POWER TEN
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of this
29th day of May, 1998 by and between Power Ten, a California corporation (the
"Company"), and Xxxxxxx X. Xxxxxxxx ("Executive").
RECITALS
WHEREAS, Executive is the Vice President--Marketing of Power Ten, a company
engaged in the business of manufacturing power supplies;
WHEREAS, the shareholders of the Company have entered into a Stock Purchase
Agreement (the "Acquisition Agreement"), dated as of May 5, 1998, providing for
the purchase by Elgar Electronics Corporation, a California corporation
("Elgar"), of all the issued and outstanding shares of common stock of the
Company on the Closing Date (as defined in the Acquisition Agreement);
WHEREAS, the Company desires to continue to avail itself of the benefit of
Executive's services, and the Company is willing to compensate Executive
adequately therefor; and
WHEREAS, Executive desires to continue in the employ of the Company on the
terms hereinafter specified.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the covenants and
conditions contained in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. EMPLOYMENT.
(a) The Company agrees to employ Executive as the Vice
President--Marketing of the Company, and Executive agrees to act in such
capacity, all in accordance with the terms and conditions contained in this
Agreement. Executive shall have the powers and duties customarily accorded to
the Vice President--Marketing of a wholly owned subsidiary, and shall perform
such other duties consistent therewith as may be assigned, subject to the terms
of this Agreement, to Executive from time to time by the President of the
Company or the Board of Directors of the Company. Executive will report
directly to the President and Chief Executive Officer of the Company.
(b) The principal place of employment hereunder shall at all times be
within 35 miles of current location of the Company in the state of California,
subject to reasonable travel requirements in connection with the performance of
Executive's duties hereunder.
(c) Executive shall devote his full and exclusive time and efforts to
the business and affairs of the Company in the manner he has done so prior to
the date of this Agreement, and shall not, except as may be approved in writing
in advance by the Board of Directors of the Company, engage in any other
business activity that may, in the Company's reasonable belief, interfere with
the performance by Executive of his duties hereunder.
2. COMMENCEMENT AND TERMINATION. The term of this Agreement, and
Executive's employment hereunder, shall begin upon the Closing Date and shall
continue until his replacement has been hired and trained, which term in no
event shall exceed 2 years from the date of the Closing Date. The Company
hereby agrees to recruit, hire and train the Executive's replacement as promptly
as reasonably practicable without disruption to the Company's business, and in
any event during the term of this Agreement.
3. COMPENSATION.
(a) The Company shall pay Executive a total of $150,000 as his
regular annual salary during the term of employment hereunder. All salary
payments hereunder shall be made in installments consistent with the Company's
general payroll practices as in effect from time to time.
(b) Executive will participate in an incentive compensation plan (the
"Plan") substantially equivalent to the plan established on a fiscal-year basis
for the executive officers of Elgar, with the budgeted targets to be mutually
agreed upon in good faith by the Company and Executive for the remainder of
fiscal year 1999 and for each subsequent fiscal year under the term of this
Agreement. Bonuses earned under the Plan will be paid on a PRO RATA basis
during any fiscal year for which Executive was employed by the Company for less
than the entire fiscal year. Executive will have the opportunity to earn
bonuses of up to 40% of his annual salary (on an annualized, PRO RATA basis)
upon the achievement of the budgeted targets, and a greater percentage in the
event that Executive exceeds such targets.
(c) Executive will be entitled to continued usage of a
Company-provided automobile under that certain lease agreement, dated September
26, 1997, between Jaguar Credit Corporation and the Company, and continuation of
Company-paid automobile expenses in connection therewith.
(d) The Company shall reimburse Executive for all expenses reasonably
incurred by Executive in connection with the business of the Company and the
performance of Executive's duties under this Agreement consistent with the
Company's regular operating policies and procedures.
(e) Executive shall be entitled to paid vacation time in accordance
with the Company's standard practices as in effect from time to time, and shall
be eligible to participate in all employee benefit plans offered from time to
time by the Company to its executive employees, including, without limitation,
all such plans of health, dental and disability insurance.
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4. TERMINATION.
(a) The Company may terminate this Agreement at any time for any
reason or no reason effective upon delivery of two weeks prior written notice of
termination to Executive.
(b) This Agreement shall terminate automatically upon Executive's
death or disability for which Executive is eligible for coverage under the
Company's disability insurance for Executive.
(c) If this Agreement is terminated in any manner, Executive or his
estate shall be entitled to receive any earned but unpaid regular, salaried
compensation and benefits, including bonuses and expense reimbursements accrued
up to the effective date of termination.
(d) Executive may terminate this Agreement prior to the expiration of
the term without liability to the Company if (a) the Company is in material
breach of any provision of this Agreement, (b) the Company relocates the
Executive to a facility more than 35 miles from the Company's current premises
or (iii) the Company effects any material change in the Executive's duties and
responsibilities, wages, or title as forth in this Agreement.
5. COVENANT NOT TO COMPETE.
(a) In consideration for Executive's covenant not to compete set
forth in Section 5(b) below, the Company agrees to pay to Executive $120,000
upon execution of this Agreement.
(b) Executive hereby agree that during his employment with the
Company and for five years following termination of such employment, Executive
shall not engage in, own (except for owning less than 5% of the voting stock of
publicly-traded company), manage or control, or materially participate in the
ownership (except for owning less than 5% of the voting stock of publicly-traded
company), management or control, directly or indirectly, of any person, firm,
corporation or other entity engaged in any business that manufactures or sells
products that compete against those sold by the Company (the "Restricted
Business") in any jurisdiction in which the Company, or their affiliates are
engaged in the Restricted Business (the "Restricted Area"); PROVIDED, HOWEVER,
that Executive shall not be deemed to have engaged in a Restrictive Business
solely as a result of his employment by a division or subsidiary of a third
party not engaged in a Restricted Business where the third party has other
divisions or subsidiaries that are engaged in the Restricted Business. If the
Company breaches this Agreement in any material respect, then this
noncompetition provision shall not be enforceable by the Company against
Executive.
6. GENERAL PROVISIONS.
(a) AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
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(b) NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) or sent by telecopy,
confirmation received, to the parties at the following addresses and telecopy
numbers (or at such other address or number for a party as shall be specified by
like notice):
(i) if to the Company to:
Power Ten
000 Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attn: Secretary
Phone: 000-000-0000
Fax.: 000-000-0000
with a copy to:
Elgar Electronics Corporation
0000 Xxxxx Xxxx Xxxx
Xxx Xxxxx, XX 00000
Attn: Xxxxxxxxxxx X. Xxxxxxx
Phone: 000-000-0000
Fax: 000-000-0000
and
X.X. Xxxxxx & Company
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxx
Phone: 000-000-0000
Fax: 000-000-0000
and
Xxxxxx Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Phone: 000-000-0000
Fax: 000-000-0000
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(ii) if to Executive to:
Xxxxxxx X. Xxxxxxxx
000 Xxxxx Xxxx Xxxxx
Xxx Xxxxx, XX 00000
Phone: 000-000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Phone: 000-000-0000
Fax: 000-000-0000
(c) COUNTERPARTS. This Agreement may be executed in counterparts,
both of which shall be considered one and the same agreement.
(d) ENTIRE AGREEMENT. This Agreement and the documents, instruments
and other agreements executed in connection with the Acquisition Agreement
(including without limitation the Confidentiality Agreement) constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and are not intended to
confer upon any other person any rights or remedies hereunder except as
otherwise expressly provided herein.
(e) NO TRANSFER. This Agreement and the rights and obligations set
forth herein may not be transferred or assigned by the Executive, but may be
transferred or assigned (including by operation of law) by the Company so long
as the assignee agrees to be bound by the terms and conditions hereof.
(f) SEVERABILITY. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of the void or unenforceable provision.
(g) OTHER REMEDIES. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law or equity on
such party, and the exercise of any one remedy will not preclude the exercise of
any other.
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(h) FURTHER ASSURANCES. Each party agrees to cooperate fully with
the other party and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by the other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and purposes
of this Agreement.
(i) ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provision of this
Agreement is intended, nor will he interpreted, to provide to create any third
party beneficiary rights or any other rights of any kind in any customer,
affiliate, stockholder, employee, partner or any party hereto or any other
person or entity unless specifically provided otherwise herein,, and, except as
so provided, all provisions hereof will be personal solely between the parties
to this Agreement.
(j) GOVERNING LAW, JURISDICTION FOR DISPUTES. This Agreement shall
be governed in all respects, including validity, interpretation and effect, by
the laws of the State of California (without giving effect to its choice of law
principles). All disputes arising out of, or related to, this Agreement shall
be adjudicated exclusively in the state courts of California located in the
county of Santa Clara, California. The parties hereby consent to exclusive
personal jurisdiction in such county, and service of process by first class
United States mail shall be sufficient to constitute adequate service of
process.
IN WITNESS WHEREOF, each of the parties has executed this Agreement or
caused it to be executed by its duly authorized representative as of the day and
year first written above.
POWER TEN
By: /s/Xxxxxx X. Xxxxxxx, Xx.
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Xxxxxx X. Xxxxxxx, Xx.,
President, Chief Executive Officer and
Chief Financial Officer
EXECUTIVE:
/s/Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
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