EMPLOYMENT AGREEMENT
EXHIBIT
10.29
This
is an Employment Agreement (“Agreement”) between Xxxxxxx
Electronics, Inc., a Minnesota corporation (the “Corporation”), and Xxxxxxx X.
Xxxxxxxx (“Employee”).
Recitals
WHEREAS,
Employee has been employed with the Corporation; and
WHEREAS,
Employee and the Corporation are parties to an existing
written employment agreement dated effective as of May 17, 2004, (hereinafter
referred to as “the Prior Employment Agreement”); and
WHEREAS,
Employee and the Corporation have agreed to several
changes with respect to Employee’s employment;
NOW,
THEREFORE, in consideration of the mutual covenants and
undertakings set forth below, the parties agree as follows:
ARTICLE
1
EMPLOYMENT;
TERM OF EMPLOYMENT
1.1) Employment.
The Corporation hereby agrees to
continue to employ Employee and Employee hereby agrees to continue employment
with the Corporation in the position of Vice President of Engineering upon
the
terms and conditions hereinafter set forth in this Agreement effective as
of the
date on which Employee executes this Agreement.
1.2) Term.
Employee’s employment with the Corporation
shall continue until terminated by Employee or the Corporation in accordance
with Articles 4 or 6.
1
ARTICLE
2
DUTIES;
EXTENT OF SERVICES
2.1) Duties.
During Employee’s employment with the
Corporation, Employee shall serve the Corporation faithfully and to the best
of
his ability. Except as approved in writing by the Board of Directors or its
designees, which approval shall not be unreasonably withheld, Employee shall
devote his full business and professional time, energy, and diligence to
the
performance of the duties of such office. Employee shall perform such duties
for
the Corporation (a) as are customarily incident to his office and (b) as
may be
assigned or delegated to him from time to time by the Board of Directors
of the
Corporation, the Corporation’s President and Chief Executive Officer, and
its/his designees. During employment with the Corporation, Employee shall
not
engage in any other business activity that would conflict or interfere with
his
ability to perform his duties under this Agreement. Employee shall use his
best
efforts to promote the interests of the Corporation.
2.2) Compliance
with Rules; Authority. Employee agrees
to be subject to the Corporation’s control, rules, regulations, policies and
programs. Employee further agrees that he shall carry on all correspondence,
publicity and advertising in the Corporation’s name and he shall not enter into
any contract on behalf of the Corporation except as expressly authorized
by the
Corporation.
2
ARTICLE
3
COMPENSATION
3.1) Compensation
for Services. As compensation for
his services to the Corporation, the Corporation will pay Employee as set
forth
in the attached Exhibit A, which shall be reviewed by the Board of Directors
and/or its designee from time to time but no less than annually. All
compensation paid to Employee shall be inclusive of all applicable income,
social security, and other taxes and charges that are required by law to
be
withheld by the Corporation or that are requested to be withheld by Employee.
All regular compensation shall be payable in accordance with the Corporation’s
usual payroll schedule.
3.2) Benefits.
Employee shall be eligible to
participate in or receive benefits under the Corporation’s paid time off (PTO)
policy, employee benefit plans, health plans, or arrangements, if any, made
available from time to time by the Corporation to its employees as set forth
in
an employee manual or otherwise including, but not limited to, medical, dental,
and long-term disability coverage, to the extent that Employee’s age, tenure,
and title make him eligible to receive those benefits. Nothing in this Agreement
is intended to or shall in any way restrict the Corporation’s right to amend,
modify or terminate any of its benefits or benefit plans during the term
of
Employee’s employment.
3.3) Business
Expenses. During Employee’s employment,
the Corporation shall reimburse Employee for all ordinary and necessary business
expenses incurred by Employee in connection with the business of the Corporation
and its subsidiaries and consistent with the Corporation’s policies in effect
from time to time with respect to travel, entertainment and other business
expenses. Payment or reimbursement to Employee will be made upon submission
by
Employee of vouchers, receipts or other evidence and documentation of such
expense in a form reasonably satisfactory to the Corporation and in compliance
with applicable requirements of taxing authorities. In the event the
Corporation’s President and Chief Executive Officer requests the services of
Employee outside the Mankato area, the Corporation will reimburse Employee
for
his reasonable transportation, lodging, and meal expense incurred in compliance
with such request.
3
ARTICLE
4
TERMINATION
4.1) Termination.
Either Employee or the Corporation
may terminate the employment relationship at any time, for any or no reason,
upon ninety (90) days’ written notice to the other party. The Corporation shall
have the right, in its sole discretion, to provide Employee ninety (90) days’
pay and benefits in lieu of written notice. Notwithstanding the foregoing,
the
Corporation shall have the right to terminate Employee’s employment immediately
for “Cause” as defined in Section 4.4 below.
4.2) Return
of Property. Immediately upon termination
(or at such earlier time as requested by the Corporation’s Board of Directors
and/or its President and Chief Executive Officer or its/his designees), Employee
shall deliver to the Corporation all of its property, including but not limited
to all work in progress, research data, equipment, originals and copies of
documents and software, customer information and lists, financial information,
and all other material in Employee’s possession or control that belongs to the
Corporation or its customers or contains Confidential Information (as defined
in
Section 5.1(E) below).
4.3) Payment
Upon Termination. Except as provided in
Section 4.4 or Article 6, after the effective date of termination, Employee
shall not be entitled to any compensation, benefits, or payments whatsoever
except for compensation earned through Employee’s last day of employment and any
accrued benefits.
4.4) Severance.
If Employee satisfies the conditions
set forth in Section 4.4(C) of this Agreement, the Corporation will provide
Employee the severance benefits described in this Section 4.4. Nothing in
this
provision is intended to limit the Corporation’s right to provide Employee
ninety (90) days’ pay and benefits in lieu of written notice or Employee’s right
to receive such pay and benefits, nor shall such pay and benefits in any
way
limit the severance contemplated by Section 4.4 of this Agreement.
A. Termination
by Employer with Cause. For purposes of
this Article 4, “Cause” shall be defined to include, but not be limited to, the
following:
| 1. |
Employee’s
neglect of any of his material duties or his
failure to carry out reasonable directives from the Board of Directors,
the Corporation’s President and Chief Executive Officer, or its/his
designees, or failure to comply with rules, regulations or policies
of the
Corporation or its Board of Directors;
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| 2. |
Any
willful or deliberate misconduct that is injurious to
the Corporation, its business reputation or its
goodwill;
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| 3. |
Dishonesty
in any dealings between Employee and the
Corporation or between Employee and vendors or customers of the
Corporation;
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| 4. |
Employee’s
commission of a felony, or other crime involving
moral turpitude or immoral conduct, whether or not against the Corporation
and whether or not committed during Employee’s employment;
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| 5. |
Employee’s
acting in a manner adverse to the best interests
of the Corporation including, but not limited to, being under the
influence of alcohol or illegal drugs while on the job;
or
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| 6. |
Employee’s
breach of any term of this
Agreement.
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B. Termination
by Employee for Good Reason. For
purposes of this Article 4, “Good Reason” shall be defined to include the
following:
| 1. |
The
assignment to Employee, without Employee’s consent, of
employment responsibilities that are not of comparable responsibility
and
status to the employment responsibilities described in this
Agreement;
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| 2. |
The
Corporation’s reduction of Employee’s base salary
without Employee’s consent except for any reduction implemented as part of
a broad-based employee cost reduction initiative;
or
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| 3. |
The
Corporation’s requiring Employee to be based anywhere
other than within fifty (50) miles of the Corporation’s principal location
at the time of Employee’s execution of this
Agreement.
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| X. |
Xxxxxxxxx
Benefits Upon Termination by the Corporation
Without Cause or Termination by Employee for Good Reason. If (1)
Employee’s employment is terminated by the Corporation without Cause in
accordance with Section 4.1 or is terminated by Employee for Good
Reason
in accordance with Section 4.4(B), and (2) Employee executes and does
not rescind a separation agreement supplied by the Corporation, which
will
include, but not be limited to, a comprehensive release of all legal
claims, then the Corporation will (a) pay Employee in a lump sum
or at
regular payroll intervals, at the Corporation’s option, an amount equal to
six (6) months of Employee’s then current base salary, subject to required
and authorized deductions and withholdings; and (b) continue to pay
the
Corporation’s ordinary share of premiums for three (3) calendar months for
Employee’s COBRA continuation coverage in the Corporation’s group medical,
dental, and life insurance plans (as applicable), provided Employee
elects
such continuation coverage and timely pays Employee’s share of such
premiums, if any.
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4
ARTICLE
5
RESTRICTION
AGAINST COMPETITION;
CONFIDENTIALITY
5.1) Restriction
Against Competition. Employee
acknowledges that he is employed in a position of trust and confidence and
has
had and will continue to have access to and become familiar with the unique
methods, services and procedures used by the Corporation and that, as part
of
Employee’s duties, he has developed and will continue to develop and maintain
close working relationships with vendors, customers and employees of the
Corporation and its subsidiaries. Employee further acknowledges that the
Corporation and its subsidiaries, over the years, through goodwill, advertising,
honest business methods and aggressive promotion, have built a lucrative
business and obtained loyal vendors and customers. Employee further acknowledges
that disclosure or use of any of the Corporation’s Confidential Information
relating to the operation of the business of the Corporation or its subsidiaries
(as defined in Section 5.1(E) of this Agreement) could have a serious
detrimental effect upon the Corporation, the monetary loss from which would
be
difficult, if not impossible, to measure. In consequence of the foregoing,
and
in consideration for the Corporation’s agreement to provide severance rights and
benefits to Employee as set forth in Article 4 of this Agreement and the
Change
of Control rights and benefits to Employee as set forth in Article 6 of this
Agreement, which Employee acknowledges and agrees are rights and benefits
to
which he is otherwise not entitled, Employee agrees as follows:
A. Noncompetition.
During Employee’s employment and
for the period specified below following a termination, Employee agrees to
the
following (referred to hereinafter as “Employee’s Noncompetition
Obligations”):
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1.
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Not
to directly or indirectly engage in, own, manage,
operate, join, control, consult with, participate in the ownership,
operation or control of, be employed by, perform services for,
contract
with or be connected with as a director, officer, principal, shareholder,
member, agent, consultant, salesperson or otherwise, any person,
corporation, partnership or other entity that produces or markets
any
product or service competitive with the Corporation’s environmental
controls and sensors business, or conspire with others to do so;
and
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2.
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Not
to directly or indirectly engage in, own, manage,
operate, join, control, consult with, participate in the ownership,
operation or control of, be employed by, perform services for,
contract
with or be connected with as a director, officer, principal, shareholder,
member, agent, consultant, salesperson or otherwise, any person,
corporation, partnership or other entity that produces or markets
any
product or service competitive with the Corporation’s electronic
manufacturing services (“EMS”) business, or conspire with others to do so,
in any state where the Corporation markets its EMS business or,
as of
Employee’s termination date, has articulable plans to actively do
so.
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3.
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Following
a termination from employment, Employee’s
Noncompetition Obligations will continue in effect as
follows:
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a. For
the two-year period immediately following a Change of
Control Termination pursuant to Section 6.2 herein, or
b. For
the one-year period immediately following any other
termination of his employment, whether voluntary or involuntary and regardless
of the reason for and timing of the termination.
B. Exceptions
to Noncompetition. The restrictions
contained in Section 5.1(A) will
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1.
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Not
prevent Employee from the
following:
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a. Owning
up to three percent (3%) of a publicly held company
that competes with the Corporation and/or its subsidiaries, so long as Employee
does not otherwise violate the terms of this Article 5; or
b. Accepting
employment with a large diversified organization
in a separate and distinct division that does not compete, directly or
indirectly, with the Corporation on the following conditions: Prior to accepting
such employment, Employee provides the Corporation written assurance that
he
will not provide any of the Corporation’s trade secrets or other Confidential
Information to the new employer, will not render any services, directly or
indirectly, to any division or business unit that competes, directly or
indirectly, with the Corporation, and that he will not violate any of the
terms
of Article 5 of this Agreement; or
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2.
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Have
no force or effect if the circumstances of Employee’s
termination of employment trigger the Corporation’s obligation to pay
severance pursuant to Section 4.4 or Change of Control Termination
amounts
pursuant to Article 6 herein and the Corporation is unable to pay
the
amount due to Employee as a result of the Corporation’s liquidation or
insolvency.
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C. Nonsolicitation
of Customers. Employee agrees he
will not, during his employment and for a two-year period immediately following
termination of his employment hereunder, regardless of the reason for and
timing
of the termination, attempt to divert any business of the Corporation or
its
subsidiaries by soliciting, contacting, or communicating with any customers
of
the Corporation or its subsidiaries with whom Employee, or employees under
his
supervision, had contacts during the year preceding termination of his
employment or any persons or entities who might reasonably be considered
within
the class of customers actively solicited by the Corporation or its
subsidiaries.
D. Nonsolicitation
of Employees and Contractors.
Employee agrees he will not, during his employment and for a two-year period
immediately following termination of his employment, regardless of the reason
for and timing of the termination, solicit any then-current employee or
contractor of the Corporation or its subsidiaries for the purpose of hiring
or
attempting to hire such employee or contractor, nor will Employee in any
manner
attempt to persuade or encourage any of the then-current employees or
contractors of the Corporation or its subsidiaries to discontinue their
employment or contractual engagement with the Corporation or its
subsidiaries.
E. Confidential
Information. Employee will not, during
or after the term of this Agreement, directly or indirectly, use or disclose
any
of the Corporation’s Confidential Information relating to the operation of the
business of the Corporation or its subsidiaries to any person, firm,
corporation, association, or other entity for any reason or purpose whatsoever
except the furtherance of the interests of the Corporation or its subsidiaries.
For purposes of this Agreement, “Confidential Information” includes but is not
limited to the following:
Information
not generally known and which is proprietary to the
Corporation including, without limitation, use of or customization to computer
application programs; financial, management, or customer data that is provided,
or to which access is provided, in the course of employment by the Corporation;
data or conclusions or opinions formed by Employee in the course of employment;
policies and procedures; manuals; trade secrets; methods, procedures, or
techniques pertaining to the business of the Corporation or a customer of
the
Corporation; specifications for products or services of the Corporation;
systems; price lists; marketing plans; sales or service analyses; financial
information; customer names or other information; vendor names or other
information; employee names or other information; research and development
data;
diagrams; drawings; videotapes, audiotapes, or computerized media used as
training regimens; notes, memoranda, notebooks, and all other records or
documents that are handled, seen, or used by Employee in the course of
employment; information not likely to be available to the general public
without
the expenditure of time or expense; and any other information designated
as such
by the Corporation in its sole discretion as confidential. “Confidential
Information” does not include (i) information which is in the public domain,
(ii) information which, through no fault of Employee, hereafter comes into
the
public domain, or (iii) information disclosed to Employee by third parties
who
do not violate duties to the Corporation in disclosing that information.
5.2) Copyrights.
A. Employee
hereby acknowledges and agrees that, to the
extent any work performed by Employee for the Corporation gives rise to the
creation of any copyrightable material (“Work”), all such Work, including all
text, software, source code, scripts, designs, diagrams, documentation,
writings, visual works, or other materials shall be deemed to be a work made
for
hire for the Corporation.
B. To
the extent that title to any Work may not, by operation
of law, vest in the Corporation or such Work may not be considered work made
for
hire for the Corporation, all rights, title and interest therein were assigned
and are hereby irrevocably assigned to the Corporation, including but not
limited to the right to xxx for past, present, and future infringement of
any
Work. All such Work shall belong exclusively to the Corporation, with the
Corporation having the right to obtain and to hold in its own name, copyrights,
registrations or such other protection as may be appropriate to the subject
matter, and any extensions and renewals thereof.
C. To
the extent that title to any Work may not be assigned
to the Corporation, Employee hereby grants the Corporation a worldwide,
nonexclusive, perpetual, irrevocable, fully paid-up, royalty-free, unlimited,
transferable, sublicensable license, without right of accounting, in such
Work.
D. Employee
agrees to execute and deliver without further
consideration such documents and to perform such other lawful acts as the
Corporation, its successors and assigns may deem necessary to fully secure
the
Corporation’s rights, title or interest in all Works as set forth in this
Agreement.
5.3) Inventions.
A. Employee
agrees to communicate promptly and fully to the
Corporation all inventions, discoveries, improvements or designs conceived
or
reduced to practice by Employee during the period of his employment with
the
Corporation (alone or jointly with others), and, except as provided in Section
5.3(C), Employee will and hereby does assign to the Corporation and/or its
nominees all of his right, title and interest in such inventions, discoveries,
improvements or designs and all of his right, title and interest in any patents,
patent applications or copyrights based thereon without obligation on the
part
of the Corporation to pay any further compensation, royalty or payment to
Employee.
B. Employee
further agrees to assist the Corporation and/or
its nominee (without charge but at no expense to Employee) at any time and
in
every proper way to obtain and maintain for its and/or their own benefit,
patents for all such inventions, discoveries and improvements and copyrights
for
all such designs.
C. This
Agreement does not obligate Employee to assign to the
Corporation any invention, discovery, improvement or design for which no
equipment, supplies, facility or trade secret information of the Corporation
was
used and which was developed entirely on Employee’s own time, and (i) which does
not relate (A) directly to the business of the Corporation or (B) to the
Corporation’s actual or demonstrably anticipated research or development, or
(ii) which does not result from any work performed by Employee for the
Corporation.
D. Employee
shall keep complete, accurate and authentic
accounts, notes, data and records of all inventions, discoveries, improvements
or designs in the manner and form requested by the Corporation. Such accounts,
notes, data and records shall be the property of the Corporation, and upon
its
request Employee shall promptly surrender the same to the Corporation.
E. The
obligations of this Section 5.3 shall continue beyond
the termination of Employee’s employment with respect to any invention,
discovery, improvement or design conceived or made by Employee during the
period
of Employee’s employment with the Corporation and shall be binding upon
Employee’s assigns, executors, administrators, and other legal representatives.
In the event Employee is called upon to render assistance to the Corporation
pursuant to Section 5.3(B) after termination of Employee’s employment with the
Corporation, the Corporation shall pay Employee reasonable compensation for
the
assistance rendered and shall call upon Employee for assistance at such
reasonable times so as not to interfere with Employee’s new employment or
business. For purposes of this Agreement, any invention, discovery, improvement
or design relating to the business of the Corporation upon which Employee
files
a patent, trademark or copyright application within one (1) year after
termination of Employee’s employment with the Corporation shall be presumed to
have been made while Employee was employed by the Corporation, subject to
proof
to the contrary by good faith, written and duly corroborated records
establishing that such invention, discovery, improvement or design was conceived
and made by Employee following termination of employment and without violation
of his continuing obligations under Section 5.1(E) hereof.
5.4) Specific
Performance and Injunctive Relief.
Employee acknowledges that the restrictions and covenants contained in this
Article 5 are reasonable and necessary to protect the legitimate interests
of
the Corporation. Employee understands and agrees that the remedies at law
for
any violation of the restrictions or covenants by this Article 5 may be
inadequate, that such violations may cause irreparable injury within a short
period of time and that the Corporation shall be entitled to preliminary
injunctive relief and other injunctive relief against such violation or
threatened violation without the necessity of proving actual damages. Such
injunctive relief shall be in addition to and not in limitation of any and
all
other remedies the Corporation shall have in law and at equity for the
enforcement of such restrictions and covenants. Nothing herein provided shall
be
construed as prohibiting the Corporation or Employee from pursuing any other
remedies available in the event of breach or threatened breach, including
the
recovery of damages. In the event of a violation of any of the provisions
of
this Article 5, the successful party shall have the right to collect a
reasonable attorney’s fee for bringing such legal or equitable action or
otherwise enforcing the terms and conditions of this Article.
5.5) Acknowledgement.
Employee acknowledges that he
has carefully considered the restrictions contained in this Article 5 and
determined that the restrictions in this Article 5 will not unduly restrict
him
in securing other suitable employment in the event of the termination of
his
employment with the Corporation.
5
ARTICLE
6
CHANGE
OF CONTROL
6.1) Change
of Control Right and Payment. In
consideration for Employee entering into the noncompetition, nonsolicitation,
confidentiality, and other obligations set forth in Article 5, the following
Change of Control rights and benefits will apply during the term of Employee’s
employment with Corporation:
A. For
a period of two (2) years following a Change of
Control, as defined in Section 6.2., Employee shall have the right, within
Employee’s sole discretion, to terminate employment with the Corporation for a
“Change of Control Good Reason” as defined in Section 6.2. Such termination
shall be accomplished by Employee giving ninety (90) days’ written notice to the
Corporation of Employee’s decision to terminate.
B. In
the event of a Change of Control Termination, as
defined in Section 6.2., then, in lieu of any severance benefits payable
under
Section 4.4 and without further action by the Board of Directors, the
Corporation shall pay to Employee an amount equal to Employee’s compensation
(including any (a) base salary, and (b) annual bonuses, but excluding non-cash
fringe benefits such as insurance and perquisites) for the two (2) completed
fiscal years preceding such termination, which amount shall be paid by the
Corporation in 24 equal monthly installments beginning on the first day of
the
calendar month following the calendar month in which such Change of Control
Termination occurs with the remaining payments made on the first day of each
of
the succeeding 23 months. Notwithstanding the foregoing, in no event shall
Employee receive any Change of Control Action, as defined below, which would
constitute a “parachute payment” for purposes of Code Section 280G, or any
successor provision, and the regulations thereunder. In the event any Change
of
Control Actions would constitute a “parachute payment,” Employee shall have the
right to designate those Change of Control Actions which would be reduced
or
eliminated so that Employee will not receive a “parachute payment.” For purposes
of this Section 6.1, a “Change of Control Action” shall mean any payment,
benefit or transfer of property in the nature of compensation paid to or
for the
benefit of Employee under any arrangement which is considered contingent
on a
Change of Control for purposes of Code Section 280G, including, without
limitation, any and all of the Corporation’s salary, bonus, incentive,
restricted stock, stock option, compensation or benefit plans, programs or
other
arrangements, and shall include any benefits payable under this Agreement.
C. Interest.
In the event the Corporation does not
make timely payment of the Change of Control Termination amounts described
in
Section 6.1, Employee shall be entitled to receive interest on any unpaid
amount
at the prime rate of interest (or such comparable index as may be adopted)
published from time to time by the Wall Street Journal.
D. Attorneys’
Fees.
In the event Employee prevails in
an action against the Corporation to enforce or defend his rights under Article
6 of this Agreement, or to recover damages for breach thereof, Employee shall
be
entitled to recover from the Corporation any reasonable expenses for attorneys’
fees and disbursements incurred.
6.2) Definitions.
For purposes of this Article 6, the
following definitions shall be applied:
A. “Continuing
Directors” shall mean the directors of the
Corporation as of the date of Employee’s execution of this Agreement and any new
director whose election to the Board of Directors or nomination for election
to
the Board of Directors is approved by a vote of at least two-thirds (2/3)
of the
directors as of the date of Employee’s execution of this Agreement who are then
still in office.
B. “Change
of Control” shall mean any of the following events
unless approved in advance by a majority of the Continuing Directors:
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1.
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The
acquisition of direct or indirect beneficial ownership
(as defined in Rule 13d-3 under the Securities Exchange Act of
1934) in
the aggregate of securities of the Corporation representing twenty
percent
(20%) or more of the total combined voting power of the Corporation’s then
issued and outstanding securities by any person or entity, or group
of
associated persons or entities acting in concert, except for the
officers
and directors of the Corporation as of the date this Agreement
is
executed; or
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2.
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A
merger or consolidation to which the Corporation is a
party if the individuals and entities who were shareholders of
the
Corporation immediately prior to the effective date of such merger
or
consolidation have beneficial ownership (as defined in Rule 13d-3
under
the Securities Exchange Act of 1934) of less than fifty percent
(50%) of
the total combined voting power for election of directors of the
surviving
corporation following the effective date of such merger or consolidation;
or
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3.
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The
sale of the properties and assets of the Corporation,
substantially as an entirety, to any person or entity which is
not a
wholly-owned subsidiary of the Corporation;
or
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4.
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A
change in the composition of the Corporation’s Board of
Directors at any time after Employee’s execution of this Agreement such
that the Continuing Directors cease for any reason to constitute
at least
a fifty-one percent (51%) majority of the
Board.
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C. “Change
of Control Termination” shall mean with respect to
Employee any of the following events occurring within two (2) years after
a
Change of Control:
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1.
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Termination
of Employee’s employment by the Corporation for
any reason other than pursuant to Section 4.4(A) (a “Cause” termination);
or
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2.
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Termination
of Employee’s employment by Employee pursuant to
Section 6.1. A Change of Control Termination by Employee shall
not include
termination by reason of death or
disability.
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D. “Change
of Control Good Reason” shall mean a good faith
determination by Employee that one or more of the following events has occurred,
without Employee’s express written consent, after a Change of Control:
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1.
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A
change in Employee’s reporting responsibilities, titles or
position as in effect immediately prior to the Change of Control,
or any
removal of Employee from, or any failure to re-elect Employee to,
any of
such positions, which has the effect of materially diminishing
Employee’s
responsibility or authority;
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2.
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A
material reduction by the Corporation in Employee’s total
compensation as in effect immediately prior to the Change of Control
or as
the same may be increased from time to
time;
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3.
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The
Corporation requiring Employee to be based anywhere
other than within fifty (50) miles of Employee’s job location at the time
of the Change of Control;
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4.
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Without
replacement by a plan, program, or arrangement
providing benefits to Employee of the Corporation and its subsidiaries
equal to or greater than those discontinued or adversely affected,
the
failure by the Corporation to continue in effect, within its maximum
stated term, any pension, bonus, incentive, stock ownership, purchase,
option, life insurance, health, accident, disability, or any other
employee compensation or benefit plan, program or arrangement,
in which
Employee is participating immediately prior to a Change of Control
or the
taking of any action by the Corporation that would adversely affect
Employee’s participation or materially reduce Employee’s benefits under
any of such plans, programs or
arrangements;
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5.
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The
taking of any action by the Corporation that would
materially and adversely affect the workplace environment existing
at the
time of the Change of Control in or under which Employee performs
his
employment duties; or
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6.
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The
taking of any action by the Corporation that would
materially change the Corporation’s business strategies or practices
existing at the time of the Change of Control including, but not
limited
to, changes in the types and brands of products offered, advertising
and
promotion programs, employment policies, and the segment to which
the
Corporation markets its products.
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6
ARTICLE
7
MISCELLANEOUS
7.1) Severability.
If any term or provision of this
Agreement shall be held to be invalid or unenforceable for any reason, such
term
or provision shall be ineffective to the extent of such invalidity or
unenforceability without invalidating the remaining terms or provisions of
this
Agreement. Without in any way limiting the generality of the foregoing, in
the
event that any provision of Article 5 hereof is held invalid or unenforceable
by
a court of competent jurisdiction, the Corporation and Employee agree that
that
part should modified by the court to make it enforceable to the maximum extent
possible. If the part cannot be modified, then that part may be severed and
the
other parts of this Agreement shall remain enforceable.
7.2) Section
409A Requirements. The Corporation and
Employee recognize and agree that revisions to the post-termination payments
and
benefits provisions contemplated by Section 4.4 and Article 6 may be necessary
and desirable to comply with the requirements of Internal Revenue Code Section
409A, and the regulations, notices and other guidance of general application
issued thereunder (hereinafter, “409A Requirements”), in a manner intended to
prevent any adverse tax consequences to Employee and the Corporation as a
result
of any failure to so comply. Any such revisions will be made only with the
written consent of both parties; and each of them agrees to cooperate in
good
faith to make any such revisions in a manner that timely complies with the
409A
Requirements.
7.3) Notices.
Any notice required or permitted to be
given under this Agreement shall be sufficient, if given in person or if
in
writing, sent by certified mail, return receipt requested, to the last known
residence address in the case of Employee or to its principal office in the
case
of the Corporation.
7.4) Waiver
of Breach. The failure of either party
hereto to enforce its rights under any provision of this Agreement shall
not
operate or be construed as a waiver of such breach or of any subsequent breach
by any party.
7.5) Entire
Agreement. This Agreement contains the
entire agreement of the parties concerning the employment of Employee by
the
Corporation and supersedes and replaces any prior agreement or arrangement
relative to Employee’s employment by the Corporation, whether oral or written,
including, but not limited to, any Prior Employment Agreement. Except as
provided in Section 7.1 of this Agreement, no modification, supplement, or
amendment of any provision hereof shall be valid unless made in writing and
signed by the parties against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
7.6) Governing
Law. This Agreement shall be construed
and interpreted according to the laws of the State of Minnesota.
7.7) Headings.
The captions set forth in this
Agreement are for convenience only and shall not be considered a part of
this
Agreement or in any way limiting or amplifying the terms or provisions
hereof.
7.8) Obligations
Which Survive Termination. The
obligations and remedies of Sections 4.2, 4.3, 4.4, and Articles 5, 6 and
7 of
this Agreement shall survive the termination of this Agreement or any successor
relationship and the termination of Employee’s employment for any reason, except
as expressly otherwise provided for in this Agreement.
7.9) Successors
and Assigns. This Agreement shall
inure to the benefit of and be binding upon Corporation and Employee and
their
respective successors, assigns, heirs, executors, and administrators, except
that the services to be performed by Employee are personal and are not
assignable.
7.10) 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.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the day and year written below.
XXXXXXX
ELECTRONICS, INC.
| Date: February 2, 2007 |
By:
/s/ Xxxxx X. Xxxxxxx
|
|
Xxxxx
X. Xxxxxxx
|
|
|
Its
President and CEO
|
| Date: February 2, 2007 | By: /s/ Xxxxxxx X. Xxxxxxxx |
|
Xxxxxxx
X.
Xxxxxxxx
|
|
|
Employee
|
7
EXHIBIT
A
In
consideration of the mutual covenants and undertakings set
forth in the Employment Agreement between Xxxxxxx Electronics, Inc., a Minnesota
corporation (the “Corporation”), and Xxxxxxx X. Xxxxxxxx (“Employee”), the
parties agree as follows:
1. Base
Salary. For each fiscal year of the
Corporation during Employee’s employment, the Corporation shall pay Employee an
annual base salary (“Base Salary”) in the amount determined by the Compensation
Committee of the Corporation’s Board of Directors, provided that such amount
shall not be less than the Base Salary for the immediately preceding fiscal
year
without the consent of Employee unless such reduction is implemented as part
of
a broad-based employee cost reduction initiative. For the fiscal year from
January 1, 2007 through December 31, 2007, Employee’s annual Base Salary shall
be $120,000, payable in accordance with the Corporation’s usual payroll
schedule.
2. Bonus.
The Corporation may, but is not obligated
to, pay Employee an annual bonus (“Annual Bonus”) consisting of stock options or
a cash payment or both, the amounts of which, if any, shall be determined
by the
Compensation Committee of the Board of Directors. If any Annual Bonus is
earned
by Employee, it shall be paid within ninety (90) days after the end of the
Corporation’s applicable fiscal year.
3. Amendment.
The Board of Directors and/or its
designee reserves the right to modify, supplement and/or amend the terms
of this
Exhibit A from time to time with written notice to Employee.
IN
WITNESS WHEREOF, the parties hereto have caused this Exhibit A
to be duly executed and delivered as of the day and year written below.
| Date: February 2, 2007 |
By: /s/
Xxxxx X. Xxxxxxx
|
|
Xxxxx
X. Xxxxxxx
|
|
|
Its
President and CEO
|
| Date: February 2, 2007 | By: /s/ Xxxxxxx X. Xxxxxxxx |
|
Xxxxxxx
X.
Xxxxxxxx
|
|
|
Employee
|
4126217_3.DOC
