EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and
between Stellex Microwave Systems, Inc. (the "Company") and ▇▇▇▇▇ ▇▇▇▇▇▇▇
("Employee"), as of the 1st day of November 1997.
I. EMPLOYMENT.
The Company hereby employs Employee and Employee hereby accepts such
employment, upon the terms and conditions hereinafter set forth, from November
1, 1997, to and including December 31, 2000.
II. DUTIES.
A. Employee shall serve during the course of his employment as
President and Chief Executive Officer of the Company, and shall have such other
duties and responsibilities as the Board of Directors of the Company shall
determine from time to time. In the event that at any time during the term of
this Agreement Employee serves as a Director of the Company, Employee shall not
participate as a Director in any actions taken, determinations made, or
instructions given by the Board of Directors that relate to Employee's
employment with the Company or any aspect of this Agreement.
B. Employee shall perform all duties incident to the position of
President and Chief Executive Officer as may from time to time be requested by
the Board of Directors. At all times, Employee shall devote his full time and
best efforts,
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knowledge and experience to performing his duties hereunder, shall perform such
duties in a diligent and competent manner and shall act in conformity with the
written and oral policies of the Company and within the limits, budgets and
business plans set by the Company. Employee will at all times during the term of
his employment with the Company strictly adhere to and obey all of the rules and
regulations in effect from time to time relating to the conduct of employees of
the Company. Employee further agrees that to the best of his ability and
experience he will at all times loyally and conscientiously perform all duties
and obligations whether expressly or implicitly required of him by the terms of
this Agreement.
C. For the term of this Agreement, Employee shall report to the Board
of Directors of the Company.
III. COMPENSATION.
A. The Company will pay to Employee a base salary at the rate of
$250,000.00 per year. Such salary shall be earned monthly and shall be payable
in periodic installments no less frequently than bi-weekly in accordance with
the Company's customary payroll practices. Amounts payable shall be reduced by
standard withholding and other authorized deductions. The Board of Directors
will review Employee's base salary annually and, in their sole discretion, may
increase such base salary.
B. Annual Incentive Bonus. Employee shall be eligible for an annual
incentive bonus, beginning with the Company's 1998 fiscal year, pursuant to the
terms set forth on Exhibit A hereto.
C. Incentive, Deferred Compensation, Savings and Retirement Plans.
During the term of this Agreement, Employee shall be entitled to participate in
all
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incentive, deferred compensation, savings and retirement plans, practices,
policies and programs applicable generally to other peer executives of the
Company.
D. Welfare Benefit Plans. Employee and/or his family, as the case may
be, shall be eligible for participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of the Company.
E. Expenses. Employee shall be entitled to receive prompt reimbursement
for all reasonable employment expenses incurred by him in accordance with the
policies, practices and procedures as in effect generally with respect to other
peer executives of the Company.
F. Fringe Benefits. Employee shall be entitled to fringe benefits in
accordance with the plans, practices, programs and policies as in effect
generally with respect to other peer executives of the Company.
G. Vacation. Employee shall be entitled to four (4) weeks paid vacation
per year, subject to a maximum vacation accrual at any time of four (4) weeks.
H. The Company reserves the right to modify, suspend or discontinue any
and all of the plans, practices, policies and programs referred to in Sections C
- F above at any time without recourse by Employee so long as such action is
taken generally with respect to other similarly situated peer executives and
does not single out Employee.
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IV. TERMINATION.
A. Death or Disability. Employee's employment shall terminate
automatically upon Employee's death. If the Company determines that the
Disability of Employee has occurred (pursuant to the definition of Disability
set forth below), it may terminate Employee's employment by giving written
notice in accordance with Section XIX. For purposes of this Agreement,
"Disability" shall mean a physical or mental impairment which substantially
limits a major life activity of Employee and which renders Employee unable to
perform the essential functions of his position, with or without reasonable
accommodation, for a period of 120 days. The Company reserves the right to make
the determination of disability under this Agreement based upon information
supplied by Employee and/or his medical personnel, as well as information from
medical personnel (or others) selected by the Company or its insurers.
B. Cause. The Company may terminate Employee's employment for Cause.
For purposes of this Agreement, "Cause" shall be determined by the Board of
Directors based upon the information then known to the Company, and shall mean
any of the following: (i) Employee's material breach of any provision of this
Agreement; (ii) Employee's material or repeated failure or neglect to perform
the duties of his position with the Company including, but not limited to,
failure to implement or achieve the Company's business plan; (iii) Employee's
development or pursuit of interests adverse to the Company or any of its direct
or indirect subsidiaries or parent companies or their affiliates; (iv)
Employee's insubordination; (v) Employee's willful misconduct, dishonesty, gross
negligence, theft, fraud or other illegal conduct; (vi) Employee's
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conduct which reflects adversely upon, or remarks disparaging of, the Company,
its Board, officers, directors, advisors or employees or its affiliates or
subsidiaries; (vii) Employee's violation of any fiduciary duty or duty of
loyalty to the Company; or (viii) any other material reason which would justify
a reasonably prudent employer in terminating an employee's employment in similar
circumstances.
C. Other than Cause or Death or Disability. The Company may terminate
Employee's employment at any time, with or without cause, upon 120 days' written
notice.
D. Obligations of the Company Upon Termination.
1. Death or Disability. If Employee's employment is terminated
by reason of Employee's Death or Disability, this Agreement shall
terminate without further obligations to Employee or his legal
representatives under this Agreement, other than for (a) payment of the
sum of (i) Employee's annual base salary through the date of
termination to the extent not theretofore paid and (ii) any
compensation previously deferred by Employee (together with any accrued
interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid (the sum of the amounts
described in clauses (i) and (ii) shall be hereinafter referred to as
the "Accrued Obligations"), which shall be paid to Employee or his
estate or beneficiary, as applicable, in a lump sum in cash within 30
days of the date of termination; and (b) payment to Employee or his
estate or beneficiary, as applicable, any amounts due pursuant to the
terms of any applicable welfare benefit plans.
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2. Cause. If Employee's employment is terminated by the
Company for Cause, this Agreement shall terminate without further
obligations to Employee other than for the timely payment of Accrued
Obligations. If it is subsequently determined that the Company did not
have Cause for termination under this Section IV-D-2, then the
Company's decision to terminate shall be deemed to have been made under
Section IV-D-3 and the amounts payable thereunder shall be the only
amounts Employee may receive for his termination.
3. Other than Cause or Death or Disability. If the Company
terminates Employee's employment other than for Cause or for Death or
Disability, this Agreement shall terminate without further obligations
to Employee other than (a) the timely payment of Accrued Obligations
and (b) continuation of Employee's base salary for the lesser of (i)
the remainder of the term of this Agreement or (ii) one (1) year. The
Company shall make any salary continuation payments to Employee in the
Company's normal payroll cycles and shall deduct standard withholdings
and other authorized deductions.
4. Termination By Employee. If Employee's employment is
terminated by Employee, this Agreement shall terminate without further
obligations to Employee other than for the timely payment of Accrued
Obligations.
5. Exclusive Remedy. Employee agrees that the payments
contemplated by this Agreement shall constitute the exclusive and sole
remedy for any termination of his employment and Employee covenants not
to assert or
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pursue any other remedies, at law or in equity, with respect to any
termination of employment.
V. CONFIDENTIAL AND PROPRIETARY INFORMATION.
A. Employee, in the performance of Employee's duties on behalf of the
Company, shall have access to, receive and be entrusted with confidential,
proprietary information, including but in no way limited to inventions,
improvements, technical developments, trademarks, designs, formulae, processes,
computer programs, know-how, techniques, data, trade secrets, discoveries,
copyrightable works, financial data, and other information or documents
regarding the business or technology of the Company, including but not limited
to drawings, computer programs or portions thereof, computer data, blueprints,
process specifications, customer lists, price data, relationships with
employees, manner of operations, business plans, and other Company documents
owned or at any time in the future developed, by the Company or its agents or
consultants, or used presently or at any time in the future in the course of its
business that is not otherwise part of the public domain (collectively, the
"Proprietary Information"). All such Proprietary Information is considered
secret and will be available to Employee in confidence. Except in the
performance of duties on behalf of the Company, Employee shall not, directly or
indirectly for any reason whatsoever, disclose or use any such Proprietary
Information, unless such Proprietary Information ceases (through no fault of
Employee's) to be confidential because it has become part of the public domain.
All records, files, drawings, documents, equipment and other tangible items,
wherever
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located, relating in any way to the Proprietary Information or otherwise to the
Company's business, which Employee prepares, uses or encounters, shall be and
remain the Company's sole and exclusive property and shall be included in the
Proprietary Information. Upon termination of this Agreement by any means, or
whenever requested by the Company, Employee shall promptly deliver to the
Company any and all of the Proprietary Information, not previously delivered to
the Company, that may be or at any previous time has been in Employee's
possession or under Employee's control.
B. Employee hereby acknowledges that the sale or unauthorized use or
disclosure of any of the Company's Proprietary Information by any means
whatsoever and any time before, during or after Employee's employment with the
Company shall constitute Unfair Competition. Employee agrees that Employee shall
not engage in Unfair Competition either during the time employed by the Company
or any time thereafter.
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VI. OWNERSHIP AND ASSIGNMENT OF PROPRIETARY INFORMATION.
A. Employee shall disclose to the Company all Proprietary Information
which he may conceive or make during his employment, either solely, jointly, or
in common with others, and which (1) are developed, either in whole or in part,
by use of the Company's equipment, supplies, facilities or Proprietary
Information, or (2) are related to the Company's business at the time of
conception or reduction to practice, or (3) are related to the Company's actual
or demonstrably anticipated research or development at the time of conception or
reduction to practice, or (4) result from any work Employee performs for the
Company.
B. Employee agrees to assign to the Company complete ownership of all
Proprietary Information which he conceives under the circumstances listed in
Section VI(A) above, and as well as complete ownership of all patent
applications, patents, trademarks, and copyrights (United States and foreign)
which the Company may desire to secure with respect to such Proprietary
Information. Employee further agrees, both during his employment and thereafter,
to cooperate with the Company in procuring such patents, trademarks, and
copyrights, including execution of all documents necessary or incidental to such
processes.
C. Employee acknowledges that he has read the California ▇▇▇▇▇▇ Act
attached hereto as Exhibit B and understands that under its provisions Employee
may retain ownership of inventions that he may make entirely on his own time and
in a manner not described in Section VI(A) above. Employee agrees, however, to
disclose to the Company all inventions that he conceives during his employment,
including any
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invention which he desires to retain as his own property, so that the Company
may determine if such invention qualifies under the law for retention as
Employee's property. The Company will treat any such disclosed information as
confidential unless such information (1) was previously known to the Company,
(2) is disclosed in patents or other publications, (3) has been imparted to the
Company by third parties, or (4) is well known to the trade to which it relates.
Employee understands that this paragraph applies even if he works outside of
California.
D. Employee agrees, during his employment and thereafter, to maintain
and make available to the Company, upon its request, complete and up-to-date
written records (including computer files, photographs, or drawings, where
appropriate) of all Proprietary Information which, during the course of his
employment with the Company, he has conceived or created, either in whole or in
part.
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VII. NON-COMPETITION.
Employee agrees that, during the term of this Agreement, he will not,
directly or indirectly, without the prior written consent of the Board of
Directors of the Company, provide consultative service with or without pay, own,
manage, operate, join, control, participate in, or be connected as a
stockholder, partner, or otherwise with, any business, individual, partner,
firm, corporation, or other entity which is then in competition with the
business of the Company or any present affiliate of the Company. Employee
further acknowledges and agrees that by virtue of his position and duties with
the Company, including his access to the Proprietary Information of the Company
in discharging such duties, Employee's employment or participation with any
entity in competition with the Company for a period of two (2) years after
termination of this Agreement would inevitably require Employee to use or
disclose the Company's Proprietary Information in violation of this Agreement.
VIII. ANTISOLICITATION.
Employee promises and agrees that during the term of this Agreement,
and for a period of two (2) years after the termination of this Agreement, he
will not solicit or attempt to solicit customers of the Company or any of its
present or future subsidiaries or affiliates, either directly or indirectly, to
divert their business to any individual, partnership, firm, corporation or other
entity then in competition with the business of the Company, or any subsidiary
or affiliate of the Company.
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IX. JOINING FORMER COMPANY EMPLOYEES.
Employee promises and agrees that for two (2) years following his
termination of employment other than pursuant to Section IV-C above or
Disability above or expiration of this Agreement, he will not enter business or
work with any person who was employed with the Company, and who earned annually
$25,000 or more as a Company employee during the last six months of his or her
own employment, in any business, partnership, firm, corporation or other entity
then in competition with the business of the Company or any subsidiary or
affiliate of the Company.
X. SOLICITING EMPLOYEES.
Employee promises and agrees that he will not, for a period of two (2)
years following termination of his employment or the expiration of this
Agreement, directly or indirectly solicit any of the Company employees who
earned annually $25,000 or more as a Company employee during the last six months
of his or her own employment to work for any business, individual, partnership,
firm, corporation, or other entity then in competition with the business of the
Company or any subsidiary or affiliate of the Company.
XI. REMEDIES.
It is expressly agreed that the Company will or would suffer
irreparable injury if Employee were to engage in any conduct or commit any act
in violation of Sections V - X above, and the Company would by reason of such
violation be entitled to injunctive
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relief in a court of appropriate jurisdiction. Employee consents and stipulates
to the entry of such injunctive relief in such a court prohibiting him from
engaging in any action in violation of this Agreement, which relief shall be
cumulative to other remedies at law or in equity and shall not be construed as
an exclusive remedy.
XII. SUCCESSORS.
A. This Agreement is personal to Employee and shall not, without the
prior written consent of the Company, be assignable by Employee.
B. This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns and any such successor or assignee shall
be deemed substituted for the Company under the terms of this Agreement for all
purposes. As used herein, "successor" and "assignee" shall include any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires the stock of the
Company or to which the Company assigns this Agreement by operation of law or
otherwise.
XIII. WAIVER.
No waiver of any breach of any term or provision of this Agreement
shall be construed to be, nor shall be, a waiver of any other breach of this
Agreement. No waiver shall be binding unless in writing and signed by the party
waiving the breach.
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XIV. MODIFICATION.
This Agreement may not be amended or modified other than by a written
agreement executed by Employee and the Board of Directors.
XV. SAVINGS CLAUSE.
If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not affect other provisions or applications of the
Agreement which can be given effect without the invalid provisions or
applications and to this end the provisions of this Agreement are declared to be
severable. In the event that a court of competent jurisdiction determines that
any provision or portion of this Agreement is unreasonable, arbitrary, against
public policy or otherwise unenforceable, such court shall enforce such
provision to the extent the court determines reasonable or in accordance with
public policy and to the maximum extent enforceable by law.
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XVI. COMPLETE AGREEMENT.
This Agreement constitutes and contains the entire agreement and final
understanding concerning Employee's employment with the Company and the other
subject matters addressed herein between the parties. It is intended by the
parties as a complete and exclusive statement of the terms of their agreement.
It supersedes and replaces all prior negotiations and all agreements proposed or
otherwise, whether written or oral, concerning the subject matter hereof. Any
representation, promise or agreement not specifically included in this Agreement
shall not be binding upon or enforceable against either party. This is a fully
integrated agreement.
XVII. GOVERNING LAW.
This Agreement shall be deemed to have been executed and delivered
within the State of California, and the rights and obligations of the parties
hereunder shall be construed and enforced in accordance with, and governed by,
by the laws of the State of California without regard to principles of conflict
of laws.
XVIII. CONSTRUCTION.
Each party has cooperated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement, the same
shall not be construed against any party on the basis that the party was the
drafter. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect.
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XIX. COMMUNICATIONS.
All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered or if
mailed by registered or certified mail, postage prepaid, addressed to Employee
at Stellex Microwave Systems, Inc, Stanford Research Park, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ or addressed to the Company at Stellex Microwave Systems,
Inc., c/o Stellex Industries, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇. Either party may change the address at which notice shall be given by
written notice given in the above manner.
XX. EXECUTION.
This Agreement is being executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Photographic copies of such signed counterparts may
be used in lieu of the originals for any purpose.
In witness whereof, the parties hereto have executed this Agreement as
of the date first above written.
"COMPANY" "EMPLOYEE"
STELLEX MICROWAVE SYSTEMS, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Its _______________________
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EXHIBIT A
ANNUAL INCENTIVE BONUS
Employee shall be eligible for an annual incentive bonus, beginning
with fiscal year 1998, based upon the Company's attainment of targeted annual
EBITDA pursuant to the following schedule:
Actual EBITDA Bonus as a
divided by Targeted Percentage of
EBITDA Base Salary
Less than 95% 0.0%
95% 25.0%
100% 50.0%
125% or greater 75.0%
[Interpolate between levels]
The target EBITDA shall be established annually by the Board of Directors no
later than January 1 of each fiscal year. As used herein, "EBITDA" shall mean,
for any period, determined for the Company in conformity with generally accepted
accounting principles consistently applied (i) the sum of the amounts for such
period of (A) net income (i.e., the net earnings or loss after taxes), (B)
depreciation and amortization expense, (C) interest expense, and (D) federal,
state, local, and foreign income taxes, minus (ii) extraordinary or
non-recurring gains. The Board of Directors may, in its sole discretion,
consider other appropriate adjustments to EBITDA. Within thirty (30) days after
completion of the Company's audited financial statements for the fiscal year,
the Board of Directors shall determine the eligibility and amount of any
Incentive Bonus and shall pay such bonus to Employee in a lump sum, less
standard withholdings and authorized deductions.
A-1
EXHIBIT B
THE ▇▇▇▇▇▇ ACT
Sections 2870, 2871 and 2872 of the California Labor Code
2870. (a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either: (1) Relate at the time of conception or reduction to
practice of the invention to the employer's business, or actual or demonstrably
anticipated research or development of the employer; or (2) Result from any work
performed by the employee for the employer;
(b) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable.
2871. No employer shall require a provision made void and unenforceable by
Section 2870 as a condition of employment or continued employment. Nothing in
this article shall be construed to forbid or restrict the right of an employer
to provide in contracts of employment for disclosure, provided that any such
disclosures be received in confidence,
B-1
of all of the employee's inventions made solely or jointly with others during
the term of his or her employment, a review process by the employer to determine
such issues as may arise, and for full title to certain patents and inventions
to be in the United States, as required by contracts between the employer and
the United States or any of its agencies.
2872. If an employment agreement entered into after January 1, 1980, contains a
provision requiring the employee to assign or offer to assign any of his or her
rights in any invention to his or her employer, the employer must also, at the
time the agreement is made, provide a written notification to the employee that
the agreement does not apply to an invention which qualifies fully under the
provisions of Section 2870. In any suit or action arising thereunder, the burden
of proof shall be on the employee claiming the benefits of its provisions.
B-2