EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE AGREEMENT (this "Agreement") is made as of September 5,
2005, by and between Aavid Thermalloy, LLC a Delaware limited liability company
(the "Company), and Xxxxxxx X. Xxxxxxxx ("Executive"). Certain definitions are
set forth in Section 9 of this Agreement.
Executive desires to be employed by the Company and the Company desires
to employ Executive and to be assured of its right to have the benefit of
Executive's services on the terms and subject to the conditions set forth in
this Agreement. The Company and Executive desire to enter into this Agreement
(i) setting forth the terms and conditions of Executive's employment with the
Company; and (ii) setting forth the obligation of Executive to refrain from
competing with the Company and its Affiliates (as defined below) under certain
circumstances as provided herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive by this
Agreement accepts employment with the Company, upon the terms and conditions set
forth in this Agreement for the period beginning on the date hereof and ending
as provided in Section 4 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, Executive shall serve as the Chief
Operating Officer of the Company.
(b) Executive shall report to the Chief Executive Officer of the Company,
and Executive shall devote Executive's best efforts and Executive's full
business time and attention except for permitted vacation periods, periods of
illness or other incapacity, reasonable time spent with respect to civic and
charitable activities (provided that none of such activities shall interfere
with Executive's duties to the Company), and other permitted absences for which
senior executive employees of the Company are generally eligible from time to
time under the Company's policies) to the business and affairs of the Company
and the Company's Affiliates. Executive shall perform Executive's duties and
responsibilities to the best of Executive's abilities in a diligent,
trustworthy, businesslike and efficient manner.
3. Base Salary; Benefits and Bonuses.
(a) During the Employment Period, Executive's base salary shall be
$237,000 per annum, or such higher rate as the Board of the Company may
designate from time to time (the "Base Salary"), which salary shall be payable
in regular installments in accordance with the Company's general payroll
practices and shall be subject to customary withholding.
(b) In addition to the Base Salary, during the Employment Period,
Executive shall be eligible to receive an annual bonus (the "Bonus") determined
by the following formula: "% times % times T", where "%" is the percentage of
the Company's target EBITDA actually achieved by the Company during a particular
fiscal year and "T" is 30% of Executive's Base Salary during such fiscal year.
This formula is subject to modification by the Board on an annual basis. For
purposes of this Agreement, the Company's target EBITDA shall be determined
prior to the beginning of each fiscal year by the Company's Board of Directors
in
good faith, providing Executive with a reasonable opportunity to earn the Bonus.
Any such Bonus, if determined by the Company to be payable, shall be payable
within 90 days following the end of each fiscal year (provided that the first
fiscal year for which the Bonus will be paid will be the year beginning January
1, 2005 based on the actual Base Salary paid to Executive in the year 2005)
during the Employment Period. Notwithstanding the forgoing, no Bonus shall be
due or payable unless the EBTIDA actually achieved by the Company during a
particular fiscal year is at least 90% of the target EBITDA for such year.
(c) During the Employment Period, Executive shall be entitled to
participate in all of the Company's employee benefit plans and programs for
which senior executive employees of the Company are generally eligible (without
duplication), which shall include, but shall not be limited to, health
insurance, dental insurance, life insurance, disability insurance and
participation in the Company's 401(k) plan. Executive's right to participate in
any employee benefit plans or programs of the Company shall be subject to the
right of the Company to amend, modify or terminate any such plan or program in
accordance with its terms and applicable law and subject in each case to any
applicable waiting periods or other restrictions contained in such benefit plans
or programs. During the Employment Period, Executive shall be eligible for three
weeks per year of paid vacation in accordance with the policies of the Company.
The maximum amount of vacation time that Executive shall be permitted to carry
over from one year to the next shall be equal to two weeks.
(d) The Company shall reimburse Executive for all reasonable business
expenses incurred by Executive in the course of performing Executive's duties
under this Agreement which are consistent with the Company's policies in effect
from time to time with respect to travel, entertainment and other business
expenses, subject to the Company's requirements with respect to reporting and
documentation of such expenses.
(e) Executive shall relocate to New Hampshire within a reasonable time
after his son completes his senior year of high school. The Company shall pay
the reasonable expenses of Executive's relocation of his residence from
Wisconsin to the Concord, New Hampshire vicinity in accordance with the then
relocation policies of the Company. During this interim period prior to the
relocation to New Hampshire of Executive's family, Executive shall work in the
Concord, New Hampshire headquarters of the Company, except that at a time
mutually agreed upon by the Company and the Executive, Executive shall be able
to work from his residence in Wisconsin for a week at a time every four to six
weeks. Executive must have high speed Internet access at his Wisconsin residence
in order to work there.
4. Term; Termination; Severance.
(a) The Employment Period shall be for a period from the date hereof
through July 1, 2007; provided that (i) the Employment Period shall terminate
prior to such date upon Executive's death or Incapacity; (ii) the Employment
Period may be terminated by the Company at any time prior to such date with
Cause or without Cause; and (iii) the Employment Period may be terminated by
Executive at any time for any reason (a "Voluntary Termination"). Any
termination of the Executive's employment with the Company shall be a
"Termination." The date of any termination of Executive's employment with the
Company shall be the "Termination Date."
(b) Upon any Termination, Executive shall be entitled to receive
Executive's Base Salary earned through Executive's Termination Date, prorated on
a daily basis together with all accrued but unpaid vacation time earned by
Executive during the fiscal year in which such
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Termination occurs. Except as set forth in Section 4(d), Executive shall not be
entitled to receive Executive's Base Salary or any bonuses or other benefits
from the Company for any period after the Termination Date.
(c) In the event Executive's employment is terminated by the Company with
Cause, upon a Voluntary Termination other than for Good Reason or upon
Executive's death or Incapacity, the Company shall have no obligation to make
any severance or other similar payment to or on behalf of Executive.
(d) In the event that Executive's employment is terminated by the Company
without Cause, following such Termination and upon execution by Executive of a
general release on employment matters in favor of the Company and its
Affiliates, in form satisfactory to the Company, releasing any and all claims,
including claims for payments (other than those payments due under this Section
4), due to Executive arising under or pursuant to this Agreement against the
Company and its Affiliates as of the Termination Date, the Company shall pay
Executive his annual Base Salary (as in effect on the Termination Date) and
provide benefits equivalent to those provided at the Termination Date for nine
(9) months from the Termination Date. Each severance payment under this
Agreement shall be payable in accordance with the Company's normal payroll
procedures and cycles and shall be subject to withholding of applicable taxes
and governmental charges in accordance with federal and state law. After payment
of the severance amounts described in this Section 4(d), the Company shall have
no obligation to make any further severance or other payment to or on behalf of
Executive except as otherwise expressly contemplated by this Agreement.
Notwithstanding the foregoing, in the event that Executive shall breach any of
Executive's obligations under Sections 5, 6 or 7 of this Agreement, then, in
addition to any other rights that the Company may have under this Agreement or
otherwise, the Company shall be relieved from and shall have no further
obligation to pay Executive any amounts to which Executive would otherwise be
entitled pursuant to this Section 4.
5. Confidential Information. Executive acknowledges that by reason of
Executive's duties to and association with the Company and its Affiliates,
Executive has had and will have access to and has and will become informed of
Confidential Information (as defined in Section 9 below) which is a competitive
asset of the Company and/or its Affiliates. Executive agrees to keep in strict
confidence and not, directly or indirectly, make known, disclose, furnish, make
available or use, any Confidential Information, except for use in Executive's
regular authorized duties on behalf of the Company and its Affiliates (including
their predecessors). Executive acknowledges that all documents and other
property including or reflecting Confidential Information furnished to Executive
by the Company or any of its Affiliates or otherwise acquired or developed by
the Company or any of its Affiliates or Executive or known by Executive shall at
all times be the property of the Company and its Affiliates. Executive shall
take all necessary and appropriate steps to safeguard Confidential Information
and protect it against disclosure, misappropriation, misuse, loss and theft.
Executive shall deliver to the Company at the termination of the Employment
Period, or at any other time the Company may request, all memoranda, notes,
plans, records, reports, computer tapes, printouts and software and other
documents and data (and copies thereof) relating to the Confidential
Information, Work Product (as defined in Section 9 below) or the business of the
Company or any of its Affiliates which Executive may then possess or have under
Executive's control.
6. Inventions and Patents.
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(a) Executive acknowledges that all Work Product (as defined in Section 9
below) is the exclusive property of the Company. Executive by this Agreement
assigns all right, title and interest in and to all Work Product to the Company.
Any copyrightable works that fall within the Work Product will be deemed "works
made for hire" under Section 201(b) of the 1976 Copyright Act, and the Company
shall own all of the rights comprised in the copyright therein; provided,
however, that to the extent such works may not, by operation of law, constitute
"works made for hire," Executive by this Agreement assigns to the Company all
right, title and interest therein.
(b) Executive shall promptly and fully disclose all Work Product to the
Company and shall cooperate and perform all actions reasonably requested by the
Company (whether during or after the Employment Period) to establish, confirm
and protect the Company's right, title and interest in such Work Product.
Without limiting the generality of the foregoing, Executive agrees to assist the
Company, at the Company's expense, to secure the Company's rights in the Work
Product in any and all countries, including the execution by Executive or
Executive's Affiliates of all applications and all other instruments and
documents which the Company shall deem necessary in order to apply for and
obtain rights in such Work Product and in order to assign and convey to the
Company the sole and exclusive right, title and interest in and to such Work
Product. If the Company is unable because of Executive's mental or physical
incapacity or for any other reason (including Executive's refusal to do so after
request therefor is made by the Company) to secure Executive's signature to
apply for or to pursue any application for any United States or foreign patents
or copyright registrations covering Work Product belonging to or assigned to the
Company pursuant to paragraph 6(a) above, then Executive by this Agreement
irrevocably designates and appoints the Company and its duly authorized officers
and agents as Executive's agent and attorney-in-fact to act for and in
Executive'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
patents or copyright registrations thereon with the same legal force and effect
as if executed by Executive. Executive agrees not to apply for or pursue any
application for any United States or foreign patents or copyright registrations
covering any Work Product other than pursuant to this paragraph in circumstances
where such patents or copyright registrations are or have been or are required
to be assigned to the Company.
7. Non-Compete, Non-Solicitation.
(a) In further consideration of the compensation to be paid to Executive
under this Agreement and the so-called 3% Incentive Bonus Agreement to be
provided at a later date, Executive acknowledges that in the course of
Executive's employment with the Company, he has prior to the date of this
Agreement, and will during the Employment Period, become familiar with the
Company's trade secrets, business plans and business strategies and with other
Confidential Information concerning the Company and its Affiliates and that
Executive's services have been and shall be of special, unique and extraordinary
value to the Company and its Affiliates. Therefore, Executive agrees that,
during the Employment Period and for two (2) years thereafter (such period, the
"Noncompete Period"), Executive shall not directly or indirectly own any
interest in, manage, control, participate in (whether as an officer, director,
employee, partner, agent, representative or otherwise), consult with, render
services for, or in any other manner engage in any business which is, directly
or indirectly, competitive with any business that the Company and its
subsidiaries engage in or are planning to engage in during the Employment
Period, including but not limited to the business of providing thermal
management products and solutions for electronic products, anywhere in the
World. Nothing herein shall prohibit Executive from being a passive owner of not
more than 2% of the
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outstanding securities of any class of a corporation which is publicly traded,
so long as Executive has no active participation in the business of any such
corporation.
(b) During the Employment Period and for two (2) years thereafter,
Executive shall not directly or indirectly through another Person (i) induce or
attempt to induce any employee of the Company or any Affiliate to leave the
employ of the Company or such Affiliate, or in any way interfere with the
relationship between the Company or any Affiliate and any employee thereof, (ii)
hire any person who was an employee of the Company or any Affiliate at any time
during the two year period prior to the termination of the Employment Period,
(iii) call on, solicit or service any customer, supplier, licensee, licensor,
franchisee or other business relation of the Company or any Affiliate in order
to induce or attempt to induce such Person to cease or reduce doing business
with the Company or such Affiliate, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any Affiliate (including, without limitation, making any
negative statements or communications about the Company or its Affiliates) or
(iv) directly or indirectly acquire or attempt to acquire any business in the
World to which the Company or any of its Affiliates, prior to the Termination
Date, has made an acquisition proposal relating to the possible acquisition of
such business by the Company or any of its Affiliates, or has planned, discussed
or contemplated making such an acquisition proposal (such business, an
"Acquisition Target"), or take any action to induce or attempt to induce any
Acquisition Target to consummate any acquisition, investment or other similar
transaction with any Person other than the Company or any of its Affiliates.
8. Enforcement. If, at the time of enforcement of Sections 5, 6 or 7 of
this Agreement, a court shall hold that the duration, scope, or area
restrictions stated herein are unreasonable under circumstances then existing,
the parties hereto agree that the maximum period, scope or geographical area
reasonable under such circumstances shall be substituted for the stated period,
scope or area and that the court shall be allowed and directed to revise the
restrictions contained herein to cover the maximum period, scope and area
permitted by law. Because Executive's services are unique and because Executive
has access to Confidential Information and Work Product, the parties hereto
agree that money damages would not be an adequate remedy for any breach of this
Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions hereof (without posting
a bond or other security). In addition, in the event of an alleged breach or
violation by Executive of Section 7, the Period set forth in such Section shall
be tolled until such breach or violation has been duly cured. Executive agrees
that the restrictions contained in Section 7 are reasonable and that Executive
has received consideration in exchange therefor.
9. Definitions.
"Affiliate" of a Person means any other person, entity or investment
fund controlling, controlled by or under common control with the Person and, in
the case of a Person which is a partnership, any partner of the Person.
"Board" means the board of directors of the specified Person.
"Cause" means (i) the commission of a felony or a crime involving moral
turpitude, (ii) the commission of any other act or omission involving dishonesty
or fraud with
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respect to the Company or any of its Affiliates or any of their respective
customers or suppliers, (iii) conduct which brings the Company or any of their
Affiliates into public disgrace or disrepute in any material respect, (iv)
substantial and repeated failure to perform (other than due to Incapacity)
duties of the office held by Executive as reasonably directed by any Executive's
supervisors or the Board of Directors of the Company which is not cured within
30 days after notice thereof to Executive, (iv) gross negligence or willful
misconduct with respect to the Company or any of its Affiliates, or (v) any
other material breach of this Agreement or any policy of the Company or its
Affiliates established by their Boards of Directors, which breach, if curable,
is not cured within 30 days after written notice thereof to Executive. A motor
vehicle felony will not constitute Cause unless it involves drunk driving.
"Confidential Information" means all information of a confidential or
proprietary nature (whether or not specifically labeled or identified as
"confidential"), in any form or medium, that is or was disclosed to, or
developed or learned by, Executive in connection with Executive's relationship
with the Company or any of its Affiliates prior to the date hereof or during the
Employment Period and that relates to the business, products, services,
financing, research or development of the Company or any of its Affiliates or
their respective suppliers, distributors or customers. Confidential Information
includes, but is not limited to, the following: (i) internal business
information (including information relating to strategic and staffing plans and
practices, business, training, marketing, promotional and sales plans and
practices, cost, rate and pricing structures, accounting and business methods);
(ii) identities of, individual requirements of, specific contractual
arrangements with, and information about, any of the Company' or any of its
Affiliates' suppliers, distributors and customers and their confidential
information; (iii) trade secrets, know-how, compilations of data and analyses,
techniques, systems, formulae, research, records, reports, manuals,
documentation, models, data and data bases relating thereto; (iv) inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable); and
(v) Acquisition Targets and potential acquisition candidates. Confidential
Information shall not include information that Executive can demonstrate: (a) is
or becomes publicly known through no wrongful act or breach of obligation of
confidentiality; (b) was rightfully received by Executive from a third party
without a breach of any obligation of confidentiality by such third party; (c)
was known to Executive prior to his employment with the Company and its
Affiliates and prior to his employment with the Company or any of its
Affiliates; or (d) is required to be disclosed pursuant to any applicable law or
court order; provided, however, that Executive provides the Company with prior
written notice of the requirement for disclosure that details the Confidential
Information to be disclosed and cooperates with the Company to preserve the
confidentiality of such information to the extent possible.
"EBITDA" means, with respect to any fiscal year, the Company's EBITDA,
as defined in and determined pursuant to the provisions of the indenture entered
into by the Company on February 2, 2000 in connection with the Company's 12 3/4%
senior subordinated securities due 2007, as such indenture may be amended from
time to time, or upon termination of such subordinated securities, as defined by
the Company's Board of Directors.
"Good Reason" means the occurrence, without Executive's consent, of any
of the following: (i) unless corrected within 15 days of written notice by
Executive to the Company's Board of Directors of Executive's objection thereto,
the assignment to the Executive of any significant duties materially
inconsistent with the Executive's status as an officer of the Company or a
substantial diminution in the nature of the Executive's responsibilities or
Executive's status; or (ii) a reduction in the Executive's annual base salary as
in effect on the
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date of this Agreement, except for across-the-board salary reductions similarly
affecting all executives.
"Incapacity" means the disability of Executive caused by any physical
or mental injury, illness or incapacity as a result of which Executive is unable
to effectively perform the essential functions of Executive's duties as
determined by the Board of the Company in good faith, for a period of 90
consecutive days or a period of 120 days during any 180-day period; provided
that any determination of Incapacity shall be made in compliance with the
provisions of the Family Medical Leave Act.
"Person" means an individual or a corporation, partnership, limited
liability company, trust, unincorporated organization, association or other
entity.
"Work Product" means all inventions, innovations, improvements,
developments, methods, processes, designs, analyses, drawings, reports and all
similar or related information (whether or not patentable or reduced to practice
or comprising Confidential Information) and any copyrightable work, trade xxxx,
trade secret or other intellectual property rights (whether or not comprising
Confidential Information) and any other form of Confidential Information, any of
which relate to the Company's or any of its Affiliates' actual or anticipated
business, research and development or existing or future products or services
and which were or are conceived, reduced to practice, contributed to, developed,
made or acquired by Executive (whether alone or jointly with others) while
employed (both before and after the date hereof) by the Company (or its
predecessors, successors or assigns), and its Affiliates.
10. Notices. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipients at the address indicated below:
If to Executive: Xxxxxxx X. Xxxxxxxx
0000 X. Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
If to the Company: Aavid Thermal Technologies, Inc.
Xxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxx Xxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx
Xxxx X. Xxxxxxxx
with a copy to: Xxxxxx, Xxxxx & Partners II, L.P.
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxxx
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
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11. General Provisions.
(a) Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(b) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way
(including, without limitation, any employment agreement or similar agreement
between the Company or its Affiliates and Executive, which is by this Agreement
terminated).
(c) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(d) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company and its successors and assigns; provided that the rights
and obligations of Executive under this Agreement shall not be assignable.
(E) GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY
AND INTERPRETATION OF THIS AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW, AND
NOT THE LAW OF CONFLICTS, OF THE STATE OF NEW HAMPSHIRE.
(f) Arbitration. Except for actions for injunctive relief and actions
to enforce the decision of an arbitrator, each of the parties hereto agrees that
in the event of any dispute arising between or among the parties arising out of
or relating to this Agreement or its breach, such dispute shall be settled by
arbitration to be conducted in Concord, New Hampshire in accordance with the
employment arbitration rules (except as modified below) of the American
Arbitration Association and with the Expedited Procedures thereof (collectively,
the "Rules"). Each of the parties hereto agrees that such arbitration shall be
conducted by a single arbitrator selected in accordance with the Rules; provided
that such arbitrator shall be experienced in deciding cases concerning the
matter which is the subject of the dispute. Each of the parties agrees that in
any such arbitration that pre-arbitration discovery shall be limited to the
greatest extent provided by the Rules, that the award shall be made in writing
no more than 30 days following the end of the proceeding, that the arbitration
shall not be conducted as a class action, that the arbitration award shall not
include factual findings or conclusions of law, and that no punitive damages
shall be awarded. Any award rendered by the arbitrator shall be final and
binding and judgment may be entered on it in any court of competent
jurisdiction. Each of the parties hereto agrees to treat as confidential the
results of any arbitration (including, without limitation, any findings of fact
and/or law made by the arbitrator) and not to disclose such results to any
unauthorized person.
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(g) Remedies. Each of the parties to this Agreement shall be entitled
to enforce its rights under this Agreement specifically. The parties hereto
agree and acknowledge that money damages would not be an adequate remedy for any
breach of the provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance and/or other
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
(h) Survival. The provisions set forth in Sections 4 through 11 shall
survive and continue in full force and effect in accordance with their terms
notwithstanding any termination of the Employment Period.
(i) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and
Executive.
* * * *
IN WITNESS WHEREOF, the parties hereto have executed this Executive
Agreement on the date first written above.
AAVID THERMALLOY, LLC
/s/ Xxxx X. Xxxxxxxx
----------------------------------------
BY: Xxxx X. Xxxxxxxx
ITS: Vice President
EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxx
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