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EXHIBIT 10.2
EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT
Agreement, made as of the 1st day of January 1998, by and
between NortaVOD Corporation., a Delaware corporation (the "Company"), and
Xxxxxxx X'Xxxxxxxx ("Executive").
RECITALS
A. The Company desires to employ Executive as Senior Vice
President and Director of Overseas Operations; and
B. Executive is willing to accept such employment on the terms
and conditions set forth in this Agreement.
THE PARTIES AGREE as follows:
1. Position and Term of Employment. Executive's
employment hereunder shall commence as of January 1, 1998 and shall end
December 31, 2000, unless terminated sooner pursuant to Section 6 of this
Agreement or extended by the mutual agreement of the parties. During the term
hereof, Executive shall be employed as Senior Vice President and Director of
Overseas Operations of the Company and shall devote his full business time,
skill, attention and best efforts in carrying out his duties and promoting the
best interests of the Company. Executive shall also serve as a director and/or
officer of one or more of the Company's subsidiaries as may be requested from
time to time by the Board of Directors. Subject always to the instructions and
control of the Board of Directors of the Company, Executive shall report to the
Chief Executive Officer of the Company and shall be responsible for the duties
of the Senior Vice President and Director of Overseas Operations. Executive's
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duties under this Agreement shall be limited to those duties performed while
outside of the United States and shall be subject to the fulfillment by
Executive of his duties under his Employment Agreement with The DII Group, Inc.
("DII").
Executive shall not at any time while employed by the Company
or any of its affiliates or for a period of one (1) year following the later of
(i) termination of employment for any reason or (ii) the date on which the last
payment is required to be made under Section 2.1(a)(ii) hereof, without the
prior consent of the Board of Directors, knowingly acquire any financial
interests, directly or indirectly, in or perform any services for or on behalf
of any business, person or enterprise which undertakes any business in
competition with the business of the Company and its affiliates or sells to or
buys from or otherwise transacts business with the Company and its affiliates;
provided that Executive may acquire and own not more than five percent (5%) of
the outstanding capital stock of any public corporation or mutual fund.
Executive shall not at any time while employed by the Company or any of its
affiliates or for a period of two (2) years following termination of employment
for any reason, directly or indirectly, solicit for employment, employ or enter
into any business or contractual relationship with any employee of the Company
or any of its affiliates.
2.1 Base Salary. (a) (i) Initially, Executive shall
not be paid any base salary ("Base Salary") under this Agreement. Executive's
Base Salary shall be subject to review and possible change by the Board of
Directors of the Company.
(ii) If for any reason other than Executive's voluntary resignation
or termination pursuant to Sections 6(a), (b) or (c) hereof, Executive does not
continue to be employed by the Company, Executive shall continue to receive an
amount equal to his then current Base Salary under this Agreement plus an
annual performance bonus equal to the highest
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annual bonus payment Executive has received under this Agreement in the
previous three years for the then remaining balance of the term of this
Agreement. In no event shall such payment be less than one year's base salary
plus such highest annual bonus. The foregoing amounts shall be paid to
Executive over the remaining term of this Agreement or one year (whichever is
applicable) in accordance with the Company's payroll and bonus payment
policies. Notwithstanding the foregoing, no payments under this subparagraph
(ii) shall be made if the Company makes all payments to Executive required to
be made under the Executive's Senior Executive Severance Agreement (the
"Severance Agreement") in the event of a Change in Control. For purposes of
this Agreement, a Change in Control shall be deemed to have taken place upon
the occurrence of any of the following events:
(A) any corporation, person, other entity or
group (other than the trustee of any qualified retirement plan maintained by
DII) becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of securities
representing twenty percent (20%) or more of the combined voting power of DII's
then outstanding securities; or
(B) during any period of twenty-four consecutive
months, individuals who at the beginning of such consecutive twenty-four month
period constitute the Board of Directors of DII cease for any reason (other
than retirement upon reaching normal retirement age, disability or death) to
constitute at least a majority thereof, unless the election or the nomination
for election by DII's stockholders of each new director was approved by a vote
of at least two-thirds of the directors then still in office who were directors
at the beginning of such twenty-four month period; or
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(C) the stockholders of DII approve a merger or
consolidation of DII with any other corporation, other than a merger or
consolidation which would result in the voting securities of DII outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) at least 80% of the combined voting power of the voting securities of
DII or such surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of DII approve a plan of complete
liquidation of DII or an agreement for the sale or disposition by DII of all or
substantially all of DII's assets; or
(D) there shall occur a transaction or series of
transactions which the Board of Directors shall determine to have the effect of
a Change in Control.
(b) If Executive resigns voluntarily or ceases to be
employed by the Company (or any affiliate) for any reason described in Section
6(a) or (c) of this Agreement, all benefits described in Sections 2 and 3
hereof shall terminate (except to the extent previously earned or vested).
(c) If Executive's employment shall have been terminated
pursuant to Section 6(b), the Company shall pay in equal monthly installments
for the then remaining balance of the term of this Agreement to Executive (or
his beneficiaries or personal representatives, as the case may be) disability
benefits at a rate per annum equal to one hundred percent (100%) of his then
current Base Salary under this Agreement, plus amounts equal to the highest
annual bonus as provided in clause (ii) of Section 2.1(a), less payments and
benefits, if any, received under any disability plan or insurance provided by
the Company and less any "sick leave" payments received from the Company for
the applicable period.
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2.2 Bonuses. Executive shall be eligible for an annual
performance bonus for calendar years beginning after December 31, 1997, in the
discretion of the Company's Board of Directors
2.3 Expenses. During the term hereof, the Company shall
pay or reimburse Executive in accordance with the Company's normal practices
any travel, hotel and other expenses or disbursements reasonably incurred or
paid by Executive in connection with the services performed by Executive
hereunder, in each case upon presentation by Executive of itemized accounts of
such expenditures or such other supporting information as the Company may
require.
3.1 Stock Options; Performance Shares. Executive shall
be eligible for grants of stock options and performance share awards under
DII's 1994 Stock Incentive Plan (the "Plan"), as may hereafter be determined by
the Compensation Committee of the Board of Directors of DII under the Plan.
Stock options and performance share awards under this Section 3.1 shall be
deemed to be granted exclusively for Executive's services under this Agreement.
3.2 Effect of Termination of Employment; Change in
Control. (a) Notwithstanding the provisions of Executive's options, if
Executive shall resign voluntarily or cease to be employed by the Company (or
an affiliate) other than as a result of death or disability, Executive shall be
entitled to exercise such options to the extent such options could otherwise
have been exercised immediately prior to the time of termination at any time up
to and including 90 days after the date of termination, but not beyond the
expiration date of an option. This provision is not intended to limit any
other rights that Executive may have with respect to the vesting or exercise of
options.
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(b) If Executive shall die or become disabled, all
options and performance shares which have not vested will accelerate and vest
immediately, and, in the event of Executive's death, all option rights will
transfer to Executive's representative. All then unexercised options will be
cancelled one year after Executive dies or becomes disabled.
(c) If there is a Change in Control, all options and
performance shares which have not vested will accelerate and vest immediately.
4. Confidential Information. Except as specifically
permitted by this Section 4, and except as required in the course of his
employment with the Company, while in the employ of the Company or thereafter,
Executive will not communicate or divulge to or use for the benefit of himself
or any other person, firm, association, or corporation without the prior
written consent of the Company, any Confidential Information (as defined
herein) owned, or used by the Company or any of its affiliates that may be
communicated to, acquired by or learned of by Executive in the course of, or as
a result of, Executive's employment with the Company or any of its affiliates.
All Confidential Information relating to the business of the Company or any of
its affiliates which Executive shall use or prepare or come into contact with
shall become and remain the sole property of the Company or its affiliates.
"Confidential Information" means information not generally
known about the Company and its affiliates, services and products, whether
written or not, including information relating to research, development,
purchasing, marketing plans, computer software or programs, any copyrightable
material, trade secrets and proprietary information, including, but not limited
to, customer lists.
Executive may disclose Confidential Information to the extent
it (i) becomes part of the public domain otherwise than as a result of
Executive's breach hereof or (ii) is required to
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be disclosed by law. If Executive is required by applicable law or regulation
or by legal process to disclose any Confidential Information, Executive will
provide the Company with prompt notice thereof so as to enable the Company to
seek an appropriate protective order.
Upon request by the Company, Executive agrees to deliver to
the Company at the termination of Executive's employment, or at such other
times as the Company may request, all memoranda, notes, plans, records, reports
and other documents (and all copies thereof) containing Confidential
Information that Executive may then possess or have under his control.
5. Assignment of Patents and Copyrights. Executive
shall assign to the Company all inventions and improvements within the existing
or contemplated scope of the Company's business made by Executive while in the
Company's employ, together with any such patents or copyrights as may be
obtained thereon, both domestic and foreign. Upon request by the Company and
at the Company's expense, Executive will at any time during his employment with
the Company and after termination regardless of the reason therefor, execute
all proper papers for use in applying for, obtaining and maintaining such
domestic and foreign patents and/or copyrights as the Company may desire, and
will execute and deliver all proper assignments therefor.
6. Termination.
(a) Subject to the provisions of Section 8, this
Agreement shall terminate upon Executive's death.
(b) The Company may terminate Executive's employment
hereunder upon fifteen (15) days' written notice if in the opinion of the Board
of Directors, Executive's physical or mental disability has continued or is
expected to continue for one hundred and eighty (180) consecutive days and as a
result thereof, Executive will be unable to continue the proper
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performance of his duties hereunder. For the purpose of determining
disability, Executive agrees to submit to such reasonable physical and mental
examinations, if any, as the Board of Directors may request and hereby
authorizes the examining person to disclose his findings to the Board of
Directors of the Company.
(c) The Company may terminate Executive's employment
hereunder "for cause" (as hereinafter defined). If Executive's employment is
terminated for cause, Executive's salary and all other rights not then vested
under this Agreement shall terminate upon written notice of termination being
given to Executive, subject to the provisions of Section 8. As used herein,
the term "for cause" means the occurrence of any of the following:
(i) Executive having willfully and
continually failed to perform substantially his duties with
the Company (other than such failure resulting from incapacity
due to physical or mental illness, death or disability) after
a written demand for substantial performance has been
delivered to the Executive by the Board or the President of
the Company which specifically identifies the manner in which
the Executive is not substantially performing his duties; or
(ii) Executive having willfully engaged in conduct which is
materially demonstrably injurious to the Company. For
purposes of this section, no act, or failure to act, on the
part of the Executive shall be considered "willful" unless
done, or omitted to be done, by the Executive in bad faith and
without reasonable belief that such action or omission was in,
or not opposed to, the best interests of the Company. Any act
or failure to act based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice
of counsel to the Company shall be conclusively presumed to be
done or omitted to be done by the Executive in good faith and
in the best interests of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been
terminated for cause unless and until there shall have been
delivered to the Executive a copy of a written resolution duly
adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at
a meeting called and held for that purpose after reasonable
notice to and opportunity for the Executive and the
executive's counsel to be heard by the Board, finding that in
the good faith opinion of the Board the Executive was guilty
of the conduct set forth above in (i) or (ii) and specifying
the particulars thereof in detail.
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7. Additional Remedies. Executive recognizes that
irreparable injury will result to the Company and to its business and
properties in the event of any breach by Executive of the non-compete or
non-solicitation provisions of Section 1, the confidentiality provisions of
Section 4 or the assignment provisions of Section 5 and that Executive's
continued employment is predicated on the covenants made by him pursuant to
such Sections. In the event of any breach by Executive of his obligations
under said provisions, the Company shall be entitled, in addition to any other
remedies and damages available, to injunctive relief to restrain any such
breach by Executive or by any person or persons acting for or with Executive in
any capacity whatsoever and other equitable relief.
8. Deferred Compensation Account; Contributions to
Trust. All compensation earned under this Agreement (other than stock option
grants) shall be deferred in accordance with the provisions of this Section 8.
(a) The Company shall credit to a book reserve (the "Deferred
Compensation Account") established for this purpose an amount equal to all
compensation earned under this Agreement (other than stock option grants). Any
amounts represented by credits made to the Deferred Compensation Account in
accordance with the preceding sentence shall be contributed by the Company to
the trust (the "Trust") established under the Trust Agreement annexed as
Exhibit A hereto. In the case of Performance Shares, the amount of the
deferred Performance Shares shall be credited to the Deferred Compensation
Account upon vesting in the form of Stock Units. A corresponding number of
shares of Common Stock shall be transferred by the Company to the Trust, to be
held in accordance with the provisions of the Trust Agreement.
(b) The Deferred Compensation Account shall be credited with
all amounts of cash compensation that are deferred pursuant to this Agreement,
and shall be debited or credited
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with amounts representing all losses or earnings debited or credited to an
account established in respect of the Executive under the Trust. The Deferred
Compensation Account also shall be charged from time to time with all amounts
that are distributed to the Executive.
(c) With respect to Stock Units, in the event DII declares
and pays a dividend, the Deferred Compensation Account shall be credited with
an amount equal to the amount of the dividend paid on the number of shares of
Common Stock equal to the number of Stock Units in the Deferred Compensation
Account. In the event of any stock dividend, stock split, combination or
exchange of shares of Common Stock, recapitalization or other change in the
capital structure of DII, corporate separation or division (including, but not
limited to, split-up, spin-off or distribution to DII shareholders other than a
normal cash dividend), sale by DII of all or a substantial portion of its
assets, rights offering, merger, consolidation, reorganization or partial or
complete liquidation, or any other corporate transaction or event having an
effect similar to any of the foregoing, the number of Stock Units in the
Deferred Compensation Account shall be appropriately adjusted in an equitable
manner or there shall be made such other equitable adjustments to the Deferred
Compensation Account.
(d) Amounts contributed to the Trust and credited to the
Executive's account thereunder shall be invested and reinvested, at the
direction of the Executive, in accordance with the provisions of the Trust
Agreement. The assets of the Trust shall be considered part of the general
assets of the Company subject to the claims of its general creditors.
(e) The Executive agrees on behalf of himself and his
designated beneficiary to assume all risk in connection with any debits or
credits made to his account under the Trust by reason of losses or earnings on
investments made in accordance with the provisions of the Trust Agreement.
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(f) If the Executive experiences an Unforeseeable Financial
Emergency, the Executive may, with the approval of the Company, receive a
partial or full distribution of his Deferred Compensation Account. The
distribution shall not exceed the amount reasonably needed to satisfy the
Unforeseeable Financial Emergency.
(g) The Executive may at any time elect to withdraw all of
the balance then credited to his Deferred Compensation Account, less a ten (10)
percent withdrawal penalty. Thereafter, the provisions of this Section 8 shall
no longer continue in effect.
(h) Upon the earlier of (i) a period of 30 days shall have
elapsed after the Executive ceases to be a resident of the United States, and
(ii) the earliest date reasonably practicable following the Executive's
Termination of Employment, the Company shall pay (or cause to be paid from the
Trust) to the Executive or to the Executive's beneficiary or estate (in the
event of his death) a lump sum amount equal to his Deferred Compensation
Account. All payments shall be made in cash, except that distributions
representing Stock Units shall be made in shares of Common Stock.
(i) The beneficiary referred to in paragraph (h) above may be
designated or changed by the Executive on a form provided by the Company and
delivered to the Company before his death. If no such beneficiary shall have
been designated, or if no designated beneficiary shall survive the Executive,
the lump sum payment payable under paragraph (h) above shall be payable to the
Executive's surviving spouse or, if none, his estate.
(j) For purposes of this Agreement:
"Change in Control" shall mean a change in control of the Company,
which shall be deemed to have occurred if the conditions set forth in any one
of the following four paragraphs shall have been satisfied:
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(i) any corporation, person, other entity or group (other
than the trustee of any qualified retirement plan maintained by DII)
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of
securities representing twenty percent (20%) or more of the combined
voting power of DII's then outstanding securities; or
(ii) during any period of twenty-four consecutive months,
individuals who at the beginning of such consecutive twenty-four month
period constitute the Board of Directors of DII cease for any reason
(other than retirement upon reaching normal retirement age, disability
or death) to constitute at least a majority thereof, unless the
election or the nomination for election by the Company's shareholders
of each new director was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning
of such twenty-four month period;
(iii) the shareholders of DII approve a merger or
consolidation of DII with any other corporation, other than a merger
or consolidation which would result in the voting securities of DII
outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities
of the surviving entity) at least 80% of the combined voting power of
the voting securities of DII or such surviving entity outstanding
immediately after such merger or consolidation, or the shareholders of
DII approve a plan or complete liquidation of DII or an agreement for
the sale or disposition by DII of all or substantially all DII's
assets;
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(iv) there shall occur a transaction or series of
transactions which the Board of Directors of DII shall determine to
have the effect of a Change in Control.
"Common Stock" shall mean the Common Stock, par value $0.01 of
DII, or any security of DII issued in substitution, exchange or in lieu
thereof.
"Performance Shares" shall mean performance shares awarded
under DII's 1994 Stock Incentive Plan and under any successor plan of DII which
permits the awardee to elect to defer the Performance Shares.
"Stock Units" shall mean bookkeeping units in the Deferred
Compensation Account, each of which represents a share of Common Stock.
"Termination of Employment" shall mean the Executive's
cessation of employment or service with the Company or any affiliate
voluntarily or involuntarily, for any reason.
"Unforeseeable Financial Emergency" shall mean an
unanticipated emergency that is caused by an event beyond the control of the
Executive that would result in severe financial hardship to the Executive
resulting from (i) a sudden and unexpected illness or accident of the Executive
or a dependent of the Executive, (ii) a loss of the Executive's property due to
casualty, or (iii) other such extraordinary and unforeseeable circumstances,
all as determined in the sole discretion of the Company.
(k) It is the intention of the parties hereto that the
arrangement described in this Agreement be unfunded for tax purposes and for
purposes of Title I of the Employee Retirement Income Security Act of 1974, as
amended. Nothing in this Agreement or the Trust Agreement and no action taken
pursuant to the provisions of this Agreement or the Trust Agreement shall
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create or be construed to create a fiduciary relationship between the Company
and the Executive, his designated beneficiary or any other person. Any funds
that may be invested under the provisions of the Trust Agreement shall continue
for all purposes to be a part of the general funds of the Company and no person
other than the Company shall by virtue of the provisions of this Agreement have
any interest in such funds. To the extent that any person acquires a right to
receive payments from the Company under this Agreement, such right shall be no
greater than the right of any unsecured general creditor of the Company. This
Agreement constitutes a mere promise by the Company to make a benefit payment
in the future.
(l) The Company or the trustee of the Trust shall withhold
from benefits distributed under this Agreement all income, employment and other
taxes required to be withheld by applicable law.
(m) After a Change in Control, if any person or entity has
failed to comply (or is threatening not to comply) with any of its obligations
under this Agreement or the Trust, or takes or threatens to take any action to
deny, diminish or to recover from the Executive the benefits intended to be
provided hereunder, the Company shall reimburse the Executive for reasonable
attorneys' fees and related costs incurred in the successful pursuance or
defense of the Executive's rights. If the Executive does not prevail,
attorneys' fees shall also be payable under the preceding sentence to the
extent the Executive had reasonable justification for retaining counsel, but
only to the extent that the scope of such representation was reasonable.
(n) No benefit under this Agreement shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to do so shall be void. No benefit
under this Agreement shall in any manner be liable for
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or subject to the debts, contracts, liabilities, engagements or torts of the
person entitled to any such benefit, except as specifically provided in this
Agreement.
9. Successors and Assigns. This Agreement is intended
to bind and inure to the benefit of and be enforceable by Executive and the
Company and their respective legal representatives, successors and assigns.
Neither this Agreement nor any of the duties or obligations hereunder shall be
assignable by Executive.
10. Governing Law; Jurisdiction. This Agreement shall be
interpreted and construed in accordance with the laws of the State of Colorado.
Each of the Company and Executive consents to the jurisdiction of any state or
federal court sitting in Colorado, in any action or proceeding arising out of
or relating to this Agreement.
11. Headings. The paragraph headings used in this
Agreement are for convenience of reference only and shall not constitute a part
of this Agreement for any purpose or in any way affect the interpretation of
this Agreement.
12. Severability. If any provision, paragraph or
subparagraph of this Agreement is adjudged by any court to be void or
unenforceable in whole or in part, this adjudication shall not affect the
validity of the remainder of this Agreement. In addition, to the extent
possible, a like valid term which meets the objective of the void or
unenforceable term shall be substituted for any such void or unenforceable
term.
13. Complete Agreement. This document embodies the
complete agreement and understanding among the parties, written or oral, which
may have related to the subject matter hereof in any way and shall not be
amended orally, but only by the mutual agreement of the parties hereto in
writing, specifically referencing this Agreement.
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14. Counterparts. This Agreement may be executed in
one or more separate counterparts, all of which taken together shall constitute
one and the same Agreement.
15. Miscellaneous. Executive acknowledges that the
Company is not responsible for the tax attributes of Executive's compensation
under this Agreement. Executive shall be solely responsible for Executive's
income tax liability and any other tax liability, and the Company expressly
disavows any responsibility or warranty in connection therewith.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
NORTAVOD CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
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Title: CHB/CEO
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/s/ Xxxxxxx X'Xxxxxxxx
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XXXXXXX X'XXXXXXXX
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