EXHIBIT 10.12
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
---------------------------------------
This is Amendment No. 1, dated June 1, 2001 (the "Amendment), to the
Employment Agreement made as of June 1, 1997 (the "Agreement"), by and between
Pacific Aerospace & Electronics, Inc., a Washington corporation (the "Company"),
and Xxxx X. Xxxxx (the "Executive"). Capitalized terms not otherwise defined in
this Amendment shall have the meanings set forth in the Agreement.
WHEREAS, the Executive provides services to the Company as Vice President
Finance and Chief Financial Officer pursuant to the Agreement;
WHEREAS, the Agreement provides for an increase in the Executive's Annual
Salary for the Contract Year beginning on June 1, 2001 and ending on May 31,
2002, of $10,000 over the previous Contract Year's Annual Salary;
WHEREAS, the Compensation Committee and the Option Committee of the
Company's Board of Directors have determined that it would be in the best
interests of the Company to request that the Executive forego his Annual Salary
increase for the Contract Year ending May 31, 2002 (the "2002 Contract Year"),
and that he receive, in lieu of such increase, a grant of restricted stock under
the Company's 1999 Stock Incentive Plan (the "Plan"); and
WHEREAS, the Executive has agreed to this arrangement, subject to the terms
and conditions of this Amendment.
The parties agree as follows:
1. Amendment to Salary for 2002 Contract Year. The Agreement is hereby
------------------------------------------
amended to provide that the Executive will receive no cash salary increase for
the 2002 Contract Year, and that in lieu of his $10,000 contractual salary
increase for the 2002 Contract Year, the Executive will receive, as of June 1,
2001, a grant of 47,619 shares of the Company's Common Stock (the "Shares"),
which shares may not be transferred by the Executive prior to June 1, 2002,
except in compliance with applicable securities laws. The certificate
representing the Shares will bear a legend to the effect that the Shares are
subject to restrictions on transfer. For purposes of determining future salary
increases only, the Executive's Annual Salary for the 2002 Contract Year will be
calculated as if the contractual salary increase had been paid in cash.
2. Previous Amendments. The parties acknowledge that the following amendments
-------------------
to the Agreement have previously been made by the Compensation Committee and
agreed to by the Executive, but have not previously been provided for in a
written amendment to the Agreement:
a. Term of Agreement. On May 13, 1999, the Compensation Committee
-----------------
extended the term of the Agreement to May 31, 2002.
b. Annual Salary. On May 28, 1998, the Compensation Committee increased
-------------
the Executive's Annual Salary for the Contract Year ended May 31, 1999 to
$130,000 and increased the Executive's Annual Salary for the Contract Year ended
May 31, 2000 to $140,000. On May 13, 1999, the Compensation Committee amended
the Agreement to set the Executive's Annual Salary for the Contract Years ending
May 31, 2001 and May 31, 2002 at $150,000 and $160,000, respectively.
c. Options. On May 13, 1999, the Compensation Committee amended Section
-------
3.3 of the Agreement as follow: (i) Sections 3.3.2 and 3.3.3 were renumbered as
3.3.3 and 3.3.4; and (ii) a new Section 3.3.2 was added as follows:
3.3.2 Fixed Options. Beginning with the fiscal year ending May 31,
-------------
1999, and immediately after each subsequent fiscal year end during the
Contract Term, the Executive shall be entitled to receive fully vested
options to purchase 25,000 shares of Common Stock per Contract Year.
x. Xxxxxxxxx Payments and Benefits. On May 13, 1999, the Compensation
-------------------------------
Committee amended the first sentence of Section 5.2 of the Agreement to delete
the words "one half" and replace them with the words "one times". On May 13,
1999, the Compensation Committee also amended the first sentence of Section 5.3
to delete the words "six months" and replace them with the words "one year".
e. Termination without Cause. On May 13, 1999, the Compensation Committee
-------------------------
amended the second sentence of Section 7.3 of the Agreement to delete the words
"one-half" and replace them with the words "one times". On May 13, 1999, the
Compensation Committee also amended the third and last sentences of Section 7.3
to delete the words "six months" and replace them with the words "one year".
3. No Further Amendments. Except as specifically set forth in this Amendment,
---------------------
the Agreement shall continue in effect in accordance with its terms.
THE COMPANY:
PACIFIC AEROSPACE & ELECTRONICS, INC.
By /s/ Xxxxxx X. Xxxxxx
--------------------
Its President & CEO
THE EXECUTIVE:
/s/ Xxxx X. Xxxxx
-----------------
Xxxx X. Xxxxx
