EMPLOYMENT AGREEMENT
AGREEMENT, dated this 28th day of February, 1997, between Amtech Systems,
Inc., an Arizona corporation (the "Company") with offices at 000 Xxxxx Xxxxx
Xxxxx, Xxxxx, Xxxxxxx and Xxxx X. Xxxxx (the "Executive"),
W I T N E S S E T H:
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WHEREAS, the Company and the Executive wish to enter into an employment and
compensation arrangement on the following terms and conditions:
1. Employment. Subject to the terms and conditions of this
Agreement, the Company agrees to employ the Executive as its Chief Executive
Officer during the Employment Period (as defined in Section 7) and Executive
agrees to perform such acts and duties and furnish such services to the Company
and its affiliates consistent with such position as the Company's Board of
Directors shall from time to time direct. The Executive shall have general and
active charge of the business and affairs of the Company and, in such capacity,
shall have responsibility for the day-to-day operations of the Company, subject
to the authority and control of the Board of Directors of the Company. During
the Employment Period, the Company shall continue to take such actions as
necessary to cause the Executive's nomination as a member of the Board of
Directors of the company. The Executive hereby accepts such employment and
agrees to devote his full time and best efforts to the duties provided herein,
provided, that the Executive may engage in other business activities which (i)
involve no conflict of interest with the interests of the Company (subject to
approval by the Board of Directors, which approval shall not be
unreasonably withheld) and (ii) do not materially interfere with the performance
by the Executive of his duties under this Agreement.
2. Compensation. For services rendered to the Company during the term
of this Agreement, the Company shall compensate the Executive with an initial
salary, payable in monthly installments, of $155,000 per annum. Such base salary
shall be reviewed on an annual basis by the Compensation Committee of the
Company's Board of Directors (the "Compensation Committee") and shall be
increased by at least five (5%) percent per annum.
3. Incentive Compensation. The Executive shall also be entitled to
annual incentive compensation of up to fifty per cent (50%) of the applicable
base salary ("Incentive Compensation"). The Executive's Incentive Compensation
shall be calculated in accordance with Paragraph 5 of Executive's prior
employment agreement with the Company dated November 14, 1994, which paragraph
is incorporated herein by reference.
4. Stock Options. As further compensation, Employee shall be issued
207,584 stock options (hereinafter "stock options") upon the effective date of
this Agreement. All of the stock options shall be "Incentive Stock Options"
within the meaning of the Internal Revenue Code of 1986, as amended (the
"Code"), subject to the limitations of the Code. Any stock options which are not
allowed to be incentive stock options under the Code shall be non-qualified
stock options. The stock options shall be issued at the fair market value of the
Employer's common stock as of the date of this Agreement and shall then be
vested at 20% per full year
of service (and shall not be vested for interim periods on a pro-rata basis,
except as otherwise provided in the applicable Stock Option Agreement) from the
date of this Agreement, over a five year period, all of the foregoing to be in
accordance with the provisions of Employer's Stock Option Plan, as may be
amended from time to time, which is incorporated by reference herein.
5. Benefits. During the Employment Period, the Company shall provide or
cause to be provided to the Executive such employee benefits as are provided to
other executive officers of the Company, including family medical and dental,
disability and life insurance, and participation in pension and retirement
plans, incentive compensation plans, stock option plans and other benefit plans.
During the Employment Period, the Company may provide or cause to be provided to
the Executive such additional benefits as the Company may deem appropriate from
time to time. The Company shall also provide the Executive at the Company's
expense the use of an automobile of at least equal value to that which is
presently utilized by the Executive as of the date of this Agreement as well as
a life insurance policy in the face amount of $250,000 with Executive's spouse
as the beneficiary.
6. Vacation. The Executive shall be entitled to annual vacations in
accordance with the Company's vacation policies in effect from time to time for
executive officers of the Company.
7. Term: Employment Period. The "Employment Period" shall commence on
the date of this Agreement and shall terminate 5 years thereafter, unless
extended by written agreement between the parties or unless earlier terminated
pursuant to Section 8. If the Executive shall remain in the full time
employ of the Company beyond the Employment Period without any written agreement
between the parties, this Agreement shall be deemed to continue on a month to
month basis and either party shall have the right to terminate this Agreement at
the end of any ensuing calendar month on written notice of at least 30 days.
8. Termination.
(a) Executive's employment with the company shall be "at
will". Either the Company or the Executive may terminate this Agreement and
Executive's employment at any time, with or without Cause or Good Reason (as
such terms are defined below), in its or his sole discretion, upon thirty (30)
days prior written notice of termination.
(b) Without limiting the foregoing Section 8(a), (i) the
Executive may terminate his employment with the company at any time for Good
Reason, or (ii) the Company may terminate his employment at any time for Cause.
"Good Reason" shall mean Executive's termination of his employment as a result
of a substantial diminution in the Executive's responsibilities, or base salary
below $155,000 or a demotion in title or status. "Cause" shall mean (i) the
Executive's wilful, repeated or negligent failure to perform his duties
hereunder and to comply with any reasonable or proper direction given by or on
behalf of the Company's Board of Directors and the continuation of such failure
following ten (10) days written notice to such effect, (ii) the Executive being
guilty of serious misconduct on the Company's premises or elsewhere, whether
during the performance of his duties or not, which is reasonably likely to cause
material damage to the reputation of the
Company or render it materially more difficult for the Executive to
satisfactorily continue to perform his duties; (iii) the Executive being found
guilty in a criminal court of any offense of a nature which is reasonably likely
to materially adversely affect the reputation of the company or to materially
prejudice its interests if the Executive were to continue to be employed by the
Company; (iv) the Executive's commission of any act of fraud, theft or
dishonesty, or any intentional tort against the Company; or (v) the Executive's
violation of any of the material terms, covenants, representations or warranties
contained in this Agreement and failure to correct such violation within ten
(10) days after written notice by the Company.
(c) "Disability" shall mean that the Executive, in the good
faith determination of the Board of Directors of the Company, is unable to
render services of the character contemplated hereby and that such inability (i)
may be expected to be permanent, or (ii) may be expected to continue for a
period of at least six (6) consecutive months (or for shorter periods totaling
more than six (6) months during any period of twelve (12) consecutive months).
Termination resulting from Disability may only be effected after at least thirty
(30) days written notice by the Company of its intention to terminate the
Executive's employment.
(d) "Termination Date" shall mean (i) if this Agreement is
terminated on account of death, the date of death; (ii) if this Agreement is
terminated for Disability, the date established by the Company pursuant to
Section 8(c) hereof; (iii) if this Agreement is terminated by the Company, the
date on which a notice of termination is given to the Executive; (iv) if the
Agreement is terminated by the Executive, the date the Executive ceases work; or
(v) if this Agreement expires by its terms, the last day of the term of this
Agreement.
9. Severance:
(a) If (i) the Company terminates the employment of the
Executive against his will and without Cause, or (ii) the Executive terminates
his employment for Good Reason, the Executive shall be entitled to receive
salary, Incentive Compensation and vacation accrued through the Termination Date
plus the greater of (i) Executive Compensation $155,000 or (ii) the balance of
the Executive's compensation hereunder to the end of the term of this Agreement
computed using the latest applicable salary rate without consideration of any
reductions in base pay below $155,000. The Company shall make such termination
payment within thirty (30) days of such termination. Notwithstanding the
foregoing, the Company shall not be required to pay any severance pay for any
period following the Termination Date if the Executive violates the provisions
of Section 15, Section 16 or Section 17 of this Agreement in any material
respect, and fails to cure such violation willingly thirty days after written
notice from the Company to the Executive detailing such violation. For the
purpose of this Section 9(a), the Executive's compensation hereunder shall mean
compensation as described in Section 2 without regard to any salary reductions,
Incentive Compensation as described in Section 3, pro-rated through the
Termination Date, Stock Options as described in Section 4 pro-rated through the
Termination Date and accelerated vesting of such Stock Options, such that all
stock options granted Executive shall become immediately vested and exercisable
on the Termination Date.
(b) If (i) the Executive voluntarily terminates his employment
other than for Good Reason, (ii) the Executive's employment is terminated due to
death
or Disability, or (iii) the Executive is terminated by the Company for Cause,
then the Executive shall be entitled to receive salary and accrued vacation
through the Termination Date only. In the event of death or Disability the
Executive shall also be entitled Incentive Compensation per Section 3 and stock
options per Section 4 pro-rated through the Termination Date.
(c) In addition to the provisions of Section 9(a) and 9(b)
hereof, to the extent COBRA shall be applicable to the Company or as provided by
law, the Executive shall be entitled to continuation of group health plan
benefits in accordance with COBRA if the Executive makes the appropriate
conversion and payments. If requested to do so, the Company will transfer
ownership of the life insurance policy referred to in Section 5 to the Executive
and the Executive agrees to pay for any costs related to the transfer in excess
of $1000 and to be responsible for all future premiums.
(d) The Executive acknowledges that, upon termination of his
employment, he is entitled to no other compensation, severance or other benefits
other than those specifically set forth in this Agreement or any applicable
Stock Option Agreement.
10. Expenses. The Company shall pay or reimburse the Executive for all
expenses normally reimbursed by Company, reasonably incurred by him in
furtherance of his duties hereunder and authorized and approved by the Company
in compliance with such rules relating thereto as the Company may, from time to
time, adopt and as may be required in order to permit such payments as proper
deductions
to Company under the Internal Revenue Code of 1986, as amended, and the rule and
regulations adopted pursuant thereto now or hereafter in effect.
11. Facilities and Services. The Company shall furnish the Executive
with office space, secretarial and support staff and such other facilities and
services as shall be reasonably necessary for the performance of his duties
under this Agreement.
12. Mitigation Not Required. In the event this Agreement is terminated,
the Executive shall not be required to mitigate amounts payable pursuant hereto
by seeking other employment or otherwise. The Executive's acceptance of any such
other employment shall not diminish or impair the amounts payable to the
Executive pursuant hereto.
13. Place of Performance. The Executive shall perform his duties
primarily in Tempe, Arizona or locations within a reasonable proximity thereof,
except for reasonable travel as the performance of the Executive's duties may
require.
14. Insurance and Indemnity. During the Employment Period, if available
at reasonable costs, the Company shall maintain, at its expense, officers and
directors fiduciary liability insurance covering the Executive and all other
executive officers and directors in an amount of no less than $1,000,000. The
Company shall also indemnify the Executive, to the fullest extent permitted by
law, from any liability asserted against or incurred by the Executive by reason
of the fact that the Executive is or was an officer or director of the Company
or any affiliate or related
party or is or was serving in any capacity at the request of the Company for any
other corporation, partnership, joint venture, trust, employment benefit plan or
other enterprise. This indemnity shall survive termination of this Agreement.
15. Noncompetition.
A. The Executive agrees that, except in accordance with his duties
under this Agreement on behalf of the Company, he will not during the term of
this Agreement:
Participate in, be employed in any capacity by, serve as
director, consultant, agent or representative for, or have any interest,
directly or indirectly, in any enterprise which is engaged in the business of
distributing, selling or otherwise trading in products or services which are
competitive to any products or services distributed, sold or otherwise traded in
by the Company or any of its subsidiaries during the term of the Executive's
employment with the Company, or which are competitive to any products or
services being actively developed, with the bona fide intent to market same, by
the Company or any of its subsidiaries during the term of the Executive's
employment with the Company;
In addition, the Executive agrees that for a period of two
years after the end of the term of this Agreement (unless the Company breaches
this Agreement by failing to pay to the Executive all sums due him under the
terms hereof, in which event the following provisions of this Section 15.A shall
be inapplicable), the Executive shall observe the covenants set forth in this
Section 15 and shall not own,
either directly or indirectly or through or in conjunction with one or more
members of his or his spouse's family or through any trust or other contractual
arrangement, a greater than five percent (5%) interest in, or otherwise control
either directly or indirectly, any partnership, corporation, or other entity
which distributes, sells, or otherwise trades in products which are competitive
to any products or services being developed, distributed, sold, or otherwise
traded in by the Company or any of its subsidiaries, during the term of this
Agreement, or being actively developed by the Company or any of its subsidiaries
during the term of this Agreement with the Company with a bona fide intent to
market same. Executive further agrees, for such two year period following
termination, to refrain from directly or indirectly soliciting Company's
vendors, customers or employees, except that the Executive may solicit the
Company's vendors or customers in connection with a business that does not
compete with the Company or any of its subsidiaries.
B. The Executive hereby agrees that damages and any other remedy
available at law would be inadequate to redress or remedy any loss or damage
suffered by the Company upon any breach of the terms of this Section 15 by the
Executive, and the Executive therefore agrees that the Company, in addition to
recovering on any claim for damages or obtaining any other remedy available at
law, also may enforce the terms of this section 15 by injunction or specific
performance, and may obtain any other appropriate remedy available in equity.
16. Assignment of Patents. Executive shall disclose fully to the
Company any and all discoveries and any and all ideas, concepts or inventions
relating to the Company's business as described in the Company's most recent
10-K report) which he shall conceive or make during his period of employment, or
during the period of
six months after his employment shall terminate, which are in whole or in part
the result of his work with the Company. Such disclosure is to be made promptly
after each such discovery or conception, and each such discovery, idea, concept
or invention will become and remain the property of the Company, whether or not
patent applications are filed thereon. Upon request and at the expense of the
Company, the Executive shall make application through the patent solicitors of
the Company for letters patent of the United States and any and all other
countries at the discretion of the Company on such discoveries, ideas and
inventions, and to assign all such applications to the Company, or at its order,
forthwith, without additional payment by the Company during his period of
employment and for reasonable compensation for time actually spent by the
Executive at such work at the request of the Company after the termination of
the employment. Executive shall give the Company, its attorneys and solicitors,
all reasonable assistance in preparing and prosecuting such applications and, on
request of the Company, execute all papers and do all things that may be
reasonably necessary to protect the right of the Company and vest in it or its
assigns the discoveries, ideas or inventions, applications and letters patent
herein contemplated. Said cooperation shall also include all actions reasonably
necessary to aid the Company in the defense of its rights in the event of
litigation.
17. Trade Secrets.
A. In the course of the term of this Agreement, it is anticipated that
the Executive shall have access to secret or confidential technical and
commercial information, records, data, specifications, systems, methods, plans,
policies, inventions, material and other knowledge ("Confidential Material")
owned by the
Company and its subsidiaries. The Executive recognizes and acknowledges that
included within the Confidential Material are the Company's confidential
commercial information, technology, methods of manufacture, designs, and any
computer programs, source codes, object codes, executable codes and related
materials, all as they may exist from time to time, and that they are valuable
special and unique aspects of the Company's business. All such Confidential
material shall be and remain the property of the Company. Except as required by
his duties to the Company, the Executive shall not, directly or indirectly,
either during the term of his employment or at any time thereafter, disclose or
disseminate to anyone or make use of, for any purpose whatsoever, any
Confidential Material. Upon termination of his employment, the Executive shall
promptly deliver to the Company all Confidential Material (including all copies
thereof, whether prepared by the Executive or others) which are in the
possession or under the control of the Executive. The Executive shall not be
deemed to have breached this Section 17 if the Executive shall be specifically
compelled by lawful order of any judicial, legislative, or administrative
authority or body to disclose any Confidential Material or else face civil or
criminal penalty or sanction.
B. The Executive hereby agrees that damages and any other remedy
available at law would be inadequate to redress or remedy any loss or damage
suffered by the Company upon any breach of the terms of this Section 17 by the
Executive, and the Executive therefore agrees that the Company, in addition to
recovering on any claim for damages or obtaining any other remedy available at
law, also may enforce the terms of this Section 17 by injunction or specific
performance, and may obtain any other appropriate remedy available in equity.
18. Provisions After Change of Control.
(a) In the event Executive's employment with the Company is
terminated within one year following the occurrence of a Change of Control
(other than as a consequence of death or Disability) either (x) by the Company
for any reason other than for Cause, or (y) by Executive for Good Reason, then
Executive shall be entitled to receive from the Company, in lieu of the
severance payment otherwise payable pursuant to Section 9(a), the following:
(i) Base Salary: The severance payment otherwise
payable pursuant to Section 9(a) of this Agreement;
(ii) Incentive Compensation: The maximum amount of
the Executive's Incentive Compensation for the fiscal year in which the
Termination Date occurs shall be paid on the Termination Date; and
(iii) Other Benefits: Notwithstanding the vesting
period provided for in the Company's Stock Option Plan and any related Stock
Option Agreements between the Company and the Executive for stock options
granted Executive by the Company all of options shall be fully vested and
exercisable upon a Change of Control and termination of employment.
(b) For purposes of this Agreement, the term "Change of
Control" shall mean:
(i) The acquisition, other than from the Company, by
any individual, entity or group (within the meaning of Rule
13d-3
promulgated under the Exchange Act or any successor provision)
(any of the foregoing described in this Paragraph 18
b.i.hereafter a "Person") of 50% or more of either (a) the
then outstanding shares of Capital Stock of the Company (the
"Outstanding Capital Stock") or (b) the combined voting power
of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Voting Securities"), provided, however, that any acquisition
by (x) the Company or any of its subsidiaries, or any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any of its subsidiaries or (y) any Person that is
eligible, pursuant to Rule 13d-1 (b) under the Exchange Act,
to file a statement on Schedule 13G with respect to its
beneficial ownership of Voting Securities, whether or not such
Person shall have filed a statement on Schedule 13G, unless
such Person shall have filed a statement on Schedule 13D with
respect to beneficial ownership of 50% or more of the Voting
Securities or (z) any corporation with respect to which,
following such acquisition, more than 60% of, respectively,
the then outstanding shares of common stock of such
corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Capital
Stock and Voting Securities immediately prior to
such acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the
Outstanding Capital Stock and Voting Securities, as the case
may be, shall not constitute a Change of Control; or
(ii) Individuals who, as of the Effective Date,
constitute the Board (the"Incumbent Board") cease for any
reason to constitute at least a majority of the Board,
provided that any individual becoming a director subsequent to
the date hereof whose election or nomination for election by
the Company's shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election
contest relating to the election of the Directors of the
Company (as such terms are used in Rule 14a-11 of Regulation
14A, or any successor section, promulgated under the Exchange
Act); or
(iii) Approval by the shareholders of the Company of
a reorganization, merger or consolidation (a "Business
Combination"), in each case, with respect to which all or
substantially all holders of the Outstanding Capital Stock and
Voting Securities immediately prior to such Business
Combination do not, following such Business Combination,
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and
the
combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting
from the Business Combination; or
(iv) (a) a complete liquidation or dissolution of the
Company or (b) a sale or other disposition of all or
substantially all of the assets of the Company other than to a
corporation with respect to which, following such sale or
disposition, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors is then owned
beneficially, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Capital Stock and
Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their
ownership of the Outstanding Capital Stock and Voting
Securities, as the case may be, immediately prior to such sale
or disposition.
19. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered or
certified mail, return receipt requested to his residence in the case of the
Executive, or to its principal office in the case of the Company, or to such
other addresses as they may respectively designate in writing.
20. Entire Agreement; Waiver. This Agreement contains the entire
understanding of the parties and may not be changed orally but only by an
agreement in writing, signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought. Waiver of or failure to
exercise any rights provided by this Agreement in any respect shall not be
deemed a waiver or any further or future rights.
21. Binding Effect; Assignment. The rights and obligations of this
Agreement shall bind and inure to the benefit of any successor of the Company by
reorganization, merger or consolidation, or any assignee of all or substantially
all of the Company's business or properties. The Executive's rights hereunder
are personal to and shall not be transferable nor assignable by the Executive.
22. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
23. Governing Law; Arbitration. This Agreement shall be construed in
accordance with and governed for all purposes by the laws and public policy of
the State of Arizona applicable to contracts executed and to be wholly performed
within such state. Any dispute or controversy arising out of or relating to this
Agreement shall be settled by arbitration in accordance with the rules of the
American Arbitration Association and judgment upon the award may be entered in
any court having jurisdiction thereover. The arbitration shall be held in
Maricopa County or in such other place as the parties hereto may agree.
24. Further Assurances. Each of the parties agrees to execute,
acknowledge, deliver and perform, and cause to be executed, acknowledged,
delivered and performed, at any time and from time to time, all such further
acts, deeds, assignments, transfers, conveyances, powers of attorney and/or
assurances as may be necessary or proper to carry out the provisions or intent
of this Agreement.
25. Severability. The parties agree that if any one or more of the
terms, provisions, covenants or restrictions of this Agreement shall be
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
26. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
IN WITNESS WHEREOF, AMTECH SYSTEMS, INC. has caused by instrument to be
signed by a duly authorized officer and the Executive has hereunto set his hand
the day and year first above written.
AMTECH SYSTEMS, INC.
By /s/ Xxxxxx X. Xxxx /s/ Xxxx X. Xxxxx
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Xxxxxx X. Xxxx Xxxx X. Xxxxx
Vice President-Finance
