Document:

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

THIS
EMPLOYMENT AGREEMENT (this “Agreement”), dated as of July 9, 1998, is
made by and between HUGH K. GAGNIER (the “Employee”), an individual residing at 5395
Round Meadow Road, Hidden Hills, California 91302, ELTRON INTERNATIONAL, INC.,
a California corporation (the “Company”), and ZEBRA TECHNOLOGIES
CORPORATION, a Delaware corporation (“Zebra”).

 

PREAMBLE:

 

A.            The Company desires to retain Employee as a
senior executive of the Company and Employee desires to perform such duties.

 

B.            Concurrently herewith, the Company, Zebra
and SPRUCE ACQUISITION CORP., a Delaware Corporation (“Merger Sub”) are entering
into an Agreement and Plan of Merger (as such agreement may hereafter be
amended from time to time, the “Merger  Agreement”; capitalized terms
used and not defined herein have the respective meanings ascribed to them in
the Merger Agreement) pursuant to which Merger Sub will be merged with and into
the Company, with the Company continuing as the surviving corporation and as a
direct wholly-owned subsidiary of Zebra (the “Merger”).

 

C.            The effectiveness of this Agreement is
expressly conditioned upon consummation of the Merger and the transactions
contemplated by the Merger Agreement.

 

D.            This Agreement, once effective, will
supersede all previous employment agreements by and between the Company and
Employee (the “Prior Agreements”), which Prior Agreements shall be null and
void, having no further force or effect, as of the Effective Time.

 

E.             In consideration of
the continuation of his employment with the Company subsequent to the Merger,
Employee has agreed to certain nonsolicitation and noncompetition provisions
contained in this Agreement.

 

STATEMENT OF AGREEMENT

 

NOW,
THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company and Employee agree as follows:

 

Section 1. Employment, Term and Duties.

 

1.1          Employment.  Upon the terms and subject to the
conditions contained herein, during the Employment Term (as defmed in Section 1.2
- the Company hereby employs Employee as a senior executive officer of the
Company.  Employee shall initially
report directly to the President of Zebra. 
Employee hereby accepts such employment, and during the Employment Term
shall devote his full business time, skill, energy and attention to the
business of the Company, and shall perform his duties in a diligent
trustworthy, loyal, businesslike and efficient manner, all for the purpose of
advancing the business of the Company. 
The Company agrees that in the event that Employee’s position is
eliminated by the Company and Employee is not offered any other comparable
position with the Company in the Los Angeles metropolitan area, Employee shall
have the right to terminate his employment and Employee shall be entitled to
receive all of the benefits set forth in Section 3.4 below.

 

1.2          Employment Term.  The Employment Term shall
commence as of the Effective Time on the Closing Date and, unless extended by
mutual agreement of the parties hereto or sooner terminated or canceled
pursuant to Section 3 hereof, shall be for a period ending at 11:59
P.M., California time,  on
December 31, 2000 (the “Initial Term”) and shall automatically
renew at the end of the Initial Term and on each anniversary thereafter, in
each case, for an additional one (1) year period.  “Employment Term” shall mean the Initial Term and any
extensions or renewals thereof.

 

1.3          Duties and Responsibilities.  Employee shall serve the Company
initially as its Vice President and General Manager of Simi Valley Operations
of the Company and shall have the duties and responsibilities associated

 

 

therewith.  Employee initially
will be in charge of the engineering, manufacturing and product management
areas of the Company’s Simi Valley Operations and the managers of such areas
will report to Employee.  Employee
agrees to observe and comply with the policies, procedures and rules of the
Company regarding performance of his specific duties and the duties of the
Company employees in general, Employee specifically covenants, warrants and
represents to the Company that he has the full, complete and entire right and
authority to enter into this Agreement that he has no agreement, duty,
commitment or responsibility of any kind or nature whatsoever with any other
party, person or entity which would conflict in any manner whatsoever with any
of his obligations to the Company under this Agreement, and that he is fully
ready, willing and able to perform each and all duties and responsibilities set
forth in this Agreement.

 

Section 2. Compensation.

 

2.1          Base Salary.  Subject to annual adjustments as provided below, the
Company shall initially pay, and Employee shall be entitled to receive from the
Company, a base salary for full-time employment referred to in Section 1
hereof, compensation at the rate of $180,000 per year (“Base Salary”), payable in
equal bi-weekly installments.  The
Company shall make all deductions, withholdings and/or payments that are
required by law from the gross sums payable pursuant to the provisions of this Section
2.

 

2.2          Adjustment.  During the Employment Term, the Base
Salary and Incentive Bonus (as defined in Section 2.3) which Employee is
entitled to receive will be reviewed each December by the Compensation
Committee of the Board of Directors and shall be adjusted effective January 1
of each year.  The Base Salary and
Incentive Bonus will be determined at the sole discretion of the Compensation
Committee, but in no event will the Base Salary be decreased.

 

2.3          Incentive Bonus.  An incentive bonus may be awarded
to Employee.  The incentive bonus shall
be in an amount not to exceed seventy-five percent (75 %) of Employee’s Base
Salary for the fiscal year in respect of which a bonus is payable (the Incentive
Bonus”).  The Incentive Bonus
which Employee shall be entitled to receive will be based on the audited
financial statements of the Company, and will be calculated based on the
criteria determined by the Compensation Committee of the Board of Directors
described in Appendix I.

 

In the event
that either the nature of the Company changes by virtue of a merger,
acquisition or similar event or if Employee is called upon to serve in a
substantially different role by the Company, the bonus criteria will be
reviewed and revised to reflect such terms as are mutually acceptable to both
Employee and the Compensation Committee of the Company’s Board of Directors.

 

2.4              Stock Option Plans.  Employee shall be eligible to
participate in the Company’s Stock Option Plans.  Notwithstanding any terms to the contrary contained in any Stock
Option Agreement all stock options received by Employee from the Company shall
immediately accelerate upon a Change in Control (as defined in Section 3.5).

 

2.5              Expenses.  The Company shall reimburse Employee for all ordinary
and necessary expenses incurred and paid by him in the course of the
performance of his duties pursuant to this Agreement and consistent with the
Company’s policies in effect from time to time with respect to travel,
entertainment and other business expenses, and subject to the Company’s
requirements with respect to the manner of reporting such expenses.  The Company shall continue in effect (or
substitute on a comparable basis) the major medical, hospitalization, life,
travel, accident and disability insurance policies covering Employee and/or his
eligible dependents.

 

2.6              Benefit Plans and Other Fringe
Benefits.  Employee and his
dependents that are eligible will be permitted to participate in medical, life
insurance and disability plans now made available generally by the Company to
its employees or which may be made generally available in the future, subject
to, and on a basis consistent with the terms, conditions and administration of
each such plan.

 

It will not
constitute a breach of this Agreement if the Company unilaterally modifies,
reduces or eliminates any of the benefits under any of these plans if such
modifications, reduction or elimination applies equally to all similarly
situated eligible participants in such plans.

 

2.7              Zebra Stock Options.  On the Closing Date, but in no
event prior to the Effective Time, Employee shall be granted an option to
purchase 22,000 shares of Class A Common Stock of Zebra (the “Common
Stock”) at an exercise price per share equal to the closing price of
the Common Stock on the Closing Date as reported by the Nasdaq

 

 

National Market (“Nasdaq”).  In
the event a closing price is not reported by Nasdaq, the price per share shall
be equal to the closing price as reported by the Wall Street Journal.  Such option shall be granted in accordance
with the Zebra 1997 Stock Option Plan attached hereto as Exhibit C and upon the
terms and conditions set forth in Zebra’s customary form of stock option
certificate; provided, that such option shall immediately become exercisable in
the event that the Company terminates this Agreement pursuant to Section 3.4
hereof.

 

2.8              Eltron Stock Options.  The parties acknowledge and agree
that all options to acquire common stock of the Company previously granted to
Employee shall become automatically fully vested at the strike price at the
time of such grant upon commencement of the Employment Term.

 

Section 3. Termination.

 

3.1          Termination of Employment For
Cause.  The Company may at
any time during the term of this Agreement, by written notice, terminate the
employment of Employee For Cause (as defined below).  In such event, Employee shall be entitled to receive any unpaid
amounts of Base Salary and Incentive Bonus for services provided by Employee to
the Company up to and including the date of termination of the employment of
Employee, but under no circumstances whatsoever shall Employee be entitled to
receive any other compensation of any kind or nature whatsoever, including
without limitation, for any period of time after the date of the termination of
the employment of Employee.  The
following shall be deemed to constitute the types of acts or conduct which
shall constitute grounds for termination of Employee’s employment “For Cause” by
written notice pursuant to this Agreement:

 

(a)           The conviction
(notwithstanding any possible or pending appeal) of Employee of any felony; provided,
however, that prior to any conviction, but while charged with a felony,
the Company may, at its discretion, suspend Employee with or without pay;

 

(b)           Any material breach by
Employee of any term, provision or covenant contained in this Agreement and the
failure of Employee to cure the same within a reasonable period of time not to
exceed sixty (60) days of receipt of written notice of such failure (which
notice must state specifically and precisely what action or inaction by the
Employee constitutes the breach and what Employee must do or not do to correct
the breach) and the demand that the same be cured;

 

(c)           The persistent and
willful failure, neglect, inability or refusal of Employee to perform in all
material respects his duties and responsibilities under this Agreement and the
failure to cure the same within fifteen (15) days of receipt of written notice
(which notice must state specifically and precisely what action or inaction by
the Employee constitutes the breach and what Employee must do or not do to
correct the breach) of such failure and the demand that the same be cured; or

 

(d)           Any material breach by Employee
of any of the Company’s policies, practices, rules and/or regulations and the
failure to cure the same within fifteen (15)  days of receipt of written
notice (which notice must state specifically and precisely what action or
inaction by the Employee constitutes the breach and what Employee must do or
not do to correct the breach) of such failure and the demand that the same be
cured.

 

3.2          Disability.  If during the Employment Term Employee becomes
disabled due to illness, injury or similar cause in such a manner that he is
unable fully to perform his duties pursuant to this Agreement, he shall be
entitled upon certification of such disability by a physician of the Company’s
choice to a leave of absence from the Company for the duration of such disability
as certified by such physician up to but not exceeding the expiration of a
period of one (1) year or until the end of the current Employment Term of this
Agreement, whichever first occurs.  Such
period shall not to exceed one (1) year and shall be integrated with any
existing Company disability policy, provided, however, in no event shall
Employee receive disability income coverage beyond the period of one (1) year
except to the extent provided in the Company’s disability policy, if any.  Employee’s salary as provided in this
Agreement including the Base Salary and the incentive bonuses (if earned),
shall continue to be paid by the Company during any such leave of absence not
to exceed one (1) year provided, however, that if Employee receives any payment
or payments on account of such disability from any employer-provided,
governmental, employee-provided or other program or programs of disability
insurance attributable to the one (1) year leave of absence, or when
appropriate, such shorter time period the Company shall be obligated to pay to
Employee only the difference, if any, between the salary provided to Employee
by the Company pursuant to this Agreement for the applicable period and the
total amount of any disability

 

 

insurance payments payable to Employee through or by any such program
or programs of disability insurance attributable to the same applicable
period.  If Employee’s absence because
of disability continues for more than one (1) year and the term of this
Agreement has not expired, the Company shall have the full and unrestricted
right, in its sole and exclusive discretion, immediately to terminate
Employee’s employment by the Company.

 

3.3          Death of Employee.  In the event of the death of
Employee during the term of this Agreement, this Agreement shall immediately
terminate, and Employee’s estate shall be entitled to receive any unpaid
amounts of Base Salary and Incentive Bonus for services provided by Employee to
the Company up to and including the date of Employee’s death and an additional
payment equal to the aggregate of Employee’s base salary and Incentive Bonus
during his last full year of employment by the Company, but under no
circumstances whatsoever shall Employee’s estate be entitled to receive any
other compensation of any kind or nature whatsoever for any period of time
after the date of Employee’s death.

 

3.4          Option to Terminate Without Cause.  If the Company terminates
Employee’s employment for any reason other than For Cause, Employee shall be
entitled to receive all of the following severance benefits, which shall
satisfy all of the Company’s liabilities to Employee for any claims related to
such termination:

 

(a)           A continuation of his
Base Salary in effect immediately prior to such termination for a period of one
(1) year from the date of termination (“Continued Base Salary”); and

 

(b)           During any such period
that he is receiving Continued Base Salary, Employee shall also receive medical
coverage for himself and his dependents and life insurance for himself, all at
a level equivalent (or as nearly equivalent as practicable) to the benefits he
was receiving immediately prior to his termination.  Employee agrees to cooperate with the Company to facilitate its
provision of such benefits to Employee at the lowest reasonable cost.  No vacation benefits shall accrue during any
such period.

 

In any such
case, any Continued Base Salary payments shall be made in accordance with the
Company’s then existing payroll policies. 
During any period that Employee is receiving Continued Base Salary,
Employee agrees to advise and consult with the Company’s officers and directors
with respect to the Company’s affairs if reasonably requested to do so.

 

3.5          Option to Terminate Upon Change in
Control.  Upon a Change in
Control (as defined below), Employee shall have the option for a period of up
to one (1) year from the date of any Change in Control, to terminate his
employment and shall be entitled to receive a lump-sum severance payment equal
to one time his then existing annual Base Salary subject to normal withholding
requirements (the “Severance Payment”). 
Employee shall notify the Company in writing 60 days prior to
his decision to terminate based upon said Change in Control.  Following such notice and on or before
Employee’s last day of employment, the Company shall pay Employee the Severance
Payment.

 

For purposes
of this Agreement a “Change in Control” means the occurrence of
any of the following events:

 

(i)         Any “person” or group (as
such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended) is or becomes the “beneficial owner” (as defined in Rule
13d-3 under said Act), directly or indirectly, of securities of the Company or
Zebra representing 50% or more of the total voting power represented by the Company’s
or Zebra’s then outstanding voting securities, as the case may be; or

 

(ii)           A change in the
composition of the Board of Directors of Zebra occurring within any two-year
period, as a result of which fewer than a majority of the directors are
Incumbent Directors.  “Incumbent
Directors” shall mean directors who either (A) are directors of
Zebra as of the date hereof; or (B) are elected, or nominated for election, to
the Board of Directors of Zebra with the affirmative votes of at least a
majority of the current directors who were directors at the beginning of such
two year period (but shall not include an individual whose election or
nomination is proposed in connection with an actual or threatened proxy contest
relating to the election of directors for Zebra); or

 

(iii)          The stockholders of
Zebra approve any transaction which would be a reorganization under Delaware
law and results in the voting securities of Zebra outstanding immediately prior
to the consummation of the transaction continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) less than fifty percent (50%)  of the total voting power
represented by the voting securities of the surviving entity outstanding
immediately after such merger or consolidation; or

 

 

(iv)          The stockholders of
Zebra approve a plan of complete liquidation of Zebra or an agreement for the
sale or disposition by Zebra of all or substantially all of Zebra’s assets.

 

Notwithstanding
the paragraph above, the following events shall not constitute a Change in
Control: (i) any acquisition of beneficial ownership pursuant to a will or the
laws of descent and distribution; (ii) any acquisition of beneficial ownership
by operation of a trust established prior to such reorganization and merger,
created and utilized for estate planning purposes and which was the record
holder of 5 %  or more of the voting; (iii) any acquisition of beneficial
ownership pursuant to (A) a reclassification, however effected, of Zebra’s
authorized stock, or (B) a corporate reorganization involving Zebra or any of
its subsidiaries which does not result in a material change in the ultimate
ownership by the shareholders or Zebra (through their ownership of Zebra or to
the successor to Zebra resulting from the reorganization) of the assets of
Zebra and its subsidiaries, if such reclassification or reorganization is
approved by the Board of Directors of Zebra; or (iv) the Merger or any
transaction contemplated by the Merger Agreement.

 

3.6          Option of Employee to Terminate
Employment.  If Employee
terminates his employment with the Company (other than in connection with a
Change in Control or pursuant to Section 1.1 above), or his employment is
terminated by the Company For Cause, the Company’s obligation to provide
Employee with compensation or employment benefits shall cease upon the
effective date of such termination and Employee shall not be entitled to
receive any severance payments, or any other payments or reimbursements, in
connection with such termination.

 

3.7          Duties of Employee After Termination of
Employment.  Following any
termination of Employee’s employment with the Company for any reason under Section
3, Employee shall fully cooperate with the Company in all matters relating
to the winding up of his pending work on behalf of the Company and the orderly
transfer of any such pending work and of his duties and responsibilities for
the Company to such other employees of the Company as may be designated by the
Company.  The Company shall be entitled
to such full-time or part-time services of Employee as the Company may
reasonably require during all or any part of the thirty (30) day period
immediately following any termination of Employee’s employment by the Company,
excluding Saturdays, Sundays and federal holidays.  In addition, to any other severance benefits, Employee shall
receive reasonable compensation for any such services so rendered.  Immediately upon any termination of
Employee’s employment with the Company, Employee shall return to the Company
any and all property of the Company of any kind or nature whatsoever in
Employee’s possession, custody or control.

 

Section 4.              Full-Time
Employment; Confidentiality; Indemnification.

 

4.1          Full-Time Employment.  Employee will devote his full
time, energies and attention to perform all of his duties to the Company under
this Agreement.  In addition, Employee
will not engage in any business, civic or other activities that would interfere
with the performance of his duties hereunder. 
Employee further agrees that he will not perform services, whether or
not for compensation, for any person or entity which competes directly or
indirectly with the Company.

 

4.2          Confidentiality.  Except as may be required in the
ordinary course of performing his duties hereunder.  Employee at no time, whether during or after the termination of
his employment (other than to promote and advance the business of the Company),
will reveal to any person or entity any trade secrets proprietary or
confidential business information concerning the Company, including but not
limited to, its production: processes, inventions, formulae, research results
and activities, marketing plans and strategies, pricing policies, customer
lists and accounts, business or financial information of the Company which have
come to the Employee’s knowledge in the course and result of his employment
with the Company.  These restrictions
will not apply to (a) information that is in the public domain through no
breach by Employee of this Agreement, (b) information that is required to be
disclosed by law or an order of a court, agency or proceeding, or (c) in the
event Employee is authorized in writing to disclose such information by the
Board of Directors of the Company.

 

4.3          Return of All Company Property and
Documents.  Upon the
termination of employment, Employee will immediately return to the Company all
property of the Company including, without limitation, all keys, credit cards,
documents and information, however maintained (including computer files, tapes,
and recordings), concerning the Company and acquired by Employee in the course
and scope of his employment (excluding only those documents totaling to
Employee’s own salary and benefits).

 

4.4          Company’s Right to Equitable
Relief.  Employee
acknowledges that the provisions of Sections 4.2, 5.1  and
5.2 are reasonable and necessary to protect the legitimate interests of
the Company.  If Employee commits a

 

 

breach, or threatens to commit a breach, of Sections 4.2, 5.1,
5.2 or any other term of this Agreement it is understood and agreed that
such conduct would result in immediate and irreparable harm to the Company and
would cause damage to the Company which cannot reasonably or adequately be
compensated by monetary damages.  The
Company will be entitled to the remedies of injunction and specific performance
by any court having competent equity jurisdiction, and nothing in Section 8
herein shall apply or be interpreted to prohibit the Company from seeking such
equitable remedies.

 

4.5          Indemnification.  The Company agrees to indemnify
and hold harmless Employee from and against all claims, suits, damages, losses,
costs and expenses incurred or suffered by Employee by reason of any acts or
omissions arising out of Employee’s services to or activities on behalf of the
Company or its subsidiaries to the full extent permitted by the California
General Corporation Law.  Employee will
also be covered by Zebra’s directors and officers liability insurance policy.

 

Section 5.              Non-Solicitation
and Non-Competition.

 

5.1          Non-Solicitation.  During the Employment Term and
for a period of three (3) years thereafter, Employee agrees that he shall not
solicit any customers of the Company, or recruit or cause any other person to
recruit any employee of or consultant to the Company, to stop working for,
contracting with, or otherwise alter their relationship with the Company or to
work for or contract with any business or businesses competitive with the
Company.

 

5.2          Non-Competition.  For a period of one (1) year after
termination of employment under this Agreement, Employee shall not (a) compete
with the Company or any affiliate or subsidiary of the Company, in the
Territory (as defined below), in the conduct of its business as a manufacturer
and/or seller of bar code printers and plastic card printers, or (b) engage or
participate, directly or indirectly, whether for his own account or for that of
any other person, firm or corporation, and whether as a stockholder (except as
a stockholder in a publicly held corporation of which Employee owns less than
1% of the outstanding securities of any class), principal, agent proprietor,
partner, officer, director, employee or consultant, or in any other
capacity.  “Territory” shall mean each
of the cities, counties or other jurisdictions set forth on Exhibit D
attached hereto, and any other domestic or foreign jurisdiction in which the
Company or any affiliate or subsidiary of the Company, as of the date of the
Agreement, has conducted any part of its business, whether design, development,
engineering, manufacturing, sale, distribution or servicing of its products or
other marketing operations, in any business or businesses substantially similar
to the business as conducted by the Company as of the date of this Agreement or
as may thereafter be conducted by the Company at any time during the Employment
Term.

 

Section 6.              Inventions.

 

6.1          Inventions Retained and Licensed.  Employee has attached as Exhibit
A hereto a list describing all inventions, original works of authorship,
developments, improvements, and trade secrets which were made by Employee prior
to his employment with the Company (collectively referred to as “Prior
Inventions”), which belong to Employee, which relate to the
Company’s proposed business, products or research and development and which are
not assigned to the Company hereunder, or, if no such list is attached,
Employee represents that there are no such Prior Inventions.  If in the course of Employee’s employment
with the Company, Employee incorporates into the Company product, process or
machine any Prior Inventions owned by Employee or in which Employee has an
interest the Company is hereby granted and shall have a nonexclusive,
royalty-free, irrevocable, perpetual, worldwide license to make, have made,
modify, use and sell such Prior Inventions as part of or in connection with
such product process or machine.

 

6.2          Assignment of Inventions.  Employee agrees that he will
promptly make full written disclosure to the Company, will hold in trust for
the sole right and benefit of the Company, and hereby assigns to the Company,
or its designee, all of Employee’s right title, and interest in and to any and
all inventions, original works of authorship, developments, concepts,
improvements or trade secrets, whether or not patentable or registrable under
copyright or similar laws, which Employee may solely or jointly conceive or
develop or reduce to practice, or cause to be conceived or developed or reduced
to practice, during the period of time Employee is in the employ of the Company
(collectively referred to as “Inventions”), except as provided in Section
6.5 below.  Employee further
acknowledges that all original works of authorship which are made by Employee
(solely or jointly with others) within the scope of and during the period of
his employment with the Company and which are protectable by copyright are
“works made for hire,” as that term is defined in the United States Copyright
Act.

 

 

6.3          Maintenance of Records.  Employee agrees to keep and
maintain adequate and current written records of all Inventions made by
Employee (solely or jointly with others) during the term of Employee’s
employment with the Company.  The
records will be in the form of notes, sketches, drawings, and any other format
that may be specified by the Company. 
The records will be available to and remain the sole property of the
Company at all times.

 

6.4          Patent
and Copyright Registrations.  Employee
agrees to assist the Company, or its designee, at the Company’s expense, in
every proper way to secure the Company’s rights in the inventions and any
copyright patents, mask work rights or other intellectual property rights
relating thereto in any and all countries, including the disclosure to the
Company of all permanent information and data with respect thereto, the
execution of all applications, specifications, oaths, assignments and all other
instruments which the Company shall deem necessary in order to apply for and
obtain such rights and in order to assign and convey to the Company, its
successors, assigns, and nominees the sole and exclusive rights, title and
interest in and to such inventions, and any copyrights, patents, mask work
rights or other intellectual property rights relating thereto.  Employee further agrees that his obligation
to execute or cause to be executed, when it is in Employee’s power to do so,
any such instrument or papers shall continue after the termination of this
Agreement.  If the Company is unable
because of Employee’s mental or physical incapacity or for any other reason to
secure Employee’s signature to apply for or to pursue any application for any
United States or foreign patents or copyright registrations covering inventions
or original works of authorship assigned to the Company as above, then Employee
hereby irrevocably designates and appoints the Company and its duly authorized
officers and agents as Employee’s agent and attorney-in-fact, to act for and in
Employee’s behalf and stead to execute and file any such applications and to do
all other lawfully permitted acts to further the prosecution and issuance of
letters or patent or copyright registrations thereon with the same legal force
and effect as if executed by Employee.

 

6.5          Execution to Assignments.  Employee understands that the
provisions of this Agreement requiring assignment of inventions to the Company
do not apply to any invention which qualifies fully under the provisions of
California Labor Code Section 2870 (attached as Exhibit B).  Employee will advise the Company promptly in
writing of any inventions that Employee believes meet the criteria in
California Labor Code Section 2870 and which are not otherwise disclosed on Exhibit
A.

 

Section 7. No  Mitigation
or Set Off.  Employee’s right
to receive benefits under this Agreement shall not be reduced by reason of Employee’s
employment with any other employer after termination or resignation of
employment with the Company.  Any
compensation for services rendered or consulting fees earned after the date of
termination or resignation shall not diminish Employee’s right to receive all
amounts due hereunder.  The right of
Employee to receive benefits under this Agreement shall be absolute and shall
not be subject to any set-off, counterclaim, recoupment, defense, duty to
mitigate or other right the Company may have against him or anyone else.

 

Section 8. Arbitration.  Any controversy,
dispute or claim arising out of, or relating to or concerning the employment
and compensation of Employee or the termination of Employee’s employment or a
claimed violation of any provision of any local, state or Federal law will be
settled by arbitration in Ventura County, California, in accordance with the
Rules of the American Arbitration Association (the “AAA”) then existing.  Should the AAA publish rules designed to
accomplish the arbitration of employment disputes between employees not
represented by a union and their employers, then those rules will be
utilized.  This agreement to arbitrate
will be specifically enforceable. 
Judgment upon any award rendered by an arbitrator may be entered in any
court having jurisdiction.  If the rules
of the AAA differ from those of this Section, the provisions of this Agreement
will control.

 

(a)           Procedure for Arbitration.  Subject to the above, any demand for arbitration may
be filed  with
the AAA and served upon the other party at any time within the period covered
by the applicable statute of limitations.

 

(b)           Conduct of Arbitration Proceedings.  The cost of the arbitrator will
be shared equally by the parties.  If
there is any issue whatsoever concerning confidentiality or trade secrets, no
recording or transcription of the arbitration will take place.

 

(c)           Powers of the Arbitrator.  The arbitrator will have no authority to extend,
modify or suspend any of the terms of this Agreement.  The arbitrator will make his award in writing and shall accompany
it with opinion discussing the evidence and setting forth the reasons for his
award.  The arbitrator shall have the
power to make all factual determinations and rule on all issues of law.  ANY AWARD RENDERED BY THE ARBITRATOR SHALL
BE FINAL AND BINDING UPON EACH PARTY TO THE ARBITRATION AND UNREVIEWABLE FOR
ERROR OF

 

 

LAW OR FOR LEGAL REASONING OF ANY KIND AND ANY SUCH AWARD MAY BE
CONFIRMED AND A JUDGMENT ON SUCH AWARD MAY BE ENTERED IN ANY COURT OF COMPETENT
JURISDICTION.

 

(d)           Waiver of Right to Trial by Jury or Court.  THE COMPANY AND EMPLOYEE EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OR A TRIAL BEFORE A STATE OR
FEDERAL COURT JUDGE OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF OR RELATED TO THIS AGREEMENT BY ONE PARTY AGAINST ANY OTHER PARTY OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE.  THE COMPANY AND THE EMPLOYEE
EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE ARBITRATED AS
PROVIDED IN THIS SECTION 8. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY OR A TRIAL BEFORE
A STATE OR FEDERAL COURT JUDGE IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION
HEREOF.  THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT.

 

Section 9.              Miscellaneous.

 

9.1          Notice. 
Any notice or other communications required or permitted to
be given to the parties hereto shall be deemed to have been given when received
addressed as follows (or at such other address as the party addressed may have
substituted by notice pursuant to this Section):

 

	
   

  	
  (a)

  	
  If to the
  Company:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Eltron
  International, Inc.

  
	
   

  	
   

  	
  41 Moreland
  Road

  
	
   

  	
   

  	
  Simi Valley,
  California 93065-1692

  
	
   

  	
   

  	
  Telephone:

  	
  (805)
  579-1800

  
	
   

  	
   

  	
  Facsimile:

  	
  (805)
  579-2085

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  If to
  Employee:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  To the address
  specified in the first paragraph hereof.

  
					

 

9.2          Heading.  The captions set forth in this Agreement are for
convenience of reference only and shall not be considered as part of this
Agreement or as in any way limiting or amplifying the terms and provisions
hereof.

 

9.3          Governing Law.  The Agreement, shall in all respect, be interpreted,
construed and governed by and in accordance with the law of the State of
California.

 

9.4          Severability.  If any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not
affect any other provision of this Agreement, but this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein and there shall be deemed substituted such other provision as
will most nearly accomplish the intent of the parties to the extent permitted
by applicable law.

 

9.5          Whole Agreement.  This Agreement embodies all the
representations, warranties, covenants and agreements of the parties in
relation to the subject matter hereof, and no representations, warranties,
covenants, understandings or agreements or otherwise, in relation thereto exist
between the parties, or in an instrument in writing signed by the party to be
bound thereby which makes reference to this Agreement.

 

9.6          No Rights in Third Parties.  Nothing herein expressed or
implied is intended to or shall be construed to confer upon or give to any
person, firm or other entity, other than the parties hereto and their
respective successors and assigns or personal representatives, any rights or
remedies under or by reason of this Agreement.

 

 

9.7          Assignment.  The Company may assign its rights and delegate its
responsibilities under this Agreement to any successor corporation or to any
corporation which acquires all or substantially all of the operating assets of
the Company by merger, consolidation, dissolution, liquidation, combination,
sale or transfer or assets or otherwise. 
Employee may not assign any rights or obligations under this Agreement.

 

9.8          Amendment.  The Agreement may not be amended orally but only by an
instrument in writing duly executed by the parties hereto.

 

9.9          Counterparts.  This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same Agreement.

 

9.10        Survival
of Obligations.  Notwithstanding
anything to the contrary set forth in this Agreement, the obligations set forth
in Sections 4, 5,  6 and 8 shall survive any termination
of this Agreement.

 

 

IN WITNESS WHEROF, the Company and Employee
have caused this Agreement to be duly executed  and delivered as of the date,
first written above.

 

 

	
  “EMPLOYEE”:

  	
   

  	
  “COMPANY”:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ELTRON
  INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/Hugh K.
  Gagnier

  	
   

  	
  By:

  	
  /s/Donald K.
  Skinner

  	
   

  
	
  HUGH K.
  GAGNIER

  	
   

  	
  Name:

  	
  Donald K.
  Skinner

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chairman,
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “ZEBRA”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ZEBRA TECHNOLOGIES
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/Edward K.
  Kaplan

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Edward K.
  Kaplan

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  CEO

  	
   

  
									

 

 

APPENDIX I

TO

EMPLOYMENT AGREEMENT

 

During the Employment Term, the
additional compensation Employee is entitled to receive will be reviewed each
December by the Compensation Committee of the Board of Directors and fixed
effective January 1 of the coming year.

 

The following defines the
criteria to be used for allocating the 1998 bonus program to Employee:

 

Most Important Tasks: (MIT) Employee shall be
entitled to receive a maximum quarterly bonus equal to 75% of his quarterly
salary.  MIT’s will be created by
Employee and approved by the Compensation Committee of the Board of Directors,
prior to the beginning of each quarter. 
Each task will be assigned a numerical weighing for bonus
allotment.  At the end of each quarter,
MIT’s will be reviewed by Employee and the Compensation Committee of the Board
of Directors to assess task completion and to compute the amount of bonus to be
awarded for the prior quarter.

 

The following defines the
criteria to be used for allocating the 1999 and 2000 bonus program to Employee:

 

Most Important Tasks: (MIT) Employee shall be
entitled to receive a maximum quarterly bonus equal to 75% of his quarterly
salary.  MIT’s will be created by
Employee and approved by the Chairman and Chief Executive Officer of Zebra,
prior to the beginning of each quarter. 
Each task will be assigned a numerical weighing for bonus allotment.  At the end of each quarter, MIT’s will be
reviewed by Employee and the Chairman and Chief Executive Officer of Zebra to
assess task completion and to compute the amount of bonus to be awarded for the
prior quarter.

 

 

EXHIBIT A

TO

EMPLOYMENT AGREEMENT

 

The following is a list describing all inventions,
original works of authorship, developments, improvements, and trade secrets of
Employee:

 

 

ý            No Inventions, improvements, etc., listed.

o            Addition Sheets Attached

 

	
   

  	
  /s/Hugh K. Gagnier

  	
   

  
	
   

  	
  Employee

  	
   

  

 

 

EXHIBIT B

TO

EMPLOYMENT AGREEMENT

 

California Labor Code Section 2870:

 

§2870.  Employment agreements; assignment of rights.

 

(a)                                  Any
provision in an employment agreement which provides that an employee shall
assign, or offer to assign, any of his or her rights in an invention to his or
her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer’s equipment,
supplies, facilities, or trade secret information except for those inventions
that either:

 

(1)                                  Relate
at the time of conception or reduction to practice of the invention to the
employer’s business, or actual or demonstrably anticipated research or
development of the employer, or

 

(2)                                  Result
from any work performed by the employee for the employer.

 

(b)                                 To
the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against the public policy of
this state and is unenforceable.

 

 

EXHIBIT C

TO

EMPLOYMENT AGREEMIENT

 

ZEBRA 1997 Stock Option Plan

 

 

EXHIBIT D

TO

EMPLOYMENT AGREEMENT

 

List of Jurisdictions

 

 

Los Angeles, Los Angeles
County, California

Simi Valley, Ventura County,
California

Greenville, Outagamie County,
Wisconsin

Camarillo, Ventura County,
California

 

 

Offices:

 

Coral Gables, Florida

Marietta, Georgia

Rochelle Park, New Jersey

Schaumburg, Illinois

Chesire, Connecticut

Malvern, Pennsylvania

Bloomington, MinnesotaExhibit 10.1

 

FIFTH AMENDMENT TO LEASE

 

THIS AGREEMENT, dated
for reference purpose only, February 18, 2004, is made by and between
Union Bank of California, N.A., as Successor in interest to Copper Mountain
Trust Corporation, Trustees, for Quest Group
Trust VI (“Landlord”), and
Pixelworks, Inc., an Oregon Corporation (“Tenant”).

 

RECITALS:

 

A.                                   The
parties hereto entered into a Lease dated May 1, 1998, and amended by Addendum
A dated May 1, 1998 and First Amendment to Lease dated August 11, 2000,
and Second Amendment to Lease dated January 24, 2001, Third Amendment to
Lease dated March 1, 2002, and Fourth Amendment dated June 23, 2004
(the “Lease”), for certain real property commonly known as Suite 207, 4,671
rentable square feet, Suite 111, 997 rentable square feet, Suite 110, 1,742
rentable square feet, Suite 107, 1,910 rentable square feet, Suite 105, 1,374
rentable square feet, and Suite 100, 3,029 rentable square feet, for a total of
13,696 rentable square feet, known as the “Premises”, located in Lakeside
Center, a Class A office building described as 8100 S.W. Nyberg Road, Tualatin,
Oregon 97062.

 

B.                                     The
parties desire to amend certain provisions thereof.

 

NOW, THEREFORE, the
parties hereto hereby agree as follows:

 

1.               Expansion Space.  Effective March 1, 2004 Tenant shall lease an additional
3,857 rentable square feet, known as Suites 201 (2,107 rsf) and 210 (1,380 rsf)
plus an additional 370 rentable square feet of corridor.  Lease term shall be co-terminus with
existing Premises.  Tenant’s total square
footage shall be 17,553 rsf.

 

2.               Lease Extension.  Effective October 1, 2004, Tenant and Landlord agree to
extend the lease term for an additional 52 months, through February 28,
2009.

 

3.               Base Rent Schedule:

 

Rent for the additional 3,857 rsf shall start
at $21.00 per square foot through 12/31/05 with three percent bumps beginning
January, 2006.

 

	
  03/01/04 – 03/31/04 *

  	
   

  	
  $28,484.00
  per month

  	
   

  	
  ($19.47/sf/yr)

  
	
  04/01/04 – 09/30/04

  	
   

  	
  $31,859.00
  per month

  	
   

  	
  ($21.78/sf/yr)

  
	
  10/01/04 – 12/31/05

  	
   

  	
  $31,664.00
  per month

  	
   

  	
  ($21.67/sf/yr)

  
	
  01/01/06 – 12/31/06

  	
   

  	
  $32,613.00
  per month

  	
   

  	
  ($22.32/sf/yr)

  
	
  01/01/07 – 12/31/07

  	
   

  	
  $33,591.00
  per month

  	
   

  	
  ($22.99/sf/yr)

  
	
  01/01/08 – 02/28/09

  	
   

  	
  $34.598.00
  per month

  	
   

  	
  ($23.68/sf/yr)

  

 

*Tenant
paying half month’s rent ($3,375) on 3,857 rsf for the month of March, 2004.

 

4.               Tenant Improvements.  Landlord will provide Tenant a tenant
improvement allowance of $123,894.00 to be applied toward the cost associated
with the attached (Exhibit A) tenant improvement plans for floors one, two and
four.  Tenant is solely responsible for
any tenant improvement cost beyond Landlord’s tenant improvement
allowance.  Landlord approves of
Tenant’s Tenant improvement plan (Exhibit A) with the following qualifications:

 

A.                                   Any
tenant improvement construction work must be performed by a contractor
signatory to the appropriate collective bargaining agreement. All tenant
improvements have been approved by all appropriate City and County inspectors.

B.                                     Tenant
shall provide Landlord a payment of $9,500.00 at the end of the Lease Term (or
upon vacation of Suite 100) to remove bathroom/showers in Suite 100. Tenant
agrees to remove bike racks(s) in Suite 100 at the end of Lease Term or upon
vacation of Suite 100.

C.                                     Tenant
agrees to remove all accordion doors and repair ceiling grid (if needed)
located in Suites 105/111 and in area known as Suite 200 at the end of the
Lease Term or upon vacation of the Premises.

 

 

 

Fifth Amendment to Lease

Pixelworks, Inc.

 

D.                                    Second
Floor corridor shall be restored upon the end of the Lease term or upon
Tenant’s vacation of the Premises. Fourth floor also requires one-hour fire
walls around elevators as provided for on the third floor.

E.                                      Tenant
will provide Landlord with updated floor plans in CAD format upon completion of
tenant improvements.

 

5.               Tenant’s base year
for operating expenses for the Premises shall be calendar year 2004. Prorata
share of operating expenses for the Premises shall be 31.65%.

 

6.               Landlord does not
pay a broker fee on the Premises lease extensions. Landlord will pay a 5% fee
to Integrated Corporate Property Services for the expansion space in Suites 201
and 210 and corridor (3,857 rsf).

 

7.               As amended by this
Fifth Amendment to Lease, the Lease shall remain in full force and effect,
including all items in the Fourth Amendment to Lease now signed.

 

IN WITNESS WHEREOF,
the parties hereto have executed this Lease Amendment.

 

 

	
   

  	
  LANDLORD:

  	
  TENANT:

  
	
   

  	
  Union Bank of California, N.A., as Trustee

  for Quest Group Trust VI

  	
  Pixelworks, Inc., an Oregon Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Tim West, Vice President

  	
   

  	
   

  	
  Hans Olsen, Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
										

 

2

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