THIS AGREEMENT is
made and entered into by and between Hargopal (Paul) Singh (“
Executive ”) and Suntron Corporation, a Delaware
corporation (the “ Company ”), to be effective
upon approval of the Board of Directors.
WHEREAS, Executive
and the Company deem it to be in their respective best interests to
enter into an agreement providing for the Company’s continued
employment of Executive pursuant to the terms herein
stated;
NOW, THEREFORE, in
consideration of the premises and the mutual promises and
agreements contained herein, it is hereby agreed as
follows:
1.
Effective Date . Provided the Agreement has been executed by
Executive, this Agreement shall be effective immediately upon the
approval of the Board of Directors and shall be effective only upon
the approval of Board of Directors, which date shall be referred to
herein as the “ Effective Date .”
(a) The
Company hereby agrees to employ Executive and Executive hereby
agrees to continue his employment as President and Chief Executive
Officer of the Company for the “ Term of Employment
” (as defined in Section 5). In this capacity, Executive
shall devote his reasonable best efforts to the performance of the
services customarily incident to such office and position and to
such other services of an executive nature as may be reasonably
requested by the Board of Directors (the “ Board
”) of the Company which may include services for one or more
subsidiaries or affiliates of the Company. Executive, in his
capacity as an employee and officer of the Company, shall be
directly responsible to and obey the reasonable and lawful
directives of the Board.
(b) Executive
shall use his reasonable best efforts during the Term of Employment
to protect, encourage, and promote the interests of the
Company.
(a)
Base Salary . The Company shall pay to Executive during the
Term of Employment a salary at the rate of three hundred thousand
dollars ($300,000) per calendar year. Such salary shall be payable
in accordance with the Company’s normal payroll procedures.
Executive’s annual salary, as set forth above or as it may be
increased from time to time by the Board in its sole discretion,
shall be referred to hereinafter as “ Base Salary
.”
(b)
Bonus Compensation . In addition to the Base Salary, for
each fiscal year of the Company, or any portion thereof, during the
Term of Employment, Executive shall be eligible to participate in
an incentive-based bonus compensation program (the “ Bonus
Compensation ”) in an amount determined by the
Compensation Committee of the Board (the “ Compensation
Committee ”), and consistent with other comparable
executives of the Company
and its
affiliated companies. The amount, if any, of such Bonus
Compensation for each such fiscal year shall be determined based
upon the Company’s attainment of performance goals approved
by the Compensation Committee and/or the Board of Directors.
Performance goals may include, among other things, the
Company’s earnings before interest expenses, taxes, and
amortization costs (adjusted to reflect working capital carrying
costs and capital spending) (“EBITDA”) as well as other
goals and targets to be determined solely by the Compensation
Committee and/or the Board of Directors. Without limiting the
foregoing, the amount of Bonus Compensation, if any, to be paid in
respect of any such fiscal year shall be up to $360,000 for meeting
or exceeding the agreed upon performance goals. The performance
goals and associated potential bonus payments for fiscal year 2005
are set forth in Exhibit A hereto. For any subsequent
years after 2005, the performance or other goals, EBITDA targets,
EBITDA target payout levels, and bonus payouts will be determined
by the Board of Directors or its designee, in its sole
discretion.
4.
Benefits . During the Term of Employment:
(a) Executive
shall be eligible to participate in any life, health and long-term
disability insurance programs, pension and retirement programs,
leave of absence and other fringe benefit programs made available
to senior executive employees of the Company from time to time, and
Executive shall be entitled to receive such other fringe benefits
as may be granted to him from time to time by the Compensation
Committee.
(b) Executive
shall be entitled to four weeks paid vacation per each full year
during the Term of Employment; provided that Executive may be
provided with additional paid vacation as provided by the Board (or
its designee) in its sole discretion.
(c) Executive
shall be eligible to participate in the Company’s 2002 Stock
Option Plan, as amended, and such other equity based or incentive
compensation plans or programs as may be adopted by the Company
from time to time (collectively, the “ Equity Plan
”) for its senior executives, at such level and in such
amounts as may be determined by the Board in its sole discretion,
subject to the terms and conditions of the Equity Plan and any
applicable award agreements; provided that Executive shall receive
an initial award of options to purchase 700,000 shares of common
stock of the Company substantially on the terms set forth on
Exhibit B hereto.
(d) The
Company shall reimburse Executive for reasonable business expenses
incurred in performing Executive’s duties and promoting the
business of the Company, including, but not limited to, reasonable
entertainment expenses, travel and lodging expenses, following
presentation of documentation in accordance with the
Company’s business expense reimbursement policies.
(e) The
Company shall reimburse Executive for reasonable moving expenses
incurred by Executive if he is asked to move to the Phoenix,
Arizona area in connection with his employment by the Company
following presentation of documentation thereof; provided, that
such expenses shall not exceed $75,000 (grossed up for tax
purposes) in the aggregate and shall include any previously unused
portion of the $50,000 in moving expenses offered to Executive to
facilitate his move from Minnesota to Texas, as set forth in
the
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offer letter
from Suntron Corporation to Hargopal (Paul) Singh dated
June 30, 2004 for the position of Vice President of Customer
Business Management at its Gulf Coast Operations (hereinafter
“GCO 2004 Offer Letter”), but that was not used by
Executive).
(f) If
Executive is not able to sell his home in Minnesota for a period of
six (6) months from the date of its placement on the market,
which shall require an active listing in the multiple listing
service for a period of six (6) months, the Company will offer
additional assistance to Executive to offset the financial burden,
if any, at that time.
5. Term;
Termination of Employment . As used herein, the phrase “
Term of Employment ” shall mean the period commencing
on the Effective Date and, except as otherwise specifically
provided below, ending on December 31, 2006, which shall
automatically renew for periods of one year unless one party gives
written notice to the other at least 60 days prior to the end
of the then current term that the Agreement shall not be further
extended. Notwithstanding the foregoing, the Term of Employment
shall expire on the first to occur of the following:
(a)
Termination by the Company without Cause or Resignation for Good
Reason . Notwithstanding anything to the contrary in this
Agreement, whether express or implied, (i) the Company may, at
any time, terminate Executive’s employment without Cause (as
defined below) by giving Executive at least 15 days’
prior written notice of the effective date of termination and
(ii) the Executive may resign for Good Reason (as defined
below) by giving the Company at least 15 days’ prior written
notice of the effective date of termination. In the event
Executive’s employment hereunder is terminated by the Company
without Cause (defined below), or Executive resigns for Good Reason
(defined below), the Company shall continue to pay to Executive
Base Salary for a period of twelve (12) months following the
date of such termination, in accordance with the Company’s
customary payroll practices, subject to and consistent with
Section 409A of the Internal Revenue Code, and shall pay
Executive a pro-rated Bonus Compensation for the year in which such
termination occurs, based on performance to the date of
termination. Further, notwithstanding the foregoing, as a condition
precedent to Executive’s receipt of said continued Base
Salary and any pro-rated Bonus Compensation under this
Section 5(a), Executive shall execute and shall not revoke a
Severance Agreement and Release of All Claims, consistent with and
not in excess of the consideration set forth this Section, and in a
form mutually acceptable to the Company and Executive. The Parties
agree to amend this Agreement to the extent necessary to avoid
imposition of any additional tax or income recognition prior to
actual payment to Executive under Internal Revenue Code 409A and
any temporary or final Treasury Regulations and IRS guidance
thereunder.
(b)
Termination for Cause . The Company shall have the right to
terminate Executive’s employment at any time for Cause by
giving Executive written notice of the effective date of
termination (which effective date may, except as otherwise provided
below, be the date of such notice). If the Company terminates
Executive’s employment for Cause, Executive shall be paid his
unpaid Base Salary through the date of termination and the Company
shall have no further obligation hereunder from and after the
effective date of such termination and the Company shall have all
other rights and remedies available under this or any other
agreement and at law or in equity.
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(c)
Certain Definitions . For purposes of this
Agreement:
(i) “
Cause ” shall mean:
(A) Fraud,
misappropriation, embezzlement, dereliction of duty, or other act
of material misconduct by Executive against the Company or any of
its affiliates;
(B) Executive’s
indictment for, charging with, or conviction of a
felony;
(C) Executive’s
breach of any material term of this Agreement, including without
limitation Section 6; or
(D) Executive’s
willful refusal or failure to act on any reasonable and lawful
directive or order from the Board which is material to the business
of the Company and which remains uncured for a period of thirty
days following written notice by the Company to Executive
describing such refusal or failure to act.
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