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EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE AGREEMENT (this "Agreement") is made as of September
5,
2005, by and between Aavid Thermalloy, LLC
a Delaware limited liability company
(the "Company), and Michael P. Flanders
("Executive"). Certain definitions are
set forth in Section 9 of this
Agreement.
Executive desires to be employed by the Company and the Company
desires
to employ Executive and to be assured of
its right to have the benefit of
Executive's services on the terms and
subject to the conditions set forth in
this Agreement. The Company and Executive
desire to enter into this Agreement
(i) setting forth the terms and conditions
of Executive's employment with the
Company; and (ii) setting forth the
obligation of Executive to refrain from
competing with the Company and its
Affiliates (as defined below) under certain
circumstances as provided herein.
NOW, THEREFORE, the parties hereto agree as follows:
1.
Employment. The Company shall employ Executive, and Executive by
this
Agreement accepts employment with the
Company, upon the terms and conditions set
forth in this Agreement for the period
beginning on the date hereof and ending
as provided in Section 4 hereof (the
"Employment Period").
2.
Position and Duties.
(a) During
the Employment Period, Executive shall serve as the Chief
Operating Officer of the Company.
(b)
Executive shall report to the Chief Executive Officer of the
Company,
and Executive shall devote Executive's best
efforts and Executive's full
business time and attention except for
permitted vacation periods, periods of
illness or other incapacity, reasonable
time spent with respect to civic and
charitable activities (provided that none
of such activities shall interfere
with Executive's duties to the Company),
and other permitted absences for which
senior executive employees of the Company
are generally eligible from time to
time under the Company's policies) to the
business and affairs of the Company
and the Company's Affiliates. Executive
shall perform Executive's duties and
responsibilities to the best of Executive's
abilities in a diligent,
trustworthy, businesslike and efficient
manner.
3. Base
Salary; Benefits and Bonuses.
(a) During
the Employment Period, Executive's base salary shall be
$237,000 per annum, or such higher rate as
the Board of the Company may
designate from time to time (the "Base
Salary"), which salary shall be payable
in regular installments in accordance with
the Company's general payroll
practices and shall be subject to customary
withholding.
(b) In
addition to the Base Salary, during the Employment Period,
Executive shall be eligible to receive an
annual bonus (the "Bonus") determined
by the following formula: "% times % times
T", where "%" is the percentage of
the Company's target EBITDA actually
achieved by the Company during a particular
fiscal year and "T" is 30% of Executive's
Base Salary during such fiscal year.
This formula is subject to modification by
the Board on an annual basis. For
purposes of this Agreement, the Company's
target EBITDA shall be determined
prior to the beginning of each fiscal year
by the Company's Board of Directors
in
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good faith, providing Executive with a
reasonable opportunity to earn the Bonus.
Any such Bonus, if determined by the
Company to be payable, shall be payable
within 90 days following the end of each
fiscal year (provided that the first
fiscal year for which the Bonus will be
paid will be the year beginning January
1, 2005 based on the actual Base Salary
paid to Executive in the year 2005)
during the Employment Period.
Notwithstanding the forgoing, no Bonus shall be
due or payable unless the EBTIDA actually
achieved by the Company during a
particular fiscal year is at least 90% of
the target EBITDA for such year.
(c) During
the Employment Period, Executive shall be entitled to
participate in all of the Company's
employee benefit plans and programs for
which senior executive employees of the
Company are generally eligible (without
duplication), which shall include, but
shall not be limited to, health
insurance, dental insurance, life
insurance, disability insurance and
participation in the Company's 401(k) plan.
Executive's right to participate in
any employee benefit plans or programs of
the Company shall be subject to the
right of the Company to amend, modify or
terminate any such plan or program in
accordance with its terms and applicable
law and subject in each case to any
applicable waiting periods or other
restrictions contained in such benefit plans
or programs. During the Employment Period,
Executive shall be eligible for three
weeks per year of paid vacation in
accordance with the policies of the Company.
The maximum amount of vacation time that
Executive shall be permitted to carry
over from one year to the next shall be
equal to two weeks.
(d) The
Company shall reimburse Executive for all reasonable business
expenses incurred by Executive in the
course of performing Executive's duties
under this Agreement which are consistent
with the Company's policies in effect
from time to time with respect to travel,
entertainment and other business
expenses, subject to the Company's
requirements with respect to reporting and
documentation of such expenses.
(e)
Executive shall relocate to New Hampshire within a reasonable
time
after his son completes his senior year of
high school. The Company shall pay
the reasonable expenses of Executive's
relocation of his residence from
Wisconsin to the Concord, New Hampshire
vicinity in accordance with the then
relocation policies of the Company. During
this interim period prior to the
relocation to New Hampshire of Executive's
family, Executive shall work in the
Concord, New Hampshire headquarters of the
Company, except that at a time
mutually agreed upon by the Company and the
Executive, Executive shall be able
to work from his residence in Wisconsin for
a week at a time every four to six
weeks. Executive must have high speed
Internet access at his Wisconsin residence
in order to work there.
4. Term;
Termination; Severance.
(a) The
Employment Period shall be for a period from the date hereof
through July 1, 2007; provided that (i) the
Employment Period shall terminate
prior to such date upon Executive's death
or Incapacity; (ii) the Employment
Period may be terminated by the Company at
any time prior to such date with
Cause or without Cause; and (iii) the
Employment Period may be terminated by
Executive at any time for any reason (a
"Voluntary Termination"). Any
termination of the Executive's employment
with the Company shall be a
"Termination." The date of any termination
of Executive's employment with the
Company shall be the "Termination
Date."
(b) Upon
any Termination, Executive shall be entitled to receive
Executive's Base Salary earned through
Executive's Termination Date, prorated on
a daily basis together with all accrued but
unpaid vacation time earned by
Executive during the fiscal year in which
such
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Termination occurs. Except as set forth in
Section 4(d), Executive shall not be
entitled to receive Executive's Base Salary
or any bonuses or other benefits
from the Company for any period after the
Termination Date.
(c) In the
event Executive's employment is terminated by the Company with
Cause, upon a Voluntary Termination other
than for Good Reason or upon
Executive's death or Incapacity, the
Company shall have no obligation to make
any severance or other similar payment to
or on behalf of Executive.
(d) In the
event that Executive's employment is terminated by the Company
without Cause, following such Termination
and upon execution by Executive of a
general release on employment matters in
favor of the Company and its
Affiliates, in form satisfactory to the
Company, releasing any and all claims,
including claims for payments (other than
those payments due under this Section
4), due to Executive arising under or
pursuant to this Agreement against the
Company and its Affiliates as of the
Termination Date, the Company shall pay
Executive his annual Base Salary (as in
effect on the Termination Date) and
provide benefits equivalent to those
provided at the Termination Date for nine
(9) months from the Termination Date. Each
severance payment under this
Agreement shall be payable in accordance
with the Company's normal payroll
procedures and cycles and shall be subject
to withholding of applicable taxes
and governmental charges in accordance with
federal and state law. After payment
of the severance amounts described in this
Section 4(d), the Company shall have
no obligation to make any further severance
or other payment to or on behalf of
Executive except as otherwise expressly
contemplated by this Agreement.
Notwithstanding the foregoing, in the event
that Executive shall breach any of
Executive's obligations under Sections 5, 6
or 7 of this Agreement, then, in
addition to any other rights that the
Company may have under this Agreement or
otherwise, the Company shall be relieved
from and shall have no further
obligation to pay Executive any amounts to
which Executive would otherwise be
entitled pursuant to this Section 4.
5.
Confidential Information. Executive acknowledges that by reason
of
Executive's duties to and association with
the Company and its Affiliates,
Executive has had and will have access to
and has and will become informed of
Confidential Information (as defined in
Section 9 below) which is a competitive
asset of the Company and/or its Affiliates.
Executive agrees to keep in strict
confidence and not, directly or indirectly,
make known, disclose, furnish, make
available or use, any Confidential
Information, except for use in Executive's
regular authorized duties on behalf of the
Company and its Affiliates (including
their predecessors). Executive acknowledges
that all documents and other
property including or reflecting
Confidential Information furnished to Executive
by the Company or any of its Affiliates or
otherwise acquired or developed by
the Company or any of its Affiliates or
Executive or known by Executive shall at
all times be the property of the Company
and its Affiliates. Executive shall
take all necessary and appropriate steps to
safeguard Confidential Information
and protect it against disclosure,
misappropriation, misuse, loss and theft.
Executive shall deliver to the Company at
the termination of the Employment
Period, or at any other time the Company
may request, all memoranda, notes,
plans, records, reports, computer tapes,
printouts and software and other
documents and data (and copies thereof)
relating to the Confidential
Information, Work Product (as defined in
Section 9 below) or the business of the
Company or any of its Affiliates which
Executive may then possess or have under
Executive's control.
6.
Inventions and Patents.
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(a)
Executive acknowledges that all Work Product (as defined in Section
9
below) is the exclusive property of the
Company. Executive by this Agreement
assigns all right, title and interest in
and to all Work Product to the Company.
Any copyrightable works that fall within
the Work Product will be deemed "works
made for hire" under Section 201(b) of the
1976 Copyright Act, and the Company
shall own all of the rights comprised in
the copyright therein; provided,
however, that to the extent such works may
not, by operation of law, constitute
"works made for hire," Executive by this
Agreement assigns to the Company all
right, title and interest therein.
(b)
Executive shall promptly and fully disclose all Work Product to
the
Company and shall cooperate and perform all
actions reasonably requested by the
Company (whether during or after the
Employment Period) to establish, confirm
and protect the Company's right, title and
interest in such Work Product.
Without limiting the generality of the
foregoing, Executive agrees to assist the
Company, at the Company's expense, to
secure the Company's rights in the Work
Product in any and all countries, including
the execution by Executive or
Executive's Affiliates of all applications
and all other instruments and
documents which the Company shall deem
necessary in order to apply for and
obtain rights in such Work Product and in
order to assign and
