having been given ten (10) business days written notice thereof), the Company
shall pay to Employee (x) his Base Salary and his Annual Bonus through October
28, 2000 and (y) if the Noncompetition Period set forth in the Non-Compete
Agreement shall not have expired on or before October 28, 2000, his Base Salary
during the period beginning on October 29, 2000 and ending on the date on which
the Noncompetition Period set forth in the Non-Compete Agreement terminates.
Amounts payable under this Section 8.5 shall be paid in accordance with the
normal payroll practices of the Company. Employee shall also be entitled to
receive payment of the Additional Bonus to the extent and in the manner set
forth in the Company's Cash Bonus Plan. In addition, for 12 months following the
Termination Date, the Company (or, if applicable, its subsidiary) will pay the
same share of the premium cost that it pays for active employees in respect of
the participation of Employee and his eligible dependents in the group health
and life insurance plans described in Section 4.1 hereof, subject, in the case
of such group health plans, to proper election to continue participation of
Employee and/or that of his eligible dependents in such plans under COBRA.
(2) Replacement Options and $61 Options. (i) All vested Replacement
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Options and $61 Options shall expire 90 days following the Termination Date and
(ii) unless and until the Board of Directors determines that either of the
following events shall have occurred (before or after the Termination Date): (A)
theft of material Company assets or (B) material violation of the terms of the
Non-Compete Agreement (such determination to be made only if Employee has failed
to cure such violation to the reasonable satisfaction of the Board of Directors
within a reasonable period of time after having been given ten (10) business
days written notice thereof), all unvested Replacement Options and $61 Options
shall continue to vest in accordance with the schedule set forth in Section 6.5
and shall expire 90 days following the date of vesting.
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8.6 By Employee for Just Cause. Upon termination of Employee's employment
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by Employee for Just Cause, neither the Company nor any of its subsidiaries
shall have any further obligation to Employee other than as set forth in Section
6.6 and in clauses (a) and (b) below:
(1) Compensation. Unless and until the Board of Directors determines
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that either of the following events shall have occurred (before or after the
Termination Date): (i) theft of material Company assets or (ii) material
violation of the terms of the Non-Compete Agreement (such determination to be
made only if Employee has failed to cure such violation to the reasonable
satisfaction of the Board of Directors within a reasonable period of time after
having been given ten (10) business days written notice thereof), the Company
shall pay to Employee (x) his Base Salary and his Annual Bonus through October
28, 2000 and (y) if the Noncompetition Period set forth in the Non-Compete
Agreement shall not have expired on or before October 28, 2000, his Base Salary
during the period beginning on October 29, 2000 and ending on the date on which
the Noncompetition Period set forth in the Non-Compete Agreement terminates.
Amounts payable under this Section 8.6 shall be paid in accordance with the
normal payroll practices of the Company. Employee shall also be entitled to
receive payment of the Additional Bonus to the extent and in the manner set
forth in the Company's Cash Bonus Plan. In addition, for 12 months following the
Termination Date, the Company (or, if applicable, its subsidiary) will pay the
same share of the premium cost that it pays for active employees in respect of
the participation of Employee and his eligible dependents in the group health
and life insurance plans described in Section 4.1 hereof, subject, in the case
of such group health plans, to proper election to continue participation of
Employee and/or that of his eligible dependents in such plans under COBRA.
(2) Replacement Options and $61 Options. (i) All vested Replacement
-----------------------------------
Options and $61 Options shall expire 90 days following the Termination Date and
(ii) unless and until the Board of Directors determines that either of the
following events shall have occurred (before or after the Termination Date):
(A) theft of material Company assets or (B) material violation of the terms of
the Non-Compete Agreement (such determination to be made only if Employee has
failed to cure such violation to the reasonable satisfaction of the Board of
Directors within a reasonable period of time after having been given ten (10)
business days written notice thereof), all unvested Replacement Options and $61
Options shall continue to vest in accordance with the schedule set forth in
Section 6.5 and shall expire 90 days following the date of vesting.
-13-
8.7 By Employee without Just Cause. Upon termination of Employee's
------------------------------
employment by Employee other than for Just Cause:
(1) Compensation. Except as set forth in Section 6.6 and in clause
------------
(b) below, neither the Company nor any of its subsidiaries shall have any
further obligation to Employee other than (i) payment of his Base Salary through
the Termination Date, (ii) payment of the Additional Bonus to the extent and in
the manner set forth in the Company's Cash Bonus Plan and (iii) such obligations
as are required under COBRA.
(2) Replacement Options and $61 Options. (i) All vested Replacement
-----------------------------------
Options and $61 Options shall expire 90 days following the Termination Date and
(ii) all unvested Replacement Options and $61 Options shall immediately expire
and be forfeited.
8.8 Liquidated Damages. If a court of competent jurisdiction issues a
------------------
final nonappealable judgment in any action brought by Employee alleging non-
payment of severance benefits to which Employee is entitled under the provisions
of the subsection of this Section 8 which correspond to the provisions of
Section 7 pursuant to which notice of termination was given by the Company or
Employee, as applicable, Employee shall be entitled to liquidated damages in an
amount equal to three times the amount of such non-payment; it being understood
and agreed that the provisions of Section 9.10 shall apply to an action
described in this Section 8.8.
9. MISCELLANEOUS
-------------
9.1 Governing Laws. IT IS THE INTENTION OF THE PARTIES HERETO THAT THE
--------------
INTERNAL LAWS OF THE STATE OF CALIFORNIA, U.S.A. (IRRESPECTIVE OF ITS CHOICE OF
LAW PRINCIPLES) SHALL GOVERN THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION OF
ITS TERMS, AND THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF
THE PARTIES HERETO.
9.2 Parachute Payments. In the event of a Change of Control prior to the
------------------
initial public offering of the Company's Common Stock, and provided Employee
requests in writing, the Company will use its best efforts to prepare and
distribute such materials as it shall consider necessary or desirable to permit
the shareholders to approve any "excess parachute payments" within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended.
9.3 Binding upon Successors and Assigns. Subject to, and unless otherwise
-----------------------------------
provided in, this Agreement, each and all of the covenants, terms, provisions,
and agreements contained herein shall be binding upon, and inure to the benefit
of, the permitted successors, executors, heirs, representatives, administrators
and assigns of the parties hereto. The rights and benefits of the Company under
this Agreement shall be transferable to successors of the
-14-
Company pursuant to a reorganization and all covenants and agreements hereunder
shall inure to the benefit of, and be enforceable by or against, such successors
in interest. This Agreement is personal to Employee and cannot be assigned nor
may duties hereunder be delegated. Any attempted assignment or delegation by
Employee shall render this Agreement null and void at the option of the Company.
9.4 Withholding. All payments made by the Company under this Agreement
-----------
shall be net of any tax or other amounts required to be withheld by the Company
under any applicable law or legal requirement.
9.5 Amendment of Muse Agreement. The Company shall not offer to amend,
----------------------------
supplement or otherwise modify the Muse Agreement during the term of this
Agreement unless an offer to amend, supplement or otherwise modify this
Agreement on a comparable basis is also extended to Employee.
9.6 Entire Agreement. This Agreement, the exhibits hereto, the documents
----------------
referenced herein, and the exhibits thereto, constitute the entire understanding
and agreement of the parties hereto with respect to the subject matter hereof
and thereof and supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written or oral,
between the parties with respect hereto and thereto. Without limiting the
generality of the foregoing, this Agreement supersedes in its entirety (i) that
certain Employment Agreement between Employee and DCI dated as of August 19,
1996, as modified through the date hereof and (ii) that certain Grant of Stock
Purchase Option between Employee and DCI, as modified through the date hereof.
Section and subsection headings are not to be considered part of this Agreement,
are included solely for convenience, are not intended to be full or accurate
descriptions of the content thereof and shall not affect the construction of
this Agreement. The express terms hereof control and supersede any course of
performance or usage of the trade inconsistent with any of the terms hereof.
9.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories.
9.8 Amendment and Waivers. Any term or provision of this Agreement may be
---------------------
amended, and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only by a writing signed by the party to be bound thereby. The waiver by a
party of any breach hereof for default in payment of any amount due hereunder or
default in the performance hereof shall not be deemed to constitute a waiver of
any other default or succeeding breach or default.
-15-
9.9 No Waiver. No failure or delay of any party to enforce any of the
---------
provisions hereof shall be construed to be a waiver of the right of such party
thereafter to enforce such provisions.
9.10 Attorneys' Fees. Should suit or arbitration be brought to enforce or
---------------
interpret any part of this Agreement, the prevailing party shall be entitled to
recover, as an element of the costs of suit or arbitration and not as damages,
reasonable attorneys' fees to be fixed by the court (including without
limitation, costs, expenses and fees on any appeal). The prevailing party shall
be the party entitled to recover its costs of suit or arbitration, regardless of
whether such suit or arbitration proceeds to final judgment. A party not
entitled to recover its costs shall not be entitled to recover attorneys' fees.
No sum for attorneys' fees shall be counted in calculating the amount of a
judgment for purposes of determining if a party is entitled to recover costs or
attorneys' fees.
9.11 Notices. Whenever any party hereto desires or is required to give any
-------
notice, demand, or request with respect to this Agreement, each such
communication shall be in writing and shall be effective only if it is delivered
by personal service or mailed, United States certified mail, postage prepaid,
addressed as follows:
If to Company: Details Holdings Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: President
with a copy to: Dynamic Circuits, Inc.
0000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: President
and
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Esq.
If to Employee: Mr. Xxxx Xxxxxx
000 Xxxxxxx Xxxx Xxxxx
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
with a copy to: Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention Xxxxxxx X. Xxxxxxxxx, Esq.
-16-
Such communication shall be effective when they are received by the
addressee thereof; but if sent by certified mail in the manner set forth above,
they shall be effective five (5) days after being deposited in the United States
mail. Any party may change its address for such communications by giving notice
thereof to the other party in conformity with this Section.
-17-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first hereinabove written.
DETAILS HOLDINGS CORP.
By:_____________________________
Name:
Title:
________________________________
Xxxx Xxxxxx
Acknowledged and Agreed
with respect to Sections 6 and 9.6
DYNAMIC CIRCUITS, INC.
By:_______________________
Name:
Title:
CONSENT OF SPOUSE
The undersigned spouse of Employee has read and hereby approves the terms
and conditions of the foregoing Agreement. In consideration of the Company's
granting his or her spouse the right to purchase the shares of Details Common
Stock as set forth in the Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Agreement and further
agrees that any community property interest shall be similarly bound. The
undersigned hereby appoints Employee as attorney-in-fact for the undersigned
with respect to any amendment or exercise of rights under the Agreement.
__________________________________
Name:
Spouse of Employee
Exhibit A
---------
The Replacement Options and the $61 Options which are referenced in the
attached Agreement have been issued under the Company's Dynamic Circuits 1996
Stock Option Plan (the "Plan") (a copy of which has been provided to Employee)
as provided below. Capitalized terms used and not defined herein or in the
attached Agreement have the meanings set forth in the Plan.
1. OPTION TERMS.
1. REPLACEMENT OPTIONS AND $61 OPTIONS. The Replacement Options and the
$61 Options will expire at the close of business on August 19, 2006 (the
"Expiration Date"), subject to earlier expiration in connection with the
termination of your employment to the extent set forth in the Agreement.
Neither the Replacement Options nor the $61 Options are intended to be
"incentive stock options" within the meaning of Section 442 of the Internal
Revenue Code of 1986, as amended.
2. EXERCISABILITY/VESTING.
1. VESTING. The Replacement Options and the $61 Options will be
exercisable only to the extent they have vested.
2. ACCELERATION OF VESTING. In the event of a Change of Control (A)
during the term of your employment with the Company and/or any of
its subsidiaries or (B) at a time when the Unvested Replacement
Options and the Unvested $61 Options are vesting pursuant to the
terms of Section 8.5(b) or 8.6(b), the Replacement Options, the
$61 Options and the Deferred Payments will automatically become
100% vested. In connection with any Change of Control, the
Company may provide on not less than 20 days' notice to you that
any portion of the Replacement Options and the $61 Options that
have not been exercised prior to or in connection with the Change
of Control will be forfeited. In lieu of requiring such exercise,
the Company may provide for the cancellation of the Replacement
Options and the $61 Options in exchange for a payment equal to
the excess (if any) of the consideration per share of Company
Common Stock receivable in connection with such Change of Control
over the exercise price of the Replacement Options and the $61
Options, respectively.
3. TERMINATION OF OPTION. In no event shall any part of the Replacement
Options or the $61 Options be exercisable after the Expiration Date set
forth in paragraph 1(a).
2. PROCEDURE FOR EXERCISE. You may exercise all or any portion of the
Replacement Options or the $61 Options to the extent permitted hereby, at
any time and from time to time by delivering written notice to the Company
(to the attention of the Company's Secretary) accompanied by payment in
full of an amount equal to the product of (i) the Exercise Price of the
subject option multiplied by (ii) the number of shares of Option Stock to
be acquired (such date of delivery the "Exercise Date"). The Company may
delay effectiveness of any exercise of the Replacement Options or the $61
Options for such period of time as may be necessary to comply with any
legal or contractual provisions to which it may be subject relating to the
issuance of its securities; provided, however, that no such delay shall
affect your right to purchase the shares of Option Stock, and the Exercise
Date shall be deemed the date of your acquisition of the shares of Option
Stock for all corporate and tax purposes regardless of such delay. As a
condition to any exercise of the Replacement Options or the $61 Options,
you will permit the Company to deliver to you all financial and other
information regarding the Company necessary to enable you to make an
informed investment decision, and you will make all customary investment
representations which the Company requires.
3. SECURITIES LAW RESTRICTIONS. You represent that when you exercise the
Replacement Options or the $61 Options you will be purchasing the shares of
Option Stock for your own account and not on behalf of others. You may not
sell, transfer or dispose of any Company Common Stock issued pursuant to
the Replacement Options or the $61 Options (except pursuant to an effective
registration statement under the Securities Act of 1933) without first
delivering to the Company an opinion of counsel reasonably acceptable to
the Company that registration under the Securities Act or any applicable
state securities laws is not required in connection with such transfer. You
further understand that the certificates for any Company Common Stock you
purchase will bear such legends as the Company deems necessary or desirable
in connection with the Securities Act or other rules, regulations or laws.
4. OPTION NOT TRANSFERABLE. The Replacement Options and the $61 Options are
personal to you and are not transferable by you other than by will or the
laws of descent and distribution. During your lifetime only you (or your
guardian or legal representative) may exercise the Replacement Options and
the $61 Options. In the event of your death, the Replacement Options and
the $61 Options may be exercised only by the executor or administrator of
your estate to he person or persons to whom your rights under the
Replacement Options and the $61 Options shall pass by will or the laws of
intestate succession.
5. CONFORMITY WITH PLAN. The Replacement Options and the $61 Options are
intended to conform in all respects with, and are subject to all applicable
provisions of, the Plan, which is incorporated herein by reference.
Inconsistencies between the terms of the
Agreement and this Exhibit, on the one hand, and the Plan, on the other
hand, shall be resolved in accordance with the terms of the Plan. By
executing the Agreement, you acknowledge your receipt of this Exhibit A and
the Plan and agree to be bound by all of the terms contained herein and
therein.
6. RIGHTS OF PARTICIPANTS. Nothing in this Exhibit A shall interfere with or
limit in any way the right of the Company and/or its subsidiaries to
terminate your employment in accordance with the Agreement or confer upon
you any right not set forth in the Agreement to continue in the employ of
the Company and/or its subsidiaries for any period of time or to continue
to receive your current (or other) rate of compensation. Nothing in this
Exhibit A shall confer upon you any right to be selected to receive
additional options under the Plan or otherwise.
7. WITHHOLDING OF TAXES. The Company may, if necessary or desirable, withhold
from any amounts due and payable by the Company to you (or secure payment
from you in lieu of withholding) the amount of any withholding or other tax
due from the Company with respect to the issuance or exercise of the
Replacement Options or the $61 Options, and the Company may defer such
issuance or exercise unless indemnified by you to its satisfaction against
the payment of any such amount. To the extent permitted by law, such
withholding may be effected through the delivery by you of shares of
Company Common Stock valued at Fair Market Value as of the Exercise Date.
8. ADJUSTMENTS. In the event of a reorganization, recapitalization, stock
dividend or stock split, or combination or other change in the shares of
Common Stock, the Company may, in order to prevent the dilution or
enlargement of rights under the Replacement Options or the $61 Options,
make such adjustments in the number and type of shares authorized by the
Plan, the number and type of shares covered by the Replacement Options and
the $61 Options and the respective Exercise Prices specified herein as may
be determined to be appropriate and equitable.
X-0
Xxxxxxx X-0
-----------
DETAILS DYNAMIC CIRCUITS INC.
1996 STOCK OPTION PLAN
EXERCISE NOTICE
Details Holdings Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: President
The undersigned hereby notifies Details Holdings Corp. of his or her
decision to exercise the Option as to _______________________ shares of Details
Common Stock.
Dated: _______________________
____________________________
(signature of Option Holder)
______________________________
(printed)
Exhibit A-2
-----------
INVESTMENT REPRESENTATION STATEMENT
PARTICIPANT:
COMPANY : DETAILS HOLDINGS CORP.
SECURITY : COMMON STOCK
AMOUNT :
DATE :
In connection with the purchase of the above-listed Securities, the
undersigned Option Holder represents to Details the following:
(a) Option Holder current residence is as set forth in the signature
page hereto.
(b) Option Holder is aware of Details' business affairs and financial
condition and has acquired sufficient information about Details to reach an
informed and knowledgeable decision to acquire the Shares. Option Holder is
acquiring the Shares for investment for Option Holder's own account only and not
with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(c) Option Holder acknowledges and understands that the Shares
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Option Holder's investment intent as expressed herein. Option Holder
further understands that the Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Option Holder further acknowledges and understands
that Details is under no obligation to register the Shares except as set forth
in the Details Holdings Corp. Stockholders Agreement dated as of October 28,
1998, as amended from time to time. Option Holder understands that the
certificate evidencing the Shares will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel satisfactory to Details.
(d) Option Holder is familiar with the provisions of Rule 701 and
Rule 144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Option to Option
Holder, the exercise will be exempt from registration under the Securities Act.
In the event that Details becomes subject to the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"),
ninety (90) days thereafter (or such longer period as any market stand-off
agreement may require) the Shares exempt under Rule 701 may be resold, subject
to the satisfaction of certain of the conditions specified by Rule 144,
including: (1) the resale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Exchange Act); and, in the case of an affiliate, (2)
the availability of certain public information about Details, (3) the amount of
Securities being sold during any three month period not exceeding the
limitations specified in Rule 144(e), and (4) the timely filing of a Form 144,
if applicable.
In the event that Details does not qualify under Rule 701 at the time
of grant of the Option, then the Shares may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Shares were sold
by Details or the date the Shares were sold by an affiliate of Details, within
the meaning of Rule 144; and, in the case of acquisition of the Securities by an
affiliate, or by a non-affiliate who subsequently holds the Securities less than
two years, the satisfaction of the conditions set forth in sections (1), (2),
(3) and (4) of the paragraph immediately above.
(e) Option Holder further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A under the Securities Act, or
some other registration exemption will be required; and that, notwithstanding
the fact that Rules 144 and 701 are not exclusive, the staff of the Securities
and Exchange Commission has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rules 144 or 701 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk. Option Holder understands that no
assurances can be given that any such other registration exemption will be
available in such event.
Signature of Option Holder:
____________________________________________
Date: _____________________________ , 199__
Option Holder's Address:
___________________________________________
___________________________________________
2
Exhibit B
---------
STANDALONE ANNUAL BONUS PROGRAM
(dollar amounts in thousands)
------------------------------------------------------------------------
FISCAL YEARS ENDING DECEMBER 31,
------------------------------------------------------------------------
1997 1998 1999 2000
DYNAMIC CIRCUITS INC.
EBITDA $26,309 $31,734 $36,727 $42,196
- % Growth 20.6% 15.7% 14.9%
EBITDA Thresholds:
------------------
% of Plan
-------------
90% $27,560 $33,054 $37,976
95% $29,147 $34,890 $40,086
Target 100% $31,734 $36,727 $42,196
105% $33,320 $38,563 $44,306
110% $34,907 $40,399 $46,416
115% $36,494 $42,236 $48,525
120% $38,080 $44,072 $50,635
Bonus Payouts:
-----------
Bonus Pool $753.80 $992.50 $1,037.00 $1,112.00
% of EBITDA % of EBITDA % of EBITDA
% of Plan Bonus Change Bonus Change Bonus Change
--------- ----- ------ ----- ------ ----- ------
90% $ 450 20.0% $ 466 35.3% $ 490 39.2 %
95% $ 721 18.8% $ 753 23.9% $ 801 23.8 %
Target 100% $ 993 18.3% $ 1,037 20.8% $1,112 20.3 %
105% $ 1,147 16.4% $ 1,203 17.6% $1,287 17.0 %
110% $ 1,302 15.1% $ 1,367 15.8% $1,463 15.1 %
115% $ 1,456 14.3% $ 1,530 14.6% $1,638 13.9 %
120% $ 1,611 13.7% $ 1,694 13.7% $1,814 13.0 %
Percentage of Incremental 9.7% 8.9% 8.3 %
EBITDA to be added to the
Bonus Pool
Schedule I
Option Holder: Xxxx Xxxxxx
Existing Options: Exercise Price Vested Unvested Tranche
---------------- -------------- ------ -------- -------
$0.05 28,875.00 48,125.00 N/A
Replacement Options:
-------------------
Vested Options: Class A-5 Class L Tranche
--------- ------- -------
5,209.7828 661.5488 N\A
Cash Payment on
the Closing Date: $366,466.95
Unvested Options: Class A-5 Class L Tranche
--------- ------- -------
8,682.9714 1,102.5813 N/A
Deferred Payment(s): Amount Tranche
------ -------
$610,778.26 N/A
$61 Options: Vested Unvested Tranche
----------- ------ -------- -------
284.1054 473.5090 N/A
