XXXXXX ELECTRONICS, INC.
October 2006
Xxxxxxx X. Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Dear Xxxx:
This letter sets forth the agreement between you and Xxxxxx Electronics,
Inc. and its affiliates (collectively, the "Company") relating to your
termination as the Company's Chairman of the Board.
1. Termination. Effective as of the closing of the Transaction as defined
in the Company's definitive proxy materials (the "Proxy") dated September 21,
2006 and filed with the Securities and Exchange Commission, all of your offices,
directorships and memberships on managing bodies which you hold with the Company
and its affiliates have been terminated; provided, that you shall remain a
director of the Company pursuant to the terms and conditions set forth in the
Proxy.
2. Payments and Benefits. In consideration of your agreement to the terms
of this letter agreement, your termination from all offices and the release
incorporated herein, as well as your commitment to abide by these terms, the
Company, upon the full execution and delivery of this Agreement, will pay you
the sum of One Hundred Thousand ($100,000) Dollars plus such amounts equal to
sixty (60%) percent of the medical insurance premiums payable under COBRA, less
required deductions, for a period of twelve months. You agree that you shall be
responsible for the remaining forty (40%) percent of the medical insurance
premiums payable under COBRA for the twelve month period.
3. Cooperation. You acknowledge and agree that as a director of the
Company, you have continuing fiduciary and other obligations to the Company
which will continue irrespective of the execution of this letter agreement.
Following the execution of this letter agreement and any termination of your
directorship with the Company, you agree to provide assistance to and shall
cooperate with the Company upon its reasonable request with respect to matters
within the scope of your duties and responsibilities during your service to the
Company as Chairman. The Company agrees and acknowledges that it shall, to the
maximum extent possible under then prevailing circumstances, coordinate any such
request with your other commitments and responsibilities to minimize the degree
to which such request interferes with such commitments and responsibilities. The
Company agrees that it will reimburse you for reasonable travel expenses (i.e.,
travel, meals, and lodging) that you may incur in providing assistance to the
Company hereunder.
4. Nondisclosure and Nondisparagement. Following any termination of your
directorship, unless required by law, you will not, for yourself or any other
person or entity, directly or indirectly, divulge, communicate or in any way
make use of any confidential or proprietary information acquired in the
performance of your services for the Company or any of its affiliates
(including, without limitation, your service as Chairman), without the prior
written consent of the Chairman of the Board. You agree that, upon request from
the Company, all documents and property of the Company and its affiliates
including those containing confidential or proprietary information, will be
returned to the Company promptly. Except as otherwise required by law, or as
permitted in the immediately succeeding sentence, you agree to keep confidential
the existence and terms and content of this letter agreement as well as the
amount of the Company's payments and benefits provided to you hereunder. You
represent that you have not disclosed, and will not disclose such information
except for (i) private conversation with members of your family who are not
members of the media or stock analyst community, (ii) private conversations with
your personal accountant, and tax and legal adviser(s), and (iii) communications
to a prospective new employer about the existence of this letter agreement and
the covenants by which you are bound hereunder, and without the Chairman of the
Board's consent, you will not disclose the specific economic terms or amounts of
your payments and benefits hereunder, other than to the parties described in the
immediately preceding clauses (i) and (ii). You agree that you will not make any
statements, written or oral, which would be reasonably likely to disparage or
damage the Company, its affiliates or the personal or professional reputation of
any present or former employees, officers or members of the board or committees
of the Company or its affiliates. The Company agrees that it will instruct each
of its officers and members of its board of directors not to make any
statements, written or oral, which would be reasonably likely to disparage or
damage you or your personal or professional reputation and no director, officer
or employee of the Company will be authorized on the Company's behalf to make
any such disparaging communications regarding you.
Notwithstanding the foregoing, nothing contained in this Letter Agreement
will prohibit you, the Company or any other party from complying with legal
process to the extent required by applicable law, provided, however, that (1)
you must provide the Company, and (2) the Company shall provide you, with
written notice of any such process as soon as practicable upon your or the
Company's receipt of such process.
5. Nonsolicitation and Noncompetition. You agree that for a period of two
(2) years from the date hereof, you will not (a) solicit or recruit any employee
of the Company or any affiliate for the purpose of being employed by you or by
any entity other than the Company or a Company subsidiary, or employ or engage
or cause to be employed or engaged any such employee as an employee or
independent contractor of any person or entity other than the Company or a
Company subsidiary, and (b) you will not solicit or entice any current customer
of the Company to become a customer of yourself or any future employer or refer
any customer of the Company to any competitor of the Company within one-hundred
fifty (150) miles of New York City.
6. Release. You release and waive all claims and causes of action
(including, without limitation, any claims under the Age Discrimination in
Employment Act) which you have or may have against the Company, directors,
officers and employees, any party participating in any way in the Transaction,
and their respective affiliates (collectively, the "Released Parties") arising
out of your service as Chairman and the termination of such service in each case
on or prior to the date hereof, other than such claims or causes of action as
may arise under the terms of this letter agreement.
You acknowledge that you have been advised by the Company to, and have,
consulted with an attorney in connection with this Agreement. You acknowledge
that you fully understand the terms, conditions, significance and consequences
of this Agreement. You further acknowledge that you have had at least 21 days in
which to consider, execute, and return this Agreement. Notwithstanding your
right to consider this Agreement for 21 days, if you sign this Agreement before
the expiration of the 21-day period, you will have done so knowingly and
voluntarily, and will have expressly waived your right to consider this
Agreement for the balance of the 21-day period.
7. Other Agreements. Effective as of the date hereof, all prior agreements
relating to your engagement by the Company and your service as an employee,
director, consultant or other independent contractor to the Company and each of
its affiliates will terminate and be no further force or effect and you hereby
waive all rights, benefits, claims and causes of action under those agreements.
8. Governing Law and Jurisdiction. This letter agreement will be construed
and enforced in accordance with the laws of New York, without regard for the
conflicts of law principles thereof. The parties irrevocably agree that any
legal action or proceeding with respect to this letter agreement or for
recognition and enforcement of any judgment in respect hereof brought by a party
hereto or its successors or assigns may be brought and determined in any New
York state court or Federal court sitting in the State of New York, County of
Nassau or the Eastern District of New York, and each of the parties hereby (x)
irrevocably submits with regard to any such action or proceeding for itself and
in respect to its property, generally and unconditionally, to the exclusive
personal jurisdiction of the aforesaid courts in the event any dispute arises
out of this letter agreement, (y) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court and (z) agrees that it will not bring any action relating to this
letter agreement or any transaction contemplated hereby in any court other than
any New York state or Federal court sitting in the State of New York, County of
Nassau. Any service of process to be made in such action or proceeding may be
made by delivery of process in accordance with the notice provisions contained
in paragraph 9 hereof.
9. Notices. Except as otherwise explicitly provided in this letter
agreement, any notice provided hereunder will be deemed to be given when
delivered in writing by hand or sent by overnight courier. All notices to the
Company will be addressed to Xxxxxx X. Xxxxxxxxx, with a copy sent by the same
means to Ruskin Moscou Faltischek, P.C., 0000 Xxxxxxx Xxxxx, Xxxx Xxxxx, 00xx
Xxxxx, Xxxxxxxxx, Xxx Xxxx 00000, Attn: Xxxx X. Xxxxx, Esq., or such other
persons or addresses as the Company may provide from time to time by notice to
you. All notices to you will be addressed to you and sent to your home address,
as on file with the Company as of the date hereof, or such other address as you
may provide from time to time by notice to the Company, with a copy to such
persons or addresses as you may request from time to time by notice to the
Company.
10. Taxes. The Company makes no representations or warranties with respect
to the tax consequences of the payment of any sums to you under the terms of
this Agreement. You agree and understand that you are responsible for payment,
if any, of local, state and/or federal taxes on the sums paid hereunder by the
Company and any penalties or assessments thereon. You further agree to indemnify
and hold the Company harmless from any claims, demands, deficiencies, penalties,
assessments, executions, judgments, or recoveries by any government agency
against the Company for any amounts claimed due on account of your failure to
pay federal or state taxes or damages sustained by the Company by reason of any
such claims, including reasonable attorneys' fees.
11. No Representations. Each party hereto represents that it has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.
12. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.
13. Payment of Compensation. Except for those items specifically identified
herein, you acknowledge and represent that the Company has paid all salary,
wages, bonuses, accrued vacation, commissions and any and all other benefits due
to you up through and including the date hereof.
This letter agreement may be executed in counterparts, including via
facsimile.
XXXXXX ELECTRONICS, INC.
By:/s/D. Xxxxxx Xxxxxxxxx
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Name: X. Xxxxxx Xxxxxxxxx
Title: Chairman of the Board
Accepted and Agreed:
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
