AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit 10.1
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (hereafter “Amendment”) is made by and between Xxxxxxx
Electronics, Inc. (hereafter “Xxxxxxx”), and Xxxx Xxxxxx (hereafter “Kermes”).
WHEREAS, Xxxxxxx and Xxxxxx are parties to an existing Employment Agreement dated January 23,
2007 (hereafter “Employment Agreement”); and
WHEREAS, Xxxxxxx and Kermes desire to amend certain provisions of the Employment Agreement.
NOW, THEREFORE, the parties agree that effective as of December 31, 2007, the following
amendments shall be made a part of the Employment Agreement:
1. Section 5.1 of the Employment Agreement is amended by deleting the current Section 5.1 in
its entirety and replacing it with the following:
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 a period of one (1)
year after termination of Employee’s employment, regardless of the reason for and timing of
the termination, Employee agrees as follows:
1. 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;
2. 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.
B. Exceptions to Noncompetition. The restrictions contained in Section 5.1(A)
will
1. Not prevent Employee from the following:
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 with
separate and distinct divisions that do 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
2. 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.
C. Nonsolicitation of Customers. Employee agrees he will not, during his
employment and for a one-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 one-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.
2. Section 6.1 of the Employment Agreement is amended by deleting the current Section 6.1 in
its entirety and replacing it with the following:
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 one (1) year 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 one completed fiscal years
preceding such termination, which amount shall be paid by the Corporation in 12 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 11 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.
3. Section 1 of Exhibit A of the Employment Agreement is amended by deleting the current
Section 1 of Exhibit A in its entirety and replacing it with the following:
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, 2008 through December 31, 2008,
Employee’s annual Base Salary shall be $150,000, payable in accordance with the Corporation’s usual payroll schedule.
This Amendment shall be attached to and be a part of the Employment Agreement between Xxxxxxx
and Xxxxxx.
Except as set forth herein, the Employment Agreement shall remain in full force without
modification.
| XXXXXXX ELECTRONICS, INC. | ||||||
| By |
||||||
Date
|
Its President and Interim CEO | |||||
| EMPLOYEE | ||||||
| Date | Xxxxx Xxxxxx | |||||
