Exhibit 10.5
Employment Agreement
X. Xxxxxx Key, Employee
This Employment Agreement ("Agreement") is made effective as of July 1, 2003, by
and between Aspect Systems, Inc. ("Company"), and X. Xxxxxx Key ("Employee").
Employee hereby represents that no restrictions exist prohibiting him from
executing and performing this Agreement.
WHEREAS, Company wishes to employ Employee under the terms and conditions set
forth below. And Employee wishes to accept such employment under the terms and
conditions set forth below;
WHEREAS, Employee acknowledges that Employee has read and is fully familiar with
the terms of this Agreement, that Employee has had a reasonable opportunity to
consider this Agreement and to seek legal counsel, and that after such review,
Employee finds that the promises and considerations provided by Employee in this
Agreement are not greater than necessary for the protection of Company's good
will and legitimate business interests and do not create undue hardship for
Employee or the public;
NOW, THEREFORE, the parties agree as follows:
1. Position. Employee shall hold the position as "President" of the Company. As
of January 1, 2004, Employee shall also hold the position of CEO of the Company.
Xxxxxxx X. Xxxxx ("Chairman") shall remain Chairman of the Board of the Company.
2. Board Member. During the Term hereof, Employee shall be appointed as a
Director to the Board of Directors of the Company and Employee shall be
appointed as a Director of the Board of Directors of DNDT.
3. Financial Matters. During the Term hereof, Chairman and Employee agree that
on any significant financial matters concerning the Company or DNDT, the parent
company of the Company, where Chairman and Employee do not agree on the spending
or financial matter to be taken, then such matters shall be taken to the
appropriate Boards of the Company and/or DNDT for discussion and approval. For
these purposes Employee shall have an opportunity to voice his concerns over any
such matters with the Boards of DNDT and/or the Company, whichever are
applicable.
4. Duties. Employee will perform the duties of the position to which he is
assigned in a reasonable, timely and professional manner, and shall comply with
all applicable policies and rules of Company. When company finances allow for
Employee's return to full salary, and when the cost of relocation will not
create an unnecessary burden for the Company, Employee shall move from Texas to
Arizona. Until that time, Employee shall make a best effort to spend two out of
every three weeks at the Company headquarters in Xxxxxxxx.
5. Term and Termination. Company agrees to employ Employee for a period not less
than two years from the date hereof. Employee and Company may terminate this
Agreement only for "cause" as defined in this Agreement. Employee may terminate
employment with "cause", at any time, upon thirty days notice to the Company.
This notice requirement is intended to help the Company protect its business
interests, preserve customer good will, and facilitates the transfer of
information that is necessary for the Company to maintain its competitive
advantage. Company may terminate Employee's employment with "cause", upon
fourteen days notice. Company may, at its option, provide pay in lieu of notice
and upon doing so will have no further payment obligations to Employee except as
set forth herein. For "cause" is defined below.
A. For Cause. Notwithstanding any other provision of this Agreement, the
Employee's employment, and all Employee's rights and benefits under this
Agreement, may, at the discretion of the Chairman or by the majority vote of the
Board of Directors of the Company, be terminated immediately and without further
notice and without liability to the Company upon the happening of any one or
more of the following events:
(1). If the Employee is convicted of any of the following: (i) any
felony, (ii) any misdemeanor in the nature of fraud, theft or
conversion of property, or (iii) any offense involving moral
turpitude which, in the sole and unfettered discretion of the
Chairman, has or could have an adverse effect on the business or
reputation of the Company, or (iv) any offense involving the use,
possession, or distribution of any illicit drug or other controlled
substance;
(2). If the Employee exhibits any conduct, including:
(a). chronic or repeated unexcused absence, which adversely or
materially affects the performance of his duties;
(b). negligence or dereliction of duty, which materially
interferes with the performance of his duties;
(c). insubordination; or
(d). a pattern of inappropriate behavior, which negatively
affects or has the substantial potential to materially and
adversely affect the Company, as reasonably determined by the
Chairman or by the Directors by majority vote to be in
violation of his duties to the Company. If the Company
provides Employee written notice of any conduct which the
Company finds objectionable, and if the Employee persists in
or repeats such similar conduct or does not remedy the
identified deficiency in his performance within a reasonable
time following such notice, the same shall be deemed
conclusively to establish the Company' right to terminate the
Employee pursuant to this subsection. However, prior written
notice shall not be required prior to termination under this
section.
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(3). If the Chairman or the Board of Directors by majority
vote in good faith determines that the Employee willfully
provided false or misleading information to the Company,
either prior to or during employment, or breached his
fiduciary duties to the Company, or committed fraud, theft or
conversion of Company property, or has engaged in other
unlawful conduct, including but not limited to the use or
possession of illicit drugs or any other controlled
substances, (other than medications prescribed by a physician)
or the use of alcohol during working hours or on Company
premises, except (with respect to alcohol) use in the ordinary
course of business, regardless whether any civil or criminal
action is brought against the Employee;
(4). If the Employee refuses to submit to any scheduled or
random periodic test, search, and/or investigation as may be
required by the Company from time-to-time as part of any
program implemented by the Company generally applicable to its
employees to detect the use, presence or possession of illicit
drugs or any other controlled substances.
B. Resignation. In the event the Employee wishes to resign his employment,
the Employee shall notify the Company of his intent to resign 60 days in
advance of his intended last day of employment. Employee agrees to
cooperate in the Company's efforts to locate and train a replacement
employee. Employee agrees to continue to perform his employment duties and
responsibilities as outlined in Paragraph 3, above, and as may be
contained in a written Job Description that may be provided by the
Chairman to Employee from time to time, during the period between giving
his notice of resignation and his last day of work. In the event of
resignation by Employee during the term hereof, Employee shall be entitled
to severance compensation equal to two months salary and two months of
benefits.
C. Termination of Employment Due to Death or Disability. As used in this
Agreement, the terns "disability" means the continuous and uninterrupted
inability of Employee to perform his duties by reason of accident or
physical or mental illness or disease for a period of 60 days. During the
period from the onset of any condition leading to disability until any
termination of this Agreement by the Company as a result of such
disability, as hereinafter provided, all salary and fringe benefits
provided under this Agreement shall continue except that the salary shall
be reduced by the amount of benefits received by Employee pursuant to any
disability insurance policy or policies, if any, procured by the Company
for the Employee's benefit.
In the event the disability ceases within one year from the start
date of disability, Employee has the option of resuming his position for
the remainder of the original Term hereof, provided that Employee is able
to discharge the duties of Employee's position. During the term of
disability Employee shall remain an officer of the Company.
In the event of Employee's death during the term hereof, the
Employee shall be paid two years salary. The Company shall purchase term
life insurance for Employee and for the Chairman, who has this same
benefit, to cover this payment. Death during the
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Term hereof shall terminate Employee's obligations to discharge his
position, however, this Agreement shall remain in full force and effect to
discharge any remaining obligations due hereunder.
The Company may terminate this Agreement in the event Employee
elects to not resume his position after the one year period or if Employee
is unable to discharge the duties of his position after such one year
period.
6. Compensation.
A. Base Salary. Employee's Beginning base salary as an officer of the
Company shall be $150,000 per annum, provided, that the Chairman is paid a
salary at the same rate. At all times during the term hereof, Employee's
salary shall match that of the Chairman and Employee, as CEO, shall cause
Chairman's salary to match that of Employee.
B. Bonus for 2004. Employee shall receive a bonus for 2004 as set forth
below if the performance targets listed below are met for the year 2004,
as follows:
100% of Base Salary 50% of Base Salary 25% of Base Salary
$20 Million Revenue $18 Million Revenue $15 Million Revenue
$2M Net Earnings $1.5M Net Earnings $1 M Net Earnings
C. Bonus for 2,005 and Years Thereafter. Employee shall receive a bonus
for 2005 as set forth below if the performance targets listed below are
met for the year 2005, as follows:
100% of Base Salary 50% of Base Salary 25% of Base Salary
$25 Million Revenue $20 Million Revenue $18 Million Revenue
$3M Net Earnings $2.5M Net Earnings $2M Net Earnings
D. Stock Grant. Employee shall receive 1,100,000 shares of DNDT common
stock as a Stock Grant.
7. Work Product Ownership. Any copyrightable works, ideas, discoveries,
inventions, patents, products, or other information (collectively, the "Work
Product") developed in whole or part by Employee while employed by the Company
shall be the exclusive property of Company. Upon receipt, Employee shall sign
all documents necessary to confirm or perfect the exclusive ownership of Company
to the Work Product.
8. Confidentiality.
A. Definitions. As used herein "Trade Secrets" are information of special
value, not generally known to the public or competitors, that the Company
has taken steps to maintain as secret from persons other than those
selected by the Company. "Confidential Information" is information
acquired by Employee in the course and scope of his or her
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activities for Company that is designated by Company as confidential, or
that Company indicates through its policies, procedures or other
instructions should riot be disclosed to anyone outside Company except
through controlled means. The controlled disclosure of Confidential
Information to customers, business associates or vendors for legitimate
business purposes and the availability of the Confidential Information to
others outside Company, through independent investigation and effort, will
not remove it from protected status as Confidential Information under this
agreement if Employee was first entrusted with the Confidential
Information in confidence while working on behalf of Company. Confidential
Information and/or Trade Secrets are generally referred to herein as
"Proprietary Information." Without limitation, some examples of protected
Proprietary Information are Company's manufacturing processes, engineering
or design specifications, marketing and research information, personnel
evaluations, customer lists, supplier lists, new product development
plans, pricing and cost information, business plans and marketing plans or
strategies. Proprietary Information may be both a Trade Secret and
Confidential Information, but need not be both to be protected hereunder.
B. Company Covenants. Upon execution of this Agreement, Employee has been
given access to Proprietary Information of the Company through computer
password access and physical access to purchase orders, sales orders, work
instructions, pricing information, drawings, customer lists, customer
contacts, vendor information and company policies and procedures. Within
90 days from the effective date of this Agreement, and as deemed necessary
by Company thereafter, Company will do one or more of the following: (a)
provide Employee with Proprietary Information of the Company, or access to
such information; or (b) provide Employee with goodwill support such as
expense reimbursements in accordance with Company policy limits, access to
Proprietary Information, and/or facilitate contact with customers and
prospective customers in order to help Employee develop goodwill for
Company. The foregoing is not conditioned upon Employee's continued
service to Company, but it is conditioned upon complete compliance with
all of the restrictions and promises contained in this Agreement.
C. Employee Covenants. Employee agrees not to disclose any of the
Company's Proprietary Information, directly or indirectly, to any
unauthorized person, and not to use it in any way, either during the term
of this agreement or at any time thereafter, except as required for the
benefit of Company or as compelled by law (such as subpoena or court
order). Employee also agrees to use the goodwill and contacts developed
with Company's customers and contractors for the exclusive benefit of
Company, and agrees not to use these items in a way that would harm the
business interests of the Company while subject to any part of this
Agreement. Employee will not at any time, or in any manner, either
directly or indirectly, use for personal benefit of Employee, or divulge,
disclose or communicate in any manner any information that is proprietary
to Company. Employee will protect such information and treat it as
strictly confidential. This provision shall continue to be effective after
the termination of this Agreement. Employee will return to Company all
records, notes, documentation and other items that were used, created or
controlled by Employee during the term of this Agreement.
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D. Other Covenants. Company hereby agrees that as consideration for
Employee's promises herein, Employee will be eligible for Company's Paid
Time off (for Vacation, Illness and Personal Floating Holidays), Bonus
Plan, 401k Savings Plan, and Long Term Disability, subject to the terms
and conditions of each specific benefit program (as it may be amended from
time to time) and the terms of this Agreement. Employee shall be provided
with travel related life insurance for accidental death in the amount of
$1,000,000. In exchange for the foregoing and the additional terms agreed
to in this Agreement, if Employee is an existing employee of Company,
Employee agrees (a) that this Agreement will replace any existing (a)
employment agreement covering the same subjects, if any, between the
parties and thereby acts as a novation, and (b) that all Company
Proprietary Information developed or received by Employee during past
employment with Company and all goodwill developed with the Company's
clients, customers and other business contacts by Employee during past
employment with Company is now the exclusive property of the Company and
will be used solely for the benefit of Company. Employee waives and
releases any claim that he or she should be able to use client or customer
goodwill, or Company's Proprietary Information, previously received or
developed by Employee while working for the Company, for the benefit of
any competing person or entity.
9. Protective Covenants. Employee agrees that the following covenants are
reasonable and necessary agreements for the protection of the business interests
of the Company.
A. Definitions. "Competing Business" means any business involving service
and/or refurbishment of semiconductor equipment or any related activities
so similar in nature that it would displace business opportunities or
customers of Company. "Covered Customer" means those customer entities
and/or persons that the Company has an ongoing business relationship with
(prior to any prohibited interference), or is negotiating with for such a
relationship, and that Employee either (a) received Proprietary
Information about in the course of his/her duties; or (b) had contact with
within the last twenty-four (24) month period that Employee was employed
with Company.
B. Handling of Covered Items. All Proprietary Information, and/or Company
materials containing Proprietary Information, shall remain the exclusive
property of Company at all times. Such materials shall, together with all
copies thereof, be returned and delivered to Company by Employee
immediately (without demand) upon the termination of this Agreement, and
shall be returned at a prior time if Company so demands.
C. Restriction on Interfering with Employee Relationships. Employee agrees
that during employment with Company, and for a period of twelve (12)
complete calendar months following the termination of Employee's
employment with Company, Employee will not, either directly or indirectly,
hire, solicit or take away any of the employees or officers of Company, or
encourage any employees or officers of Company to terminate their
relationship with Company without prior written consent of the Chairman of
the Company.
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D. Restriction on Interfering with Customer Relationships. Employee agrees
that while performing services for Company, and for a period of twelve
(12) complete calendar months following the termination of Employee's
employment with Company, Employee will not, directly or indirectly, except
in connection with Employee's employment with Company, service, solicit or
take away any of the Covered Customers of Company for a Competing Company
without the prior written consent of the Chairman of the Company. The
parties stipulate that the foregoing restriction contains a reasonable
geographic limitation because it is limited to the location, storefront,
address or place of business where a Covered Customer is present and
available for solicitation.
E. Restriction on Unfair Competition. Employee agrees that during
employment with Company, Employee will not participate in or assist a
Competing Business. Employee agrees that for a period of twelve (12)
complete calendar months following termination of services, Employee will
not work for or assist a Competing Company in any capacity (as employee,
consultant, contractor, officer, director, investor, agent or otherwise)
that would involve (a) the same or substantially similar functions or
responsibilities; or (b) supervision over the same or substantially
similar functions or responsibilities; or (c) assisting a Competing
Company in decisions within the "Restricted Area." "Restricted Area" means
any state in which SemiQuip, Aspect SemiQuip International, Aspect
Systems, Incorporated or DND Technologies is incorporated or authorized to
do business, and that contains an office that Employee worked out of,
provided services through or provided supervision over. Employee may not
circumvent the purpose of any restriction by engaging in business in the
Restricted Area through remote means like telephone, other oral or written
correspondence or computerized communication. These restrictions do not
prohibit ownership of less than 10% of the publicly traded capital stock
of a corporation, or mutual fund investments. Employee will give Company
thirty (30) days written notice prior to having any financial affiliations
or going to work for a Competing Company.
F. Reasonableness of Geographic Restriction. Employee agrees that
provision contained herein are narrow and reasonable for the following
reasons: (a) Employee is free to seek employment with other companies,
providing services that do not directly or indirectly compete with any
business of the Company; (b) Employee is free to seek employment with
other companies in the semiconductor capital equipment industry that do
not directly or indirectly compete with any business of the Company, such
as any fabricator of some semiconductor components; and (c) there are many
other companies in the semiconductor capital equipment industry that do
not directly or indirectly compete with any business of the Company. Thus,
this restriction on Employee's ability to compete does not prevent
Employee from using and offering the skills that Employee possessed prior
to receiving Confidential Information, specialized training and knowledge
from the Company.
G. Survival of Covenants. The restrictions, representations and warranties
contained herein shall survive the termination of Employee's employment
with Company to the extent necessary to carry out or to enforce the intent
of the parties set forth herein. The existence of any claim or cause of
action of Employee against Company whether
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predicated on this Agreement or otherwise shall not constitute a defense
to the enforcement by Company of said covenant. In the event an
enforcement remedy is sought hereunder, the time periods of the
restrictions, provided for herein shall be extended by one day for each
day Employee failed to comply with the restriction at issue.
H. Remedies. In the event of breach or threatened breach by Employee of
any provision herein, Company shall be entitled to (i) injunctive relief
by temporary restraining order, temporary injunction, and/or permanent
injunction, (ii) recovery of all attorney's fees and costs incurred by
Company in obtaining such relief, and (iii) any other legal and equitable
relief to which it may be entitled, including any and all monetary damages
which Company may incur as a result of said breach or threatened breach.
An agreed amount for the bond to be posted is One Thousand Dollars
($1,000.00) if Company seeks an injunction.
10. Severability. In the event of any breach of this Agreement, the Company
shall have the right to exercise all of its legal rights and remedies including,
but not limited to the right to obtain injunctive relief, without the
requirement of posting a bond in support of such injunctive relief. If any
provision of this Agreement shall be held to be invalid or unenforceable for any
reason, the remaining provisions shall continue to be valid and enforceable. If
a court finds that any provision of this Agreement is invalid or unenforceable,
but that by limiting such provision it would become valid and enforceable, then
such provision shall be deemed to be written, constructed and enforceable as so
limited. It is the intention of the parties hereto that if any provision of this
Agreement is capable of two constructions, one of which would render the
provision void and the other of which would render it valid, then the provision
shall have the meaning which renders it valid.
11. Waiver, Modification and Integration. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by any party. This instrument contains the
entire agreement of the parties concerning the matters covered in it. This
Agreement may not be modified, altered or amended except by written agreement of
all parties hereto, above or by order of the court.
12. Personal Services. This Agreement is for the personal services of the
Employee and may not be assigned by the Employee.
13. Jurisdiction; Governing Law; Arbitration and Attorney Fees.
A. Jurisdiction, Law and Venue. This Agreement shall be construed in
accordance with, and governed by the laws of the State of Arizona.
Jurisdiction and venue for any action in connection with any breach or
threatened breach or interpretation of this Agreement shall lie
exclusively in the courts located in the County of Maricopa, Arizona.
B. Attorneys Fees to Prevailing Party. In the event that a dispute of any
nature arises pertaining to this Agreement, including but not limited to
its interpretation, enforcement, applicability, or any party's performance
hereunder, and the dispute has not been resolved by negotiation or
agreement among the parties, and arbitration or litigation
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is brought to resolve the matter, the party who prevails or substantially
prevails in the litigation or arbitration shall be awarded, in addition to
any other relief awarded, its reasonable costs and attorney fees,
regardless of which party instituted the litigation or arbitration.
C. Arbitration Clause. The parties hereby consent and agree in advance
that any dispute over this Agreement shall be submitted to and resolved by
binding arbitration in Phoenix, Arizona, conducted under the rules of the
American Arbitration Association but not necessarily conducted by the
American Arbitration Association. There shall be one arbitrator selected
by agreement of the parties. However, this arbitration clause shall not
restrict the Company's ancillary remedies set forth hereunder.
14. Notices. All notices, consents, approvals, waivers or other items given or
required to be given by one party to the other shall be in writing; these
"Notices" shall be delivered by one of the following methods:
A. If personally delivered, then Notice is effective on the next business
day following receipt; or
B. If delivered by mail, Notice is deemed given and delivery 72 hours
after being deposited in any duly authorized United States mail
depository, postage prepaid, registered or certified, return receipt
requested; or
C. If sent by a reputable overnight courier service (e. g. Federal
Express), addressed as set forth below, the notice shall be deemed
effective on the next business day following receipt, as evidenced by the
receipt obtained by the courier service; or
D. If sent by telecopy to the phone number listed below, then notice shall
be deemed delivered on the next business day following receipt, as
evidenced by a successful transmission report.
All Notices shall be addressed as indicated below:
If to Employee: A. To Employees office at work, or
B. To Employee's home
If to Company: Xxxxxxx X. Xxxxx and Xxxx Xxxxx
At the Company's Address in Arizona
And to: Xxxxx X. Xxxxxxxx
00000 X. Xxxxxxxx Xxxx., Xxxxx x-000
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
15. Entire Agreement. This Agreement represents the entire Agreement between the
parties, and there are no oral agreements or representations between the
parties. This Agreement
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supersedes and cancels any and all previous negotiations, arrangements,
agreements, representation or understandings, if any, between the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year set forth above.
EMPLOYEE: COMPANY:
Xxxxxx Key Aspect Systems, Inc.
By: /s/ X. Xxxxxx Key By: /s/ Xxxxxxx X. Xxxxx
---------------------- -------------------------
X. Xxxxxx Key Xxxxxxx X. Xxxxx
The Stock Grant-referenced herein has been agreed to by the Board of Directors
of DNDT:
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Xxxxxxx X. Xxxxx, Chairman
on behalf of the Board of
Directors of DNDT
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