Exhibit 10.13
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of the effective date of May 14, 2002, by and between SMTEK INTERNATIONAL,
INC., a Delaware corporation (the "Company"), and Xxxxxx X. Xxxxx
("Employee").
WHEREAS, the Company desires to continue employment of Employee in the
position of Chief Executive Officer and President, which began on May 14,
2002, and
WHEREAS, Employee agrees to be employed by the Company in such position
pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT POSITION. The Company hereby continues to engage and employ
Employee in the capacity of Chief Executive Officer and President. Employee
shall report directly to the Board of Directors. Employee shall perform his
or her duties and functions commensurate with such position, subject only to
such reasonable limitations of authority set forth from time to time by his
or her direct report and applicable law.
2. COMPENSATION AND BENEFITS
2.1 BASE SALARY. Employee's base salary for his position shall be Two
Hundred Thousand Dollars ($200,000) per year beginning on the effective date.
This base salary will be reviewed at least annually for merit and cost of
living increases, at the end of each fiscal year, by the Board and/or the
Compensation Committee of the Board (the "Compensation Committee"), but shall
not be adjusted down without Employee's prior written consent.
2.2 BONUS. Employee shall be eligible to receive annual bonus
compensation of up to One Hundred Thousand Dollars ($100,000), based in part,
or in whole, upon reasonable increases in the Company's revenues and profits
and upon such other reasonable criteria and the achievement of such
reasonable objectives as the Company's Board may from time to time establish.
Such bonus compensation may be payable at such times during the year and in
such amounts as the same solely determined by the Board of Directors.
2.3 OTHER BENEFITS. Employee shall be entitled to the following
benefits above and beyond the usual and customary employee benefits with the
Company: a car allowance of $850 per month; a cell phone with monthly charges
reasonably limited by the Employee's direct report; and a corporate credit
card with charges reasonably limited by the Employee's direct report.
Employee shall also receive 45,000 stock options from the Company's Amended
and Restated 1996 Stock Incentive Plan subject to Board approval no later
than July 31, 2002. The options shall have a three (3) year vesting schedule
with the employee required to be continuing to work at the Company on a full
time basis: 25% of the options vested after the first anniversary, 25% vested
after the second anniversary and the remaining 50% after the third
anniversary. The Employee may also receive further stock options from time
to time as the Board may approve.
2.4 EXPENSE REIMBURSEMENT. Employee shall be reimbursed for reasonable
out-of-pocket expenses in accordance with the Company's established policies
applicable to all officers, including but not limited to full indemnity
rights under the By-laws and the Company's Directors and Officers Liability
policies.
3. TERMINATION
3.1 AT WILL. Employee and the Company acknowledge and agree that
Employee's employment with the Company is expressly "at will" both during and
after the term of this Agreement. This means that either party may terminate
Employee's employment with or without cause upon thirty (30) days' advance
written notice. Any termination of Employee's employment is, however,
subject to the terms and provisions of this Agreement as to severance pay and
other obligations.
3.2 VOLUNTARY RESIGNATION.
(a) NO SEVERANCE FOR VOLUNTARY RESIGNATION. In the event that
Employee's employment with the Company terminates as a result of his
voluntary resignation, Employee shall be entitled to no severance pay.
(b) RELOCATION OF HEADQUARTERS/DIRECTED RESIGNATION NOT VOLUNTARY
RESIGNATION. For purposes of this Agreement, the term "voluntary resignation"
shall not include any situation where: (a) the Employee terminates his
employment as a result of the Company effectively (i) relocating the
Corporate headquarters more than 20 miles from Moorpark, CA, or (ii)
requiring the Employee to physically report for his employment duties more
than 20 miles from Moorpark, California; or (b) the Employee resigns pursuant
to a direct request of the Board of Directors. A termination or resignation
under such circumstances shall be treated as an involuntary termination
without cause, and Employee's entitlement to severance pay and additional
benefits in accordance with the provisions of Sections 3.3(a), 3.3(b) and
3.3(c) below shall apply unless, and only if, such request was based on Cause
(as defined in Section 3.3(d) below).
3.3 INVOLUNTARY TERMINATION.
(a) INVOLUNTARY TERMINATION. The Company shall be deemed to have
terminated the employment of the Employee involuntarily and without cause if
(1) the Employee's full-time employment is reduced or terminated; or (2) the
Company changes materially the Employee's functions, duties or
responsibilities or reporting relationships or otherwise demotes the Employee
("demotion" or "demote").
(b) SEVERANCE PAY. In the event the Employee's employment is
involuntarily terminated without cause as stated in 3.2(b) or 3.3(a) above,
Employee shall be entitled to severance pay equal to one (1) year of salary
continuance at his highest monthly base salary with the Company, payable in a
lump sum no later than thirty (30) days after the termination date.
(c) ADDITIONAL BENEFITS. In the event of termination because of any of
the events described in section 3.2(b), the Employee's benefits as outlined
in section 2.3 shall continue for a period of one (1) year following the
occurrence of either of those events. In the event of termination of the
Employee's employment pursuant to either section 3.2(a) or 3.3(a), the
Employee's benefits as outlined in section 2.3 shall continue thirty (30)
days from the date of termination of employment with the Company. Otherwise,
the Employee's benefits terminate upon the date of the Employee's termination
from the Company.
(d) CAUSE. For purposes of this Agreement, "Cause" shall mean (i) the
willful and deliberate refusal of Employee to comply with a lawful, written
instruction of the Employee's direct report, which refusal is not remedied by
Employee within a reasonable period of time after his receipt of written
notice from the Company identifying the refusal; (ii) an act or acts of
personal dishonesty by Employee that were intended to result in substantial
personal enrichment of Employee at the expense of the Company; (iii)
Employee's conviction of any felony involving an act of moral turpitude; or
(iv) Employee's material breach of any representation or covenant contained
in Section 5, 6 or 7 of this Agreement.
3.4 DEATH. In the event of Employee's death, this Agreement shall
automatically terminate and shall be of no further force and effect.
Termination of Employee's employment as a result of his death shall not
result in any obligation by the Company to pay severance pay (unless the
obligation to pay severance exists as of the date of Employee's death) or
other benefits to Employee's estate or heirs.
3.5 DISABILITY. In the event of Employee's Disability (as defined
below) during the term of this Agreement for any period of at least six (6)
consecutive months, the Company shall have the right, which may be exercised
in its sole discretion, to terminate this Agreement. In the event the
Company does elect to terminate this Agreement, Employee shall not be
entitled to any severance pay at any time but shall be entitled to normal
disability benefits in accordance with the policies established from time to
time by the Company. For purposes of this Agreement, "Disability" shall mean
the inability of Employee to perform his employment services hereunder by
reason of physical or mental illness or incapacity as determined by a
physician chosen by the Company and reasonably satisfactory to Employee or
his legal representative.
4. TERM
The term of this Agreement shall commence on May 14, 2002, and shall be
in effect for two years to the date of commencement, unless terminated
earlier or extended in accordance with the terms and conditions specified
herein. In the event, however, this Agreement is not renewed or superseded
by written mutual consent by the end of its term, this Agreement shall
automatically be extended month-for-month until such time as it is renewed,
superseded by written mutual consent or terminated on thirty days notice.
Such automatic extension specifically includes, but is not limited to, the
full applicability of sections 3.2 and 3.3 on behalf of the Employee.
5. NONDISCLOSURE OF INFORMATION AND NON-SOLICITATION OF EMPLOYEES
5.1 NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Except in the
performance of his duties hereunder, Employee shall not disclose to any
person or entity or use for his own direct or indirect benefit any
Confidential Information (as defined below) pertaining to the Company
obtained by Employee in the course of his employment with the Company. For
purposes of this Agreement, "Confidential Information" shall include the
Company's products, services, processes, suppliers, customers, customers'
account executives, financial, sales and distribution information, price
lists, identity and list of actual and potential customers, trade secrets,
technical information, business plans and strategies to the extent that such
information has not been publicly disseminated by the Company, other than
through a breach hereof. The Company shall have available to it all
remedies, including, but not limited to suits for injunctive relief and/or
damages, as a result of Employee's breach of confidentiality. This provision
shall survive the termination of the employment relationship between the
Company and the Employee.
5.2 NON-SOLICITATION. Employee agrees that, so long as he or she is
employed by the Company and for a period of one year after termination of his
employment, he or she shall not (a) directly or indirectly solicit, induce or
attempt to solicit or induce any company employee to discontinue his or her
employment with the Company, (b) usurp any opportunity of the Company that
Employee became aware of during his tenure at the Company, or (c) directly or
indirectly solicit or induce or attempt to influence any person or business
that is an account, customer or client of the Company to restrict or cancel
the business of any such account, customer or client with the Company.
6. NON-COMPETITION
So long as Employee is employed by the Company, and for a period of one
(1) year after the Employee's termination, the Employee shall not, without
the prior written consent of the Company's Board of Directors, either
directly or indirectly engage in any business engaged in by the Company in
the State of California. This section shall only apply in the limited
situation of the Employee receiving his full and complete severance as stated
in section 3.3(b) above.
The term "directly" means the Employee is acting on his own or is acting
as a consultant, employee, director, agent, representative or associate with
or for any other person or entity.
The term "indirectly" means the Employee is acting through any
partnership, joint venture, corporation or other entity or person.
7. REPRESENTATIONS AND COVENANTS OF EMPLOYEE & COMPANY
7.1 BEST EFFORTS. In consideration of the payments to be made
hereunder, Employee agrees to devote substantially his entire business time
and attention to the performance of his duties hereunder, and to serve the
Company diligently and to the best of his abilities. Notwithstanding the
foregoing, Employee shall have the continuing right to (a) make passive
investments in the securities of any publicly-owned corporation, (b) make any
other passive investments with respect to which he is not obligated or
required to, and does not in fact, devote any substantial managerial efforts
that interfere with his fulfillment of his duties, and (c) serve as a
director or consultant for other companies or entities.
7.2 NO RESTRICTIONS. Employee represents that he is under no actual or
alleged restriction, limitation or other prohibition (whether as a result of
his prior employment or otherwise) to perform his duties as described herein.
7.3 AUTHORITY. The individual signing this Agreement on behalf of the
Company hereby represents and warrants that he has full authority to do so on
behalf of the Company.
8. MISCELLANEOUS
8.1 NO WAIVER. The waiver by either party of a breach of any provision
of this Agreement shall not operate as or be construed as a waiver of any
subsequent breach thereof.
8.2 NOTICES. Any and all notices referred to herein shall be
sufficiently furnished if in writing, and sent by registered or certified
mail, postage prepaid, to the respective parties at the following addresses
or such other address as either party may from time to time designate in
writing:
To the Company: SMTEK International, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
Attention: Secretary
To Employee: XXXXXX X. XXXXX
000 Xxxxxxxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
8.3 ENTIRE AGREEMENT AND INTERPRETATION. This Agreement supersedes any
and all prior written or oral agreements between Employee and the Company,
and contains the entire understanding of the parties hereto with respect to
the terms and conditions of Employee's employment with the Company. No
provision of this document is to be interpreted for or against any party
because the party or party's legal representative drafted it.
8.4 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws and decisions of the State of California.
8.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but
all of which shall constitute one and the same instrument.
8.6 AMENDMENT. This Agreement may not be modified, amended, altered or
supplemented except by written agreement between Employee and the Company.
8.7 ASSIGNMENT AND PARTIES IN INTEREST. This Agreement shall inure to
the benefit of and be binding upon the parties named herein and their
respective successors and assigns; provided, however, Employee may not assign
any of his rights or obligations hereunder. Further, the Company will not
consolidate or merge into or with another corporation, or transfer all or
substantially all of its assets to another corporation or entity or person,
unless such shall assume and be able to satisfy all the duties and
obligations of the Company under this Agreement.
8.8 ATTORNEY'S FEES & COSTS. In the event an action in law or in
equity is required to enforce or interpret the terms and conditions of this
Agreement, the prevailing party shall be entitled to reasonable attorneys
fees and costs in addition to any other relief to which that party may be
entitled.
8.9 INTERPRETATION. No provision of this document is to be
interpreted for or against any party because that party or party's legal
representative drafted it.
8.10 SEVERABILITY. In the event that any covenant, condition or other
provision herein contained is held to be invalid, void or illegal by any
court of competent jurisdiction, the same shall be deemed severable from the
remainder of this Agreement and shall in no way affect, impair or invalidate
any other covenant, condition or other provision herein contained. If such
condition, covenant or other provision shall be deemed invalid due to its
scope or breadth, such covenant, condition or other provision shall be deemed
valid to the extent of the scope or breadth permitted by law.
8.11. CAPTIONS/HEADINGS. The captions or headings in each section or
sub-section are only for convenience purposes. Such captions or headings
shall not be used to interpret the sections or sub-sections of this
Agreement.
IN WITNESS HEREOF, THE PARTIES TO THIS AGREEMENT AGREE TO THE ABOVE AND BIND
THEMSELVES ACCORDINGLY.
The "Company":
SMTEK International, Inc., a Delaware Corporation
/s/ Xxxxx X. Xxxx
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By: Xxxxx X. Xxxx III
Its: Director
/s/ Xxxxxx X. Xxxxx
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"Employee": XXXXXX X. XXXXX
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