EXHIBIT 10.14
SMTC CORPORATION
July 30, 1999
Xxxx Xxxxxx
00000 Xxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Re: Employment Agreement
Dear Xx. Xxxxxx:
This letter sets forth the terms and conditions of your employment with
SMTC Corporation, a Delaware corporation (the "COMPANY") to be effective as of
the date of closing of the transactions (the "EFFECTIVE DATE") described in the
Reorganization and Merger Agreement dated as of July 26, 1999 among the Company,
HTM Holdings, Inc. ("HTM"), The Surface Mount Technology Centre Inc. ("SMTC"),
EMSIcon Investments LLC, the SMTC stockholders, and the HTM stockholders and
warrantholders (the "REORGANIZATION AGREEMENT"). This Agreement is entered into
in connection with the transactions described in the Reorganization Agreement
pursuant to which you, as a stockholder of SMTC, will receive certain payments
upon the repurchase for cancellation of a portion of your interest in SMTC.
1. EMPLOYMENT AND SERVICES. You shall be employed as a Vice President of
the Company and its subsidiaries (the "SMTC GROUP") for the period beginning on
the Effective Date and ending on December 31, 2001 or on such earlier date as
your employment is terminated pursuant to paragraph 4 hereof (the "EMPLOYMENT
PERIOD"). The Employment Period shall automatically be extended for successive
one-year terms on December 31, 2001 and each anniversary thereof, unless (i)
either party has given written notice of non-renewal to the other party at least
90 days prior to the scheduled expiration date of the Employment Period or (ii)
your employment has been terminated pursuant to paragraph 4 hereof.
During the Employment Period, you shall render such services of a senior
executive nature to the SMTC Group and shall have such powers, duties and
responsibilities as may from time to time be prescribed by the Company's Board
of Directors (the "BOARD"). You shall perform and discharge, faithfully,
diligently and competently, such services, duties and responsibilities. You
shall devote all of your business time and attention and your best efforts and
ability to the business and affairs of the SMTC Group and shall not engage in
other business activities (whether or not compensated) during the Employment
Period without prior written consent of the Board. You agree to serve, if
elected or appointed thereto, in one or
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Employment Agreement
July 30, 1999
more positions as an officer or director of any one or more current or future
members of the SMTC Group or any of their affiliates, or as an officer, trustee,
director or other fiduciary of any pension or other employee benefit plan of any
member of the SMTC Group. Service in such additional positions will be without
additional compensation except for reimbursement of reasonably related business
expenses on the same terms as provided elsewhere in this Agreement.
2. COMPENSATION. As compensation for your services performed under this
Agreement during the Employment Period, the Company shall pay you a base salary
at the rate of $200,000 per year. Such salary shall be payable in installments
in accordance with the Company's regular payroll practices. During the
Employment Period, you will be eligible to receive an annual bonus payment based
on the achievement by the Company of the EBITDA Targets and the Target
Performance Bonus set forth on Annex A hereto. Such EBITDA Targets may be
adjusted by the Board from time to time to reflect any future acquisitions,
mergers or other business combinations by or involving the Company or its
affiliates. For the fiscal year ending December 31, 1999, the EBITDA Targets
shall be calculated on a pro forma basis as if the combination of HTM and SMTC
had occurred on January 1, 1999. Beginning in fiscal year 2000 you will be
entitled to receive a mid-year advance against your annual bonus payment in an
amount equal to 40% of the annual bonus payment that you would receive based on
the Board's mid-year projection of the year-end EBITDA.
3. BENEFITS. During the Employment Period, you shall be entitled to
participate in or receive benefits under any life insurance plan, health and
accident insurance plan, retirement plan and all other benefit arrangements
generally available to the Company's executive officers and employees (other
than severance plans or arrangements) as in effect from time to time. Without
limiting the foregoing, you shall be entitled to receive up to $10,000 annually
in accordance with past practice in connection with your contribution to a
401(k) plan maintained by a member of the SMTC Group. In addition to any life
insurance plan described above as being generally available to the Company's
executive officers and employees, the Company will at all times maintain a life
insurance policy with a death benefit of $200,000 to be paid to a beneficiary of
your choice. In addition, the Company will reimburse your reasonable out-of-
pocket expenses incurred in connection with the performance of your services
hereunder, in each case subject to and consistent with Company policy. During
the Employment Period you shall be entitled to twenty paid vacation days in each
fiscal year and shall also be entitled to all paid holidays given by the Company
to its employees. Your paid vacation days shall be prorated for any period of
service hereunder less than a full year. You will not be entitled to cash
compensation for any vacation time not taken during the term hereof.
4. TERMINATION AND SEVERANCE. The Employment Period shall terminate
prior to its scheduled expiration date on the first to occur of (i) your death
or permanent disability
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(defined as your actual inability to perform normal duties for a period of 90
consecutive days or for a total of 120 days in any two-year period or your
prospective inability to perform such duties for such period as determined in
good faith by the Board), (ii) a vote of the Board directing such termination
for Cause, (iii) a vote of the Board directing such termination without Cause,
or (iv) termination by you upon not less than 30 days' prior written notice for
Good Reason. In the event of termination of the Employment Period pursuant to
clauses (iii) or (iv) above and so long as you comply with the restrictions set
forth in paragraphs 5 and 6 below, the Company shall continue to pay your base
salary for two years following the date of such termination. Except as set forth
in this paragraph 4, you shall not be entitled to any compensation or other
payment from any current or future member, or affiliate of any such member, of
the SMTC Group in connection with the termination of your employment. For
purposes of this Agreement, (x) "CAUSE" shall mean (i) your willful and repeated
failure to comply with the lawful directives of the Board, (ii) any criminal act
or act of dishonesty, disloyalty, misconduct or moral turpitude by you that is
injurious to the property, operations, business or reputation of any member of
the SMTC Group, or (iii) your material breach of this Agreement that is not
cured within 30 days after written notice thereof to you by the Company, and (y)
"GOOD REASON" shall mean (i) the Company's material breach of this Agreement
that is not cured within 30 days after written notice thereof to the Company by
you or (ii) a reduction in your responsibilities and authority such that you no
longer function as a Vice President of the Company, provided however, that if
you do not terminate within 30 days after the Company has provided you notice of
any such reduction in responsibilities, then you shall be deemed to have waived
your right to terminate for Good Reason based on such reduction.
5. CONFIDENTIAL INFORMATION. You acknowledge that information obtained
by you during your employment with the Company (including during the term prior
to the Employment Period) concerning the business or affairs of the Company or
any member of the SMTC Group ("CONFIDENTIAL INFORMATION") is the property of the
Company. You shall not at any time during or after the Employment Period,
without the prior written consent of the Board, disclose to any unauthorized
person or use for your own account or for the account of any person other than
the Company or its affiliates any Confidential Information, except to the extent
necessary to comply with applicable laws or to the extent that such information
becomes generally known to and available for use by the public other than as a
result of (i) your acts or (ii) during the Employment Period, your omissions to
act. Upon termination of the Employment Period or at the request of the Board
at any time, you shall deliver to the Board all documents containing
Confidential Information or relating to the business or affairs of the Company
or its affiliates that you may then possess or have under your control.
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Employment Agreement
July 30, 1999
6. NON-COMPETITION; NON-SOLICITATION.
a. NON-COMPETITION. You acknowledge that you are and will be in
possession of Confidential Information, that your services are of unique and
great value to the Company, and that some restrictions on your activities during
and after your employment are necessary to protect the goodwill, Confidential
Information and other legitimate interests of the Company and its affiliates.
Accordingly, during the Employment Period and for the period thereafter during
which you receive continued payments of your base salary pursuant to Section 4
or, in the case of termination of your employment for Cause pursuant to Section
4(ii), for a period of one year following the date of termination of your
employment (the "NON-COMPETE PERIOD"), you shall not, directly or indirectly,
own, manage, control, participate in, consult with, render services to, or in
any manner engage in, any enterprise engaged in the assembly of printed circuit
boards or other electronic manufacturing services within any geographical area
in which the Company or its affiliates do business on the date of termination of
your employment. Such geographical area shall include but not be limited to
North America (including Mexico), Europe, Southeast Asia and China. Nothing
herein shall prohibit you from being a passive owner of not more than 5% of any
publicly-traded class of capital stock of any entity engaged in a competing
business.
b. NON-SOLICITATION OF EMPLOYEES, SUPPLIERS AND CUSTOMERS. During
the Non-Compete Period, you shall not (i) interfere with the relationship
between the Company or any of its affiliates, and any of their employees, or
induce or attempt to induce any employee of the Company or its affiliates to
terminate his or her employment, (ii) hire directly or through another entity
any person who was an employee of the Company or any of its affiliates at any
time during the Employment Period (other than a former employee of the Company
who left his or her employment without any inducement by you), (iii) induce or
attempt to induce any independent contractor providing services to the Company
or any of its affiliates to terminate or diminish its relationship with the
Company or its affiliates, (iv) induce or attempt to induce any customer,
supplier, licensee or other business relation of the Company or its affiliates
to cease doing business with such entity, or (v) in any way interfere in any
material respect with the relationship between any such customer, supplier,
licensee or business relation and the Company or its affiliates.
c. SCOPE OF RESTRICTION. If, at the time of enforcement of this
paragraph 6, a court shall hold that the duration, scope or area restrictions
stated herein are unreasonable under circumstances then existing, you agree that
the maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area.
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Employment Agreement
July 30, 1999
d. NECESSITY OF RESTRAINTS. You acknowledge that the restraints
imposed by this paragraph 6 and by paragraph 5 above are reasonable and
necessary for the protection of the Company and its affiliates, and that any
such entity would be irreparably harmed by a breach by you of these provisions.
7. WITHHOLDING; CURRENCY. 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. All amounts set
forth in this Agreement are denominated in US Dollars.
8. PRIOR AGREEMENTS. Except as expressly provided herein, all prior
agreements, arrangements or understandings, written or oral, with respect to
your employment with the Company or any subsidiary or affiliate thereof are
superseded by this Agreement and shall be of no further force and effect.
9. SURVIVAL. The provisions of paragraphs 5 and 6 hereof will survive
any termination of this Agreement in accordance with their respective terms.
10. GOVERNING LAW. All questions concerning the construction, validity
and interpretation of this Agreement shall be governed by the laws of the State
of Delaware without giving effect to any choice or conflict of laws provision or
rule that would cause the application of the domestic substantive laws of any
other jurisdiction.
11. NOTICES. All notices, requests and demands to or upon the parties
hereto to be effective shall be in writing, by facsimile, by overnight courier
or by registered or certified mail, postage prepaid and return receipt
requested, and shall be deemed to have been duly given or made upon: (i)
delivery by hand, (ii) one business day after being sent by overnight courier;
or (iii) in the case of transmission by facsimile, when confirmation of receipt
is obtained. Such communications shall be addressed and directed to the parties
as follows (or to such other address as either party shall designate by giving
like notice of such change to the other party):
If to you, at the address first stated above.
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Employment Agreement
July 30, 1999
If to the Company:
SMTC Corporation
c/o EMSIcon Investments, LLC
Two Xxxxxx Xxxxx
Xxxxxx, XX 00000
with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx
Facsimile: 000-000-0000
with a copy to:
The Surface Mount Technology Centre Inc.
000 Xxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
12. AMENDMENT; WAIVER. No provision of this Agreement may be amended
modified, waived or discharged unless such amendment waiver, modification or
discharge is approved by the Board and agreed to in writing signed by you and
such officer as may be specifically authorized by the Board in connection with
such approval. No waiver of any condition or provision of this Agreement shall
be deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time.
13. ASSIGNMENT. This Agreement shall inure to the benefit of and be
binding upon (i) you, your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees and (ii)
the Company and its successors (including, without limitation, by means of
reorganization, merger, amalgamation, consolidation or liquidation) and
permitted assigns. The Company may assign this Agreement to any of its
subsidiaries or affiliates or to any successor of the Company by reorganization,
merger, consolidation or liquidation and any transferee of all or substantially
all of the business or assets of the Company or of any division or line of
business of the Company with which you are at any time associated. The Company
and the members of the SMTC Group require your personal services hereunder and
you may not assign this Agreement.
* * * * *
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Employment Agreement
July 30, 1999
Please execute the extra copy of this letter Agreement in the space below
and return it to the undersigned at the address set forth above to confirm your
understanding and acceptance of the agreements contained herein.
Very truly yours,
SMTC CORPORATION
By:/s/ Xxxx Xxxxxx
-----------------
Name: Xxxx Xxxxxx
Title: President
Accepted and agreed to:
EMPLOYEE
/s/ Xxxx Xxxxxx
---------------
Xxxx Xxxxxx
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