Exhibit
10.1
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT (this
“Agreement”) is entered into and made effective as of
June 13, 2006 by and between MODTECH HOLDINGS, INC., a Delaware
corporation (the “Company”), and Dennis Shogren
(“Executive”).
R E C I T A L
S
WHEREAS, Executive previously serving as the
Company’s Senior Vice President of Finance and Chief
Financial Officer (CFO) being promoted to President and Chief
Executive Officer (CEO).
WHEREAS, the Company desires to retain the
services of Executive on the terms and conditions provided herein,
and Executive is willing to provide such services on such terms and
conditions.
A G R E E M E N
T
NOW, THEREFORE, in consideration of the
foregoing premises and the mutual covenants of the parties
contained herein, the parties agree as follows:
1.
Term
. This Agreement shall continue in
full force and effect for a period which shall commence on June 13,
2006 and shall continue until December 31, 2007 (the
“Term”), unless sooner terminated as hereinafter
provided or extended by the mutual agreement of the parties. On
December 31, 2007, and on each one-year anniversary of that date,
this Agreement shall automatically be renewed for a period of one
year, unless either party shall have given the other written notice
of their intent not to renew this Agreement at least
thirty (30) calendar days prior to the expiration of the Term
or any extension.
2.
Services and Exclusivity
of Services . So
long as this Agreement shall continue in effect, Executive shall
devote Executive’s full business time, energy and ability
exclusively to the business, affairs and interests of the Company
and its direct and indirect subsidiaries (“Subsidiaries), and
matters related thereto, shall use Executive’s best efforts
and abilities to promote the Company’s interests, and shall
perform the services contemplated by this Agreement in accordance
with policies established by and under the direction of the Board
of Directors of the Company (the “Board”). Executive
shall at all times perform Executive’s duties and obligations
faithfully and diligently and to the best of Executive’s
ability.
Executive may make and manage personal business
investments of Executive’s choice and serve in any capacity
with any civic, educational or charitable organization without
seeking or obtaining approval by the Board or the CEO, provided
that such activities and services do not substantially interfere or
conflict with the performance of duties hereunder or create any
conflict of interest with such duties. An investment that exceeds
five percent (5%) of the equity securities or capitalization of a
competitor, supplier or customer of the Company shall be deemed to
constitute such a conflict.
Executive represents to the Company that
Executive has no other outstanding commitments inconsistent with
any of the terms of this Agreement or the services to be rendered
hereunder.
3.
Duties and
Responsibilities . Executive shall serve as President and Chief
Executive Officer of the Company for the duration of this
Agreement. In performance of Executive’s duties, Executive
shall report directly to the Chairman of the Board and shall be
subject to such limits on Executive’s authority as the
Chairman of the Board may from time to time impose. Executive
agrees to observe and comply with the rules and regulations of the
Company as adopted by the Board respecting the performance of
Executive’s duties and agrees to carry out and perform
directions and policies of the Company and its Board as they may be
stated, either orally or in writing, from time to time. Executive
shall have responsibilities, duties and authority consistent with
Executive’s position as assigned by the Board, including day
to day responsibility for the management of all of the
Company’s affairs and operations, including oversight of the
operations and management of any Subsidiaries. In addition,
Executive shall serve as a member of the Company’s Board, and
may serve on one or more committees thereof, but without
compensation other than as provided for in Section 4
below.
4.
Compensation, Benefits
and Vacation .
As compensation for the services provided by Executive hereunder,
Executive shall be entitled to receive such compensation, benefits
and vacation as set forth in Exhibit A to
this Agreement, subject to the terms and conditions of this
Agreement, and subject to all appropriate shareholder
approvals.
5.
Expenses . During the Term hereof, Executive shall be
entitled to receive prompt reimbursement of all reasonable expenses
incurred by Executive (in accordance with the policies and
procedures from time to time adopted by the Board for the
Company’s senior officers) in performing the services
contemplated hereunder, provided that Executive properly accounts
therefor in accordance with the Company’s
policies.
6.
Termination .
(a)
Death
. Executive’s employment
hereunder shall terminate immediately upon the death of Executive.
In the event that Executive’s employment is terminated by
reason of Executive’s death, the Company shall pay
Executive’s estate or beneficiaries, as applicable, the
following amounts, after deducting any amounts lawfully owing from
Executive to the Company: (i) any Base Salary (as defined in
Exhibit A to this Agreement or bonuses
earned but unpaid through the date of termination); (ii) any
vacation days accrued but unused prior to Executive’s
termination; (iii) any expense reimbursements owed to Executive
prior to Executive’s termination; and (iv) any unpaid vested
amounts or benefits under the Company’s pension, deferred
compensation or other benefit plans, subject to the terms and
conditions of such plans (the items described in clauses (i)
through (iv) of this sentence shall be referred to herein
collectively as the “Standard Termination Benefits”).
After such payments described in the preceding sentence, the
Company shall have no further obligation to Executive or
Executive’s estate or beneficiaries, as applicable, except to
the extent that Executive’s estate or beneficiaries, as
applicable, may be entitled to exercise any vested stock options or
other equity compensation granted to Executive as contemplated in
Exhibit A to this Agreement or otherwise
(subject to the terms and conditions of applicable option plans
and/or option agreements).
(b)
Disability . In the event that Executive shall be unable
to perform the services contemplated hereunder by reason of
disability, illness or other incapacity for a period of at least 90
consecutive days or an aggregate of 120 days, whether or not
consecutive, during any 12 month period (“Disability”),
the Company may terminate Executive’s employment hereunder
prior to the expiration of the Term. In the event that
Executive’s employment is terminated by reason of
Executive’s Disability the Company shall pay to Executive in
a lump sum payment in an amount equal to six (6) months of
Executive’s Base Salary, less required withholding and
deductions (the “Severance Payment”). The Severance
Payment shall be made in full within thirty (30) days
following the Date of Termination. After such payments described in
the preceding sentence, the Company shall have no further
obligation to Executive, except to the extent that Executive may be
entitled to exercise any vested stock options or other equity
compensation granted to Executive as contemplated in
Exhibit A to this Agreement or otherwise
(subject to the terms and conditions of applicable option plans
and/or option agreements).
(c)
By the Company, Without
Cause .
Executive’s employment hereunder may be terminated by the
Company at any time prior to the expiration of the Term, for Cause
(as defined below) or without Cause.
(d)
By the Company, For
Cause .
Executive’s employment hereunder may be terminated by the
Company prior to the expiration of the Term for
“Cause.” For the purposes of this Agreement,
“Cause” means (i) other than as a result of
incapacity due to Executive’s Disability or Executive’s
death, Executive’s failure or refusal to perform
Executive’s duties or responsibilities or to follow the
lawful directions of the CEO or the Board or Executive’s
material breach of any of Executive’s duties and
responsibilities under this Agreement or under the Company’s
policies with respect to its employees or senior officers, in each
case, after the Company provides Executive with written notice of
such failure, refusal or breach and Executive fails to cure such
failure, refusal or breach within 10 calendar days from the date of
delivery of such notice to Executive; (ii) Executive’s
conviction by, or entry of a plea of guilty or nolo contendere in,
a court of competent jurisdiction for a felony, or any crime which,
in the Company’s sole discretion, adversely affects the
Company or its reputation in the community, or any crime which
involves moral turpitude or is punishable by imprisonment;
(iii) Executive’s commission of an act of fraud or
embezzlement with respect to the Company or any personal dishonesty
by Executive with respect the Company or Executive’s
obligations to the Company; (iv) Executive’s violation
of Executive’s duty of loyalty to the Company or
Executive’s breach of Executive’s fiduciary duty to the
Company; (v) Executive’s intentional or knowing failure to
comply with, or violation of, or causing the Company to fail to
comply with or violate, any laws or regulations applicable to the
Company, including, without limitation, federal or state securities
laws and regulations issued by the Internal Revenue Service; (vi)
Executive becoming barred or prohibited by the Securities and
Exchange Commission or another governmental entity or a securities
exchange or quotation system upon which the Company’s
securities are traded from holding Executive’s position with
the Company; or (vii) Executive’s use of illegal drugs or
other illegal substances.
In the event that Executive is terminated by the
Company for Cause, the Company shall pay Executive the Standard
Termination Benefits (as defined above), after deducting any
amounts lawfully owing from Executive to the Company. After such
payments described in the preceding sentence, the Company shall
have no further obligation to Executive, except to the extent that
Executive may be entitled to exercise any vested stock options or
other equity compensation granted to Executive as contemplated in
Exhibit A to this Agreement or otherwise
(subject to the terms and conditions of applicable option plans
and/or option agreements).
(e)
By
Executive .
Executive shall be entitled to terminate Executive’s
employment with the Company hereunder upon thirty (30) days
prior written notice. In the event that Executive terminates
Executive’s employment, the Company shall pay Executive the
Standard Termination Benefits (as described above), after deducting
any amounts lawfully owing from Executive to the Company. After
such payments described in the preceding sentence, the Company
shall have no further obligation to Executive, except to the extent
that Executive may be entitled to exercise any vested stock options
or other equity compensation granted to Executive as contemplated
in Exhibit A to this Agreement or otherwise
(subject to the terms and conditions of applicable option plans
and/or option agreements).
(f)
Form of
Notice . Any
termination of Executive’s employment by the Company or by
Executive shall be communicated by written Notice of Termination to
the other party hereto. For purposes of this Agreement, a
“Notice of Termination” shall mean a notice which shall
indicate the specific termination provision in this Agreement
relied upon, shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so indicated, and
shall set forth the date upon which such termination is effective
(“Date of Termination”).
7.
Compensation with respect
to Terminations by Company without Cause or by Executive for
Certain Reasons following Change of Control
. In the event that (i) the Company
terminates Executive’s employment without Cause (other than
by reason of Executive’s death or Disability), or (ii) the
Company declines to renew the Agreement at the expiration of the
Term or any one year renewal thereof (other than for Cause or by
reason of Executive’s death or Disability), or (iii) within
one year following a Change of Control (as defined below),
Executive terminates Executive’s employment due to a
significant reduction in Executive’s duties, responsibilities
and position relative to the duties, responsibilities and position
of Executive immediately prior to such reduction (which such
reduction continues without cure for a period of 30 days following
Executive providing written notice to the Board of such significant
reduction), Executive shall be entitled to the following severance
benefits (after deducting any amounts lawfully owing from Executive
to the Company) upon execution by Executive of a general release
(which must be acceptable to the Company) of any and all claims
relating to or arising from Executive’s employment or
termination of employment:
(a)
Severance
Payment . The
Company shall pay to Executive in a lump sum payment in an amount
equal to twelve (12) months of Executive’s Base Salary, less
required withholding and deductions (the “Severance
Payment”). The Severance Payment shall be made in full within
thirty (30) days following the Date of Termination. Executive
is not required to mitigate the amount of the Severance Payment by
seeking other employment or otherwise, nor shall any compensation
earned by Executive in other employment or otherwise reduce the
amount of the Severance Payment.
(b)
Pro-Rated Earned
Bonus . The
Company shall pay Executive a pro-rated earned bonus for the period
of time during which Executive was employed by the Company during
the applicable bonus period (based on the number of days Executive
worked during such period divided by 365). Such pro-rated earned
bonus shall be paid at such time as Executive would have otherwise
received Executive’s bonus.
(c)
Equity
Compensation .
All stock options, grants or other forms of equity compensation
held by Executive shall cease vesting as of the effective date of
Executive’s termination. Executive shall have the right to
exercise vested stock options in accordance with the terms and
conditions of the applicable option plan. If Executive’s
termination occurs following a Change of Control (#8 below) equity
compensation previously granted to Executive shall vest immediately
upon termination.
(d)
Medical
Benefits .
Provided that Executive timely elects continuation of
Executive’s and Executive’s eligi
