EXHIBIT 10.1
EMPLOYMENT
AGREEMENT
EMPLOYMENT AGREEMENT (the
“Agreement”) dated May 8, 2009 by and between
Nu Horizons Electronics Corp. (the “Company”)
and James Estill (the “Executive”).
The Company desires to employ Executive and to
enter into an agreement embodying the terms of such employment;
Executive desires to accept such employment and
enter into such an agreement;
In consideration of the promises and mutual
covenants herein and for other good and valuable consideration, the
parties agree as follows:
1. Term of Employment
. Subject to the provisions of Section 9 of this
Agreement, Executive shall be employed by the Company for a period
commencing on June 1, 2009 (the “Effective Date”) and
ending on the fourth anniversary of the Effective Date (the
“Initial Term”) on the terms and subject to the
conditions set forth in this Agreement. The Initial Term shall be
automatically extended for successive one-year periods (the
“Additional Terms”) unless terminated at the end of the
Initial Term or any Additional Term by either party upon ninety
(90) days’ prior written notice given to the other party (the
Initial Term and any Additional Terms shall be referred to as the
“Employment Term”), in which case the Agreement and
Executive’s employment shall terminate at the end of the
Initial Term or Additional Term, as the case may be. The provisions
of Sections 10 of this Agreement shall survive any termination of
this Agreement or Executive’s termination of employment
hereunder.
a. During the Employment Term, Executive shall
serve as the Company’s President and Chief Executive
Officer. The Executive shall report to both the
Company’s Executive Chairman of the Board and the
Company’s Board of Directors (the “Board”)
regarding the Company’s business operations. The
Executive shall oversee and manage the affairs of the
Company’s business, and shall have overall supervision and
control of the Company’s day-to-day business activities
consistent with the Company’s past business
practices. During the Employment Term, the Executive
shall be granted such additional authority as may be required from
time to time by the Board, consistent with the Executive’s
position with the Company. Executive will be a member of
an Executive Management Committee (the “Committee”) to
be established by, and serve at the discretion of, the Board, which
Committee will be comprised of the Company’s Executive
Chairman of the Board, its Senior Executive Vice President and
Chief Operating Officer and Executive, in his capacity as President
and Chief Executive Officer. The Committee will meet
regularly to deal with day-to-day business matters; any major
business matters that can not be resolved with unanimity by the
Committee will be brought to the attention of the Board of
Directors.
b. At such time as the Board shall consist of a
sufficient number of independent directors (as defined in The
Nasdaq Stock Market Marketplace Rule 4200) to permit the Company to
continue to comply with The Nasdaq Stock Market Marketplace Rule
4350(c) notwithstanding the Executive’s service as a
director, the Executive shall be nominated to serve as a member of
the Board. Upon any election of the Executive to serve
on the Board or the board of directors of any of the
Company’s subsidiaries or affiliates, he will serve as a
director thereof without additional compensation.
c. During the Employment Term, Executive shall
perform faithfully and loyally and to the best of Executive’s
abilities, the duties assigned to Executive
hereunder. Executive shall use Executive’s best
efforts, skills, and abilities to promote the business and
interests of the Company in a professional
manner. During the Employment Term, Executive will
devote Executive’s full business time and best efforts to the
performance of Executive’s duties hereunder and will not
engage in any other business, profession or occupation which would
conflict or interfere with the rendition of such services, either
directly or indirectly, without the prior written consent of the
Board. Notwithstanding the foregoing, it shall not be a
violation of this Agreement for Executive to serve on the Board of
Research in Motion Ltd and on other boards or committees, so long
as such activities do not significantly interfere with the
performance of Executive’s duties under this Agreement or
cause Executive to breach the terms of this Agreement, as
determined by the Board in its sole discretion. Prior to
joining any additional board or committee in addition to Research
in Motion Ltd, Executive will get written approval from the
Executive Chairman of the Board or the Board.
3. Base Salary . During
the Employment Term, the Company shall pay Executive a base salary
at the annual rate of $350,000 (the “Initial Base
Rate”), payable in regular installments in accordance with
the Company’s usual payment practices for senior
executives. Notwithstanding the foregoing,
Executive’s base salary shall be reduced to an annual rate of
$30,000 if at any time(s), during the Employment Term the Company
is not profitable for three consecutive fiscal
quarters. In such event, following the fiscal quarter in
which the Company reports a profit in its press release reporting
its financial results, the Executive’s base salary shall be
restored to the Initial Base Rate (i.e., $87,500 per quarter).
Executive’s annual base salary, as in effect from time to
time, is hereinafter referred to as the “Base
Salary.” Any determination of profitability
pursuant to this Section shall exclude any unusual item(s) to the
extent that the Company’s Audit Committee determines that it
is appropriate for the Company to make a pro forma adjustment for
such item(s).
4. Bonus Compensation . In
addition to Base Salary, Executive shall be entitled to an
incentive bonus for each fiscal year during the Employment Term,
based upon Executive’s performance relative to specified
quantitative goals (the “Quantitative Bonus”) and
qualitative goals (the “Qualitative Bonus”) to be
mutually agreed, which goals will be approved by the Board and the
Compensation Committee of the Board in respect of each such fiscal
year. The total of the Quantitative Bonus and the Qualitative Bonus
shall be referred to as the “Bonus.” The Bonus shall be
in an amount up to an aggregate 150% of the Initial Base Salary,
with a target Bonus in an amount equal to an aggregate of 75% of
the Initial Base Salary. The Bonus shall be paid to
Executive no later than 30 days following the delivery to the
Company by its independent registered public accounting firm of
such firm’s signed, final report with respect to the
Company’s consolidated financial statements for the
applicable completed fiscal year. In order for any Bonus to be
earned and received by Executive, Executive must be employed and in
good standing on the last day of the relevant fiscal
year.
a. Quantitative Bonus: The Quantitative
Bonus, if any, will be in amount up to 100% of the Initial Base
Salary ( i.e. $350,000), with a target of 50% of the Initial
Base Salary ( i.e. $175,000). The Quantitative
Bonus will be calculated based on reaching a minimum achievement
goal (the “Minimum”), where Executive shall have the
right to receive a portion of such Quantitative Bonus, a target
achievement goal (the “Target”), where Executive shall
have the right to receive the target amount ($175,000), and an
overachievement goal (the “Maximum”), where Executive
shall have the right to receive the maximum incentive amount
($350,000) of the Quantitative Bonus. The actual
incentive payment amount will be calculated, based on actual
results attained, prorated on a straight-line basis between the
Minimum and the Target, or the Target and the Maximum, as
applicable.
(i) For the Company’s fiscal
year ending February 28, 2010 (“Fiscal 2010”), the
Quantitative Bonus will be calculated based on the Company’s
achievement of certain levels of annual consolidated income before
provision for income tax, excluding any unusual item(s) to the
extent that the Company’s Audit Committee determines that it
is appropriate for the Company to make a pro forma adjustment for
such item(s) in its press release reporting the financial results
for Fiscal 2010 (“Pre-Tax Income”). The Minimum shall
be $5,000,000 Pre-Tax Income, the Target shall be $10,000,000
Pre-Tax Income and the Maximum shall be $13,000,000 Pre-Tax
Income. The Quantitative Bonus payable to Executive
shall be calculated, based on actual results reported by the
Company in respect of Fiscal 2010, prorated on a straight-line
basis between the Minimum and the Target, or the Target and the
Maximum, as applicable.
b. Qualitative Bonus : The Qualitative
Bonus, if any, shall be in an amount up to 50% of the Initial Base
Salary ( i.e. $175,000), with a target bonus in an amount
equal to 25% of the Initial Base Salary ( i.e.
$87,500). The Qualitative Bonus amount will be such
amount as the Board and the Compensation Committee shall determine
in their sole and absolute discretion. All or any
portion of the Qualitative Bonus may be paid in the form of stock
compensation in the sole and absolute discretion of the Board and
Compensation Committee.
c. Bonus for Fiscal 2010
: Notwithstanding the foregoing, Executive’s Bonus
for Fiscal 2010 shall be no less than $100,000.
5. Stock Options: On or about the
Effective Date, the Board will grant to Executive options to
acquire 360,000 shares of the Company’s common stock (the
“Stock Options”). The Stock Options will
have the terms set forth below and be otherwise subject to the
terms of the Company’s 2002 Key Employee Stock Incentive
Plan:
a. an exercise price equal to the greater of
$2.00 per share or the closing stock price on the trading day
preceding the date of grant;
b. a term of 10 years from the date of
grant;
c. provided that Executive has been employed for
at least the applicable “Required Duration,” will vest
when the market price of the Company’s common stock achieves
the target prices set forth below for at least 10 consecutive
trading days:
|
Number of Shares
|
Required Duration of
Employment
|
Target Price
|
|
120,000
|
1 Year
|
$4.00
|
|
120,000
|
2 Years
|
$6.00
|
|
120,000
|
3 Years
|
$8.00
|
Notwithstanding
the foregoing, all 360,000 Stock Options will become fully-vested
on the ninth anniversary of the date of grant provided that
Executive is still employed by the Company on such date;
and
d. automatically become fully exercisable in the
event of a sale or change of control of the Company.
6. Employee Benefits .
a. Executive and his spouse shall be entitled to
all benefits available to other of the senior executives and their
spouses, including health, dental and other insurance programs, if
any, subject in each case to the generally applicable terms and
conditions of the plan or program in
question. Notwithstanding the foregoing, these benefits
may be modified or eliminated at the Company’s sole
discretion, at any time, without compensation or notice to
Executive.
b. Executive shall be entitled to four
weeks’ paid vacation annually. Vacation shall be
taken at such times as do not materially interfere with the
performance of Executive’s duties hereunder as mutually
agreed upon by Executive and the Company. Executive may
not carry forward accrued unused vacation, if any, to any
subsequent calendar year.
c. During Executive’s employment
hereunder, the Company shall provide the Executive with a monthly
car allowance of $1,000.
d. The Company shall reimburse the Executive for
thirty (30) round-trip economy airline tickets from Canada to New
York during the Employment Term to be used by Executive and/or
Executive’s family members. For the purposes of this Agreement,
“family members” shall mean Executive’s spouse,
parents, children and siblings, whether by blood, marriage or
adoption.
7. Relocation Expenses: The
Company shall reimburse Executive for the Executive’s living
expenses actually incurred in living on Long Island, New York prior
to moving into a permanent residence on Long Island during the
first year of the Employment Term in an amount not to exceed
$30,000. The Company shall
reimburse Executive for the reasonable moving costs and expenses
incurred by the Executive in
connection with the physical move to the Long Island, New York area
in an amount not to exceed $50,000. The Company shall
reimburse Executive for legal expenses associated with the physical
move to the Long Island, New York area in an amount not to exceed
$5,000.
8. Reimbursement of Expenses
. During the Employment Term,
the Executive may incur reasonable expenses in connection with
conducting and promoting the business and affairs of the Company,
including expenses for travel and similar items, subject to
reasonable limitations and restrictions set by the Company from
time to time. These expenses include, but are
not limited to: (a) training and personal development programs
completed by the Executive, in an amount not to exceed $5,000 per
year; and (b) YPO/WPO membership expenses, in an amount
not to exceed $12,000 per year. The Company will reimburse the Executive for such
business expenses and any other expenses for which he has the right
to reimbursement hereunder upon the presentation by the Executive
of an itemized account of such expenditures, consistent with
procedures established by the Company, together with such bills,
receipts or other documentary evidence as shall be required by the
Company for tax or accounting purposes which reimbursement shall be
made at the times provided and otherwise in accordance with the
Company’s reimbursement policy.
9. Termination .
a. Notwithstanding anything in this Agreement to
the contrary, the Company shall have the right to terminate this
Agreement at any time, with or without cause.
b. Should the Company terminate this Agreement
“for cause” or the Executive terminates this Agreement
without “good reason,” the Executive shall be paid his
Base Salary through the date of termination and shall be reimbursed
for an
