Exhibit 10-Y
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT (the "Agreement") made as of the 1st day of
September, 2002, by and between Parlex Corporation, a Massachusetts
corporation (the "Company"), and Xxxxx X. Xxxxxx of Xxxxxxxx, New Hampshire
(the "Employee").
In consideration of the mutual promises herein contained, the Company
and the Employee hereby agree as follows:
1. Employment
----------
The Company hereby employs the Employee, and the Employee hereby
accepts employment by the Company to render such services in connection with
the business of the Company as the Company may from time to time request.
The term of the Employee's employment hereunder shall begin on September 1,
2002, and shall end on August 31, 2005.
2. Compensation
------------
2.1 In consideration of all services to be rendered by the Employee
during the term of this Agreement, the Company shall pay to the Employee
during the term of his employment hereunder compensation at the rate of
eleven thousand four hundred and sixty dollars ($11,460.00) twice a month,
payable in accordance with Company's current policy for senior management.
2.2 The amount of compensation provided in subsection 2.1 above may
be reviewed from time to time by the Compensation Committee of the Board of
Directors of the Company in its sole discretion.
2.3 If, during the term of the Agreement, a Change of Control (as
defined below) shall occur, then Employee shall have the option, beginning
six (6) months after the effective date of the Change of Control,
exercisable by him at any time during the remainder of the term of the
Agreement, upon giving written notice to the Company, to terminate this
Agreement. In the event the Employee elects to terminate the Agreement as
provided for herein, then Company shall pay to Employee, beginning 15 days
after receipt of written notice from Employee exercising his rights under
this provision, an amount, payable on a monthly basis, for a period of
twelve months from the date of termination, equal to one hundred percent
(100%) of the rate of compensation payable per month to Employee, at the
time of Employee's termination, pursuant to subsection 2.1
above, plus an amount equal to the monthly COBRA payment for the health
insurance plan the Employee participates in, at the time of Employee's
termination but shall not be required to pay to Employee the compensation
described in Section 7.3 below. Upon Employee's termination of this
Agreement, he shall also be entitled to exercise, to the extent they are
then exercisable, any stock options within a period of ninety (90) days
following such date of termination, but in no event later than the
expiration date of any stock option.
2.4 If, in the event of a Change of Control, the Company terminates
the Employee's employment hereunder, and said decision was made without
Cause, the Company shall pay to the Employee in a lump sum, an amount equal
to 24 months of the rate of compensation payable per month to Employee, at
the time of Employee's termination, pursuant to subsection 2.1 above plus an
amount equal to 24 months of the monthly COBRA payment for the health
insurance plan the Employee participates in, at the time of Employee's
termination. The Employee shall also receive, at the expense of the
Company, professional outplacement services, provided that the Company shall
only be required to bear up to Fifty Thousand Dollars ($50,000) for said
services. Additionally, all stock options granted to the Employee shall be
immediately and automatically accelerated and become fully vested and all
unexercised stock options shall be exercisable by the Employee during the
period ending ninety (90) days after the date of termination by the Company,
but in no event later than the expiration date of any stock option.
2.5 As used in this Agreement, the term "Change of Control" means
the happening of any of the following:
(i) the Company shall reorganize, merge or consolidate with any
corporation and the Company shall not be the "surviving
corporation" (as defined below); or
(ii) the Company shall sell or exchange all or substantially all of
its assets to a corporation which is not a wholly owned
subsidiary of the Company; or
(iii) any "person", as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 (the "Act") (other than
the Company or a subsidiary or any employee benefit plan
(including its trustee) of either the Company or a subsidiary)
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Act), directly or indirectly of securities of the Company
representing 30 percent or more of the combined voting power of
the Company's then outstanding securities and the effect of
which (as determined by the Board of Directors) is to take over
control or participate in the affairs of the Company. For
purposes of this Section, the term
2
"person" shall exclude all persons who are then officers or
directors of the Company, or spouses, or spouses, blood
relatives or stepchildren of such officers or directors, and
trusts for the benefit of any such persons, and the estates of
any such persons; or
(iv) during any period of two consecutive years, the individuals who,
at the beginning of such period, constituted the Board of
Directors of the Company cease, for any reason, to constitute at
least a majority thereof, unless the election or nomination for
election of each new director was approved by the vote of a
least a majority of the directors then still in office who were
directors at the beginning of the period.
As used herein, the Company shall be deemed to be the "surviving
corporation" following a reorganization, merger or consolidation if,
following such transaction, the persons who were the beneficial owners of
the Company's voting securities prior to the transaction beneficially own
securities having a majority of the aggregate voting power represented by
all outstanding securities of the Company or other entity resulting from
such reorganization, merger or consolidation.
3. Death Benefit
-------------
If the Employee dies during the term of employment hereunder, this
Agreement shall terminate and all obligations of Company to Employee shall
terminate except that Company agrees to pay to the Designated Beneficiary
(as hereinafter defined) on a monthly basis for a period of twenty-four (24)
months beginning with the first month after Employee's death, an amount
equal to seventy-five percent (75%) of the rate of compensation payable per
month to Employee, at the time of Employee's death, pursuant to subsection
2.1 above.
For purposes of this Agreement, the term "Designated Beneficiary"
shall be the person or persons designated in a writing filed by the Employee
with the Company or, upon the death of the Employee without having made such
a designation, the Employee's estate.
4. Fringe Benefits
---------------
In addition to the compensation provided for in section 2 above, while
this Agreement is in effect Employee shall be entitled to receive all fringe
benefits and perquisites customarily extended to officers and key employees
of the Company, including but not limited to, profit sharing, bonus, stock
option, health and life insurance.
5. Further Covenants
-----------------
3
5.1 The Employee agrees that all knowledge and information of a
secret or confidential nature with respect to the business of the Company
possessed or acquired by him will be held in confidence and will not, either
during or after his employment by the Company, be disclosed, published, or
made use of except when in the ordinary course of business the disclosure is
in the best interest of the Company or unless and until such knowledge and
information shall have ceased to be secret or confidential as evidenced by
general public knowledge.
5.2 The Employee agrees that all inventions, developments, patents,
and patent applications relating to the business of the Company made,
conceived, or obtained by him either alone or in conjunction with others
during the term of his employment by the Company shall be the sole property
of the Company. The Employee agrees to promptly disclose and assign to the
Company all such inventions, developments, patents, and patent applications,
and, at the request of the Company to promptly execute and deliver any
documents and take any other action which the Company deems necessary or
advisable in order to vest in it all rights to such inventions,
developments, patents, and patent applications.
5.3 The Employee agrees that at the termination of his employment by
the Company he will promptly deliver to the Company all technical data,
drawings, memoranda, customer lists, and other documents in his possession
or control which relate to the business of the Company.
5.4 The Employee agrees that so long as he is employed by the
Company hereunder, and for a period of twelve (12) months after he ceases
for any reason to be employed by the Company, he will not, directly or
indirectly, own, operate, manage or participate in the ownership, operation,
or management of, or be connected or employed in any way (whether as owner,
employee, officer, director, partner, shareholder, consultant, joint
venturer, investor, lender or in any other capacity) with, or engage, enter
into or participate in any business in competition with the business of the
Company, including, but not limited to, the business of the design,
manufacture, and sale of flexible circuits, laminated cable and related
products, operating units of flexible circuit competitors, laminated cable
competitors, material or service suppliers to competitors or customer owned
printed circuit facilities, anywhere in the United States; provided,
however, the Employee shall not be deemed to be in violation of this
subsection 5.4 solely by reason of his ownership of not more than two
percent (2%) of the equity of any corporation whose stock is regularly
traded on a national securities exchange or in the over-the-counter market.
5.5 The Employee agrees that so long as he is employed by the
Company hereunder, and for a period of twelve (12) months after he ceases
for
4
any reason to be employed by the Company, he will not, directly or
indirectly, through one or more persons, offer employment to any employee of
the Company, assist in the hiring of any employee of the Company by any
other person, or encourage any employee of the Company to terminate his or
her employment with the Company.
5.6 The Employee agrees that so long as he is employed by the
Company hereunder, and for a period of twelve (12) months after he ceases
for any reason to be employed by Company, Employee shall not, directly or
indirectly, solicit, divert or take away, or attempt to divert or take away,
the business of any client, account or customer, or prospective client,
customer or account of Company or with whom Employee has had any contact as
a result of his employment by Company hereunder nor shall he divulge,
disclose or communicate the list of customers (present or potential) of the
Company's business to any person, firm, corporation, association or other
entity.
5.7 In consideration of and as an inducement to both parties to
enter into this Agreement, Employee and Company represent and agree that the
provisions of this covenant not to compete are proper and customary for
Employee's level of responsibility and there is mutual advantage to both
parties for execution of this Agreement. The Employee represents and agrees
that he has received fair and reasonable compensation for his employment and
further represents and warrants that although a disadvantage, his education,
training and experience are such that the provisions of this Covenant will
not prevent him from earning a living. The Company acknowledges that the
employment restriction could significantly damage the Employee's ability to
quickly retain suitable employment but will not prevent him from earning a
living. Employee agrees and acknowledges that Company will suffer
irreparable injury and damage and cannot be reasonably or adequately
compensated in monetary damages for the loss by the Company of its benefits
or rights under this Agreement as a result of a breach, default or violation
by the Employee of his obligations hereunder. Accordingly, the Company
shall be entitled, in addition to all other remedies which may be available
to it (including monetary damage), to injunctive and other available
equitable relief in any court of competent jurisdiction to prevent or
otherwise restrain or terminate any actual or threatened breach, default or
violation by the Employee of any provision hereunder or to enforce any such
provision. Any legal action or other proceeding for any purpose with
respect to this Section 5 shall be brought exclusively in any court of
competent jurisdiction sitting in the Commonwealth of Massachusetts, and the
parties hereto agree to submit to the jurisdiction of such court and to
comply with all requirements necessary to give such court exclusive
jurisdiction thereof. The losing party to any such proceeding shall pay all
costs (including reasonable attorney's fees) of all parties with respect to
the proceeding.
5
It is acknowledged further by Employee that the provisions of Section
5 are restrictive and intended to prevent Employee from competing with
Company, soliciting its customers or influencing Company's employees in any
way to discontinue their employment relationship with Company.
If at any time the provisions relating to the agreement of the
Employee not to compete with the Company or raid or entice away its
employees shall be deemed invalid or unenforceable by the laws of the
jurisdiction wherein it is to be enforced, by reason of being vague or
unreasonable as to duration or geographic scope or scope of activities
restricted, or for any other reason, the remaining provisions thereof shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable parts had not been included therein and the covenant shall be
considered divisible as to such invalid or unenforceable portion, and it
shall be construed to include only such restrictions and to such extent as
shall be deemed to be reasonable and enforceable by the court or other body
of such jurisdiction charged with interpreting and/or enforcing this
Agreement, and the Company, and Employee agree that the restrictions of such
covenant as so construed shall be valid and binding as though the invalid or
unenforceable portion had not been included herein.
5.8 For purposes of this Agreement, the words "so long as he is
employed by the Company hereunder" as used herein shall refer to the time
period when the Company shall have terminated Employee's employment without
cause pursuant to Section 6.3 below and Employee continues to be paid
compensation in accordance with the provisions of Section 2 above.
6. Employment Termination
----------------------
Section 1 of this Agreement notwithstanding, the employment of the
Employee by the Company pursuant to this Agreement shall terminate upon the
occurrence of any of the following:
6.1 At the election of the Company, for cause, immediately upon
written notice by the Company to the Employee. For the purposes of this
Agreement the term "Cause" shall mean that the Employee shall have breached
or failed to perform his obligations and job responsibilities in accordance
with the terms and conditions of this Agreement or his job description,
shall demonstrate negligence, inefficiency, gross misconduct, dishonesty, or
insubordination in the execution of his duties as an employee of the
Company, or upon conviction of a felony or any crime involving moral
turpitude;
6.2 Upon the death or total disability of the Employee. As used in
this Agreement, the term "total disability" shall mean the inability of the
Employee, due to a physical or mental disability, for a period of 90
consecutive days during any 360-day period, to perform the services
contemplated under this Agreement.
6
A determination of total disability shall be made by a physician
satisfactory to both the Employee and the Company, provided that if the
Employee and the Company do not agree on a physician, the Employee and the
Company shall each select a physician and these two together shall select a
third physician, whose determination as to disability shall be binding on
all parties. Notwithstanding the foregoing, the Company may, in its sole
discretion, enlarge the time period definition provided herein; or
6.3 Upon notice of termination given at the election of the Company
by action of its board of directors without Cause provided that the Employee
shall be entitled to receive the compensation described in Section 7.3
below.
7. Effect of Termination
---------------------
7.1 In the event the Employee's employment is terminated for Cause
pursuant to Section 6.1, the Company shall pay to the Employee the
compensation and benefits otherwise payable to him under Section 2 through
the last day of his actual employment by the Company.
7.2 If the Employee's employment is terminated because of disability
pursuant to Section 6.2 above, the Company shall pay to the Employee both
the compensation which would otherwise be payable to the Employee up to the
end of the month in which the termination of his employment because of
disability occurs and an amount, payable on a monthly basis, for a period of
six (6) months beginning with the first month after termination of his
employment because of disability occurs, equal to one hundred percent (100%)
of the rate of compensation payable per month to Employee, at the time of
Employee's termination, pursuant to subsection 2.1 above. Notwithstanding
the foregoing, Company's obligation to pay compensation to Employee for six
months after termination of his employment shall be reduced dollar for
dollar by the amount of any long term disability payments received by or
payable to Employee for this same time period.
7.3 If the Employee's employment is terminated without Cause
pursuant to Section 6.3, the Company shall pay to Employee both (i) the
compensation and benefits otherwise payable to him under Section 2 through
the last day of his actual employment by the Company and (ii) an amount,
payable on a monthly basis, through August 31, 2005 equal to one hundred
percent (100%) of the rate of compensation payable per month to Employee, at
the time of Employee's termination, pursuant to subsection 2.1 above.
Additionally, Company shall pay to Employee a monthly sum equivalent to
fifty percent (50%) of the rate of compensation payable per month to
Employee, at the time of Employee's termination, pursuant to subsection 2.1
above ("Termination Pay"), for each month or pro rata portion of each month,
from September 1, 2005 to the earlier to occur of the following dates: (a)
August 31,
7
2006; (b) Employee becomes reemployed in any capacity with either Company or
any third party; or (c) Company determining, in its sole discretion, that it
will waive compliance by the Employee with the provisions of section 5.4
herein. Notwithstanding the foregoing, Company shall not be obligated to
pay Employee in total for a period of more than one year from the date of
Employee's termination without Cause pursuant to Section 6.3.
7.4 In the event the Company decides after expiration of this
Agreement not to renew Employee's employment with the Company and said
decision was made without Cause, the Company shall pay to Employee a monthly
sum equivalent to fifty percent (50%) of the rate of compensation payable
per month to Employee, at the time of expiration of this Agreement, pursuant
to subsection 2.1 above ("Termination Pay"), for each month or pro rata
portion of each month, from September 1, 2005 to the earlier to occur of the
following dates: (a) August 31, 2006; (b) Employee's reemployment; or (c)
Company determining, in its sole discretion, that it will waive compliance
by the Employee with the provisions of section 5.4 herein.
8. Attachment; assignability
-------------------------
The right of the Employee or his Designated Beneficiary to any payment
hereunder shall not be subject in any manner to attachment or other legal
process for the debts of the Employee or such Designated Beneficiary, and
the right to any such payment shall not be subject to anticipation,
alienation, sale, transfer, assignment, or encumbrance.
9. Severability
------------
The provisions of this Agreement shall be severable, and the
invalidity of any portion of this Agreement shall not affect the validity of
any other portion hereof.
10. Successors
----------
This Agreement shall be binding upon and shall inure to the benefit of
the Company, its successors and assigns, and the Employee, his executors,
administrators, and personal representatives. The parties further agree
that this Agreement contains the entire understanding of the parties and is
the complete and exclusive statement of the Agreement between them, and that
they understand and agree to be bound by its terms and conditions.
8
11. Governing Law
-------------
This Agreement shall be construed and interpreted in accordance with
the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in its behalf by an officer thereof thereunto duly authorized and
has caused its seal to be hereunto affixed and duly attested, and the
Employee has hereunto set his hand and seal, as of the day and year first
above written.
ATTEST: PARLEX CORPORATION:
_____________ By: _______________________________
Xxxxxxx X. Xxxxxxx,
Chairman of the Board
EMPLOYEE:
_____________ ___________________________________
Xxxxx X. Xxxxxx
9
