exv10w11



 






Exhibit 10.11




EMPLOYMENT AGREEMENT




     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.



WITNESSETH:




     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.”



     2. Position and Duties.



               (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.



     3. Compensation.



               (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.



                    (ii) “Change of Control” shall mean:



                         (A) The acquisition by any person, entity, or group (other than any of the Company, its
subsidiaries or any employee benefit plan of the Company) of more than 50% of the combined voting
power of the Company’s then outstanding securities;



                         (B) Stockholder approval of a merger or consolidation of the Company, other than (i) a merger
or consolidation in which the voting securities of the Company immediately prior thereto continue
to represent more than 50% of the combined voting power of the outstanding voting securities of the
surviving entity immediately after such merger or consolidation; or



                         (C) A sale of all or substantially all of the Company’s assets.



                    (iii) “Good Reason” shall mean:



                         (A) A material breach of a material term of this Agreement by the Company;



                         (B) Any material adverse change in Executive’s job title, duties, responsibilities and
authority;



                         (C) Failure of the Company to pay Base Salary, Bonus Compensation, or any other compensation
due Executive, when due under this Agreement.


provided, however, that none of the events described in this Section 5(c)(iii) shall constitute
Good Reason unless Executive shall have notified the Company in writing describing the events




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which constitute Good Reason and the Company shall have failed to cure such event within thirty
days after the Company’s receipt of such written notice.




               (d) Termination on Account of Death. In the event of Executive’s death while in the
employ of the Company, his employment hereunder shall terminate on the date of his death and
Executive shall be paid his unpaid Base Salary through the date of termination of employment, any
pro-rated Bonus Compensation, if any, for the then current fiscal year when it is paid to other
active employees, and any unpaid Bonus Compensation for the prior year, if any, when it is paid to
other active employees. No additional payments under Section 5(a) shall be paid by the Company.
In addition, any other benefits payable on behalf of Executive shall be determined under the
Company’s insurance and other compensation and benefit plans and programs then in effect in
accordance with the terms of such programs.



               (e) Resignation by Executive without Good Reason. In the event that Executive’s
employment with the Company is voluntarily terminated by Executive for any reason other than for
Good Reason, Executive shall be paid his unpaid Base Salary through the date of termination of
employment and any unpaid Bonus Compensation for the prior year, if any, when it is paid to other
active employees, and the Company shall have no further obligation hereunder from and after the
effective date of termination and the Company shall have all other rights and remedies available
under this Agreement or any other agreement and at law or in equity. Executive shall give the
Company at least 30 days’ advance written notice of his intention to terminate his employment
hereunder.



               (f) Termination on Account of Disability. To the extent not prohibited by The
Americans With Disabilities Act of 1990 or other applicable law, if, as a result of Executive’s
incapacity due to physical or mental illness (as determined in good faith by a physician acceptable
to the Company and Executive), Executive shall have been absent from the full-time performance of
his duties with the Company for 120 consecutive days during any twelve (12) month period or if a
physician acceptable to the Company advises the Company that it is likely that Executive will be
unable to return to the full-time performance of his duties for 120 consecutive days during the
succeeding twelve (12) month period, his employment may be terminated for “Disability.”
During any period that Executive fails to perform his full-time duties with the Company as a result
of incapacity due to physical or mental illness, he shall continue to receive his Base Salary,
Bonus Compensation and other benefits provided hereunder, together with all compensation payable to
him under the Company’s disability plan or program or other similar plan during such period, until
Executive’s employment hereunder is terminated pursuant to this Section 5(f). Upon termination of
employment under this Section 5(f), Executive shall not be entitled to additional payments under
Section 5(a), provided, however, Executive shall be paid any pro-rated Bonus Compensation, if any,
for the then current fiscal year when it is paid to other active employees, and any unpaid Bonus
Compensation for the prior year, if any, when it is paid to other active employees. In the event
of a Disability, Executive’s benefits shall be determined under the Company’s retirement,
insurance, and other compensation and benefit plans and programs then in effect, in accordance with
the terms of such programs and to the extent permitted by applicable law.



               (g) Termination of Employment Due to Change of Control. The initial grant of options
(700,000), provided for under Section 4(c) and Exhibit B hereto, shall fully vest



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at a Change of Control (as defined herein). If Company terminates Executive’s employment
without Cause (as defined herein) six (6) months prior to a Change of Control and in anticipation
thereof, or, if within the first year after a Change of Control, Executive’s employment is either
terminated without Cause (as defined herein) or Executive resigns for Good Reason (as defined
herein) , subject to Section 409A of the Internal Revenue Code, Executive will receive a bonus
(less statutory deductions) to the extent that the value of those options is less than $600,000
(two year’s base salary) at the time of termination of employment. The value of the options shall
be measured as the difference between the aggregate value of the shares issuable upon exercise of
the options and the aggregate exercise price (the gain). Termination after a Change of Control,
under this scenario, will not trigger the additional payment of one year’s salary and any pro-rated
Bonus Compensation under the provisions of Section 5(a).




     6. Confidential Information, Non-Solicitation and Non-Competition.



               (a) During the Term of Employment and for a period of one year following the date Executive
ceases to be employed by the Company (the “Non-Compete Period”) for any reason, including,
but not limited to, termination with or without Cause or Resignation for Good Reason, with the
exception of a termination of employment after a Change of Control (as defined above in Section
5(c)(ii)) in the event a successor to the Company and Executive have not reached a mutually
acceptable employment agreement prior to termination, Executive shall not, directly or indirectly,
engage in, work for, consult or provide advice or assistance to any Named Competitor (as defined
below) within the United States and its territories and protectorates. “Named Competitor”
shall mean any company that derives more than 50% of its annual revenues from the provision of high
mix electronic manufacturing services to original equipment manufacturers in the semiconductor
capital equipment, aerospace and defense electronics, computer peripherals, medical equipment,
industrial controls, telecommunications equipment and/or electronic instrumentation industries.
Executive further agrees that during the Non-Compete Period he will not assist or encourage any
other person in carrying out any activity that would be prohibited by the provisions of this
Section 6 if such activity were carried out by Executive and, in particular, Executive agrees that
he will not induce any employee of the Company to carry out any such activity; provided, however,
that the “beneficial ownership” by Executive, either individually or as a member of a “group,” as
such terms are used in Rule 13d of the General Rules and Regulations under the Exchange Act, of not
more than five percent (5%) of the voting stock of any publicly held corporation shall not be a
violation of this Agreement.



               (b) Executive agrees that, during the Term of Employment, and for a period of one year
thereafter, he will not, directly or indirectly, solicit or contact any customer or supplier of the
Company on behalf of any Named Competitor or in any way interfere with the Company’s relationship
with any customer or supplier of the Company.



               (c) Executive agrees that, during the Term of Employment, and for a period of one year
thereafter, he will not, directly or indirectly, solicit or recruit any employee of the Company for
the purpose of being employed by him or by any Named Competitor.



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               (d) Executive and the Company expressly agree that the Company will or would suffer
irreparable injury if Executive were to violate any provision of this Section 6 and that the
Company would by reason of such violation be entitled to injunctive relief in a court of
appropriate jurisdiction.



               (e) If it is determined by a court of competent jurisdiction in any state that any restriction
in this Section 6 is excessive in duration or scope or is unreasonable or unenforceable under the
laws of that state, it is the intention of the parties that such restriction may be modified or
amended by the court to render it enforceable to the maximum extent permitted by the law of that
state.



     7. Taxes. All payments to be made to Executive under this Agreement will be subject to
any applicable withholding of federal, state and local income and employment taxes.



     8. Miscellaneous. This Agreement shall also be subject to the following miscellaneous
considerations:



               (a) Executive and the Company each represent and warrant to the other that he or it has the
authorization, power and right to deliver, execute, and fully perform his or its obligations under
this Agreement in accordance with its terms.



               (b) This Agreement contains a complete statement of all the arrangements between the parties
with respect to Executive’s employment by the Company, this Agreement supersedes all prior and
existing negotiations and agreements between the parties concerning Executive’s employment,
including, but not limited to, the GCO 2004 Offer Letter, and this Agreement can only be changed or
modified pursuant to a written instrument duly executed by each of the parties hereto.



               (c) If any provision of this Agreement or any portion thereof is declared invalid, illegal, or
incapable of being enforced by any court of competent jurisdiction, the remainder of such
provisions and all of the remaining provisions of this Agreement shall continue in full force and
effect.



               (d) This Agreement shall be governed by and construed in accordance with the internal laws of
the State of Delaware, except to the extent governed by federal law.



               (e) The Company may assign this Agreement to any direct or indirect subsidiary or parent of
the Company or joint venture in which the Company has an interest, or any successor (whether by
merger, consolidation, spin-off, purchase or otherwise) to all or substantially all of the stock,
assets or business of the Company or any subsidiary or parent of the Company, and this Agreement
shall be binding upon and inure to the benefit of such successors and assigns. Except as expressly
provided herein, Executive may not sell, transfer, assign, or pledge any of his rights or interests
pursuant to this Agreement.



               (f) Any rights of Executive hereunder shall be in addition to any rights Executive may
otherwise have under benefit plans, agreements, or arrangements of the Company



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to which he is a party or in which he is a participant, including, but not limited to, any
Company-sponsored employee benefit plans.




               (g) For the purpose of this Agreement, notices and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have been duly given when delivered or
mailed by United States certified or registered mail, return receipt requested, postage prepaid,
addressed to the named Executive at the address contained in the Company’s records concerning the
Executive. All notices to the Company shall be directed to the attention of the Board with a copy
to the Secretary of the Company.



               (h) Section headings in this Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.



               (i) Failure to insist upon strict compliance with any of the terms, covenants, or conditions
hereof shall not be deemed a waiver of such term, covenant, or condition, nor shall any waiver or
relinquishment of, or failure to insist upon strict compliance with, any right or power hereunder
at any one or more times be deemed a waiver or relinquishment of such right or power at any other
time or times.



               (j) 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 instrument.



               (k) The Company shall indemnify Executive to the fullest extent permitted by the laws of the
State of Delaware, as in effect at the time of the subject act or omission, and he will be entitled
to the protection of any insurance policies that the Company may elect to maintain generally for
the benefit of its directors and officers against all costs, charges and expenses incurred or
sustained by him in connection with any action, suit or proceeding to which he may be made a party
by reason of his being or having been a director, officer or employee of the Company or any of its
affiliates or his having served any other enterprise, plan or trust as director, officer, employee
or fiduciary at the request of the Company. The provisions of this Section 8(k) shall survive any
termination of Executive’s employment or any termination of this Agreement.



     9. Resolution of Disputes. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted in Phoenix, Arizona in
accordance with the rules of the American Arbitration Association governing employment disputes as
then in effect. The Company and Executive hereby agree that the arbitrator will not have the
authority to award punitive damages, damages for emotional distress or any other damages that are
not contractual in nature. Judgment may be entered on the arbitrator’s award in any court having
jurisdiction; provided, however, that the Company shall be entitled to seek a restraining order or
injunction in any court of competent jurisdiction to prevent any continuation of any violation of
the provisions of Section 6, and Executive consents that such restraining order or injunction may
be granted without the necessity of the Company’s posting any bond except to the extent otherwise
required by applicable law. The fees and



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expenses of the American Arbitration Association and the arbitrator shall be borne by the
Company.




     10. Attorneys’ Fees.



               (a) Upon invoice in conformity with the Company’s customary practices, the Company shall
reimburse Executive the amount of all reasonable legal fees incurred by Executive in connection
with the negotiation of this Agreement; provided, that such expenses shall not exceed $5,000 in the
aggregate.



               (b) If any suit or action is filed by any party to enforce this Agreement or otherwise with
respect to the subject matter of this Agreement, each party shall be responsible to pay the
attorneys fees and costs incurred by such party in preparation or in prosecution or defense of such
suit or action; provided, however, that the court or adjudicator may in its sole discretion
allocate attorneys fees and costs to Executive.



* * * * * * * *




     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the dates set forth
below, to be effective as of approval of the Board of Directors of Suntron Corporation.



	 	 	 	 	 
	EXECUTIVE:	 	SUNTRON CORPORATION
	 
	 	 	 	 
	 
	 	 	 	 
	/s/ Hargopal Singh

	 	By:
	 	/s/ Jeffrey W. Goettman
	 

	 	 	 	 
	Hargopal (Paul) Singh
	 	 	 	 







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