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EXHIBIT 10.23
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and
entered into as of February 1, 1997 by and between Xxxxx X. Xxxxxxxxxxx
("Employee") and Wyle Electronics, a California corporation (the "Company").
The parties agree as follows:
1. Employment.
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1.1 Title & Duties. The Company hereby employs Employee, and
Employee hereby accepts employment, as President and Chief Executive Officer of
the Company. Employee shall be given duties consistent with such offices and
positions. There shall be no change in Employee's titles or duties without the
mutual consent of the Company and Employee.
1.2 Place. Employee shall not be required to perform any
duties as described in section 1.1 at any place other than in the County of
Orange, State of California, except insofar as his duties shall require
reasonable business trips and/or visits to suppliers or customers or Company
facilities.
2. Extent of Services; Noncompetition.
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2.1 General. It is recognized that the services to be rendered
by Employee are of such a nature as to be peculiarly rendered by Employee,
encompass the individual ability of Employee and cannot be measured exclusively
in terms of hours or services rendered in any particular period. Employee agrees
to devote his full time and best efforts to the performance of his duties and
exclusively to advance the interests of the Company.
2.2 Vacation. Employee shall be entitled to such vacations and
other absences from work as shall be reasonably consistent with the performance
of his duties as provided in this Agreement.
2.3 Noncompetition.
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(a) Employee agrees that during the term of this
Agreement (as defined in Section 3 below) he will neither directly nor
indirectly engage in a business competing with any of the businesses
conducted by the Company or any of its subsidiaries or affiliates, nor
without the prior written consent of the Board of Directors of the
Company directly or indirectly have any interest in, own, manage,
operate, control, be connected with as a stockholder, joint venturer,
officer, employee, partner or consultant, or otherwise engage, invest
or participate in any business which is competitive with any of the
businesses conducted by the
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Company or by any subsidiary or affiliate of the Company; provided,
however, that nothing contained in this section 2.3 shall prevent
Employee from investing or trading in stocks, bonds, commodities,
securities, real estate or other forms of investment for his own
account and benefit (directly or indirectly), so long as such
investment activities do not significantly interfere with Employee's
services to be rendered hereunder and are consistent with the conflict
of interest provisions contained in the Company's Business Ethics
Policy as it exists from time-to-time.
(b) Employee agrees that should his or her employment
by the Company terminate for any reason, Employee (and any corporation
or entity of which he or she is then a director, officer, employee, or
greater than 5% shareholder) shall not for a period of one year after
such termination:
(1) solicit for employment and then employ
any employee of the Company or any of its affiliates or
subsidiaries or any person who is an independent contractor
involved in sales or manufacture of products sold or
manufactured by the Company or any of its affiliates or
subsidiaries; or
(2) make any public statement concerning the
Company, any of its affiliates or subsidiaries, or Employee's
employment by the Company unless such statement is previously
approved by the Board of Directors of the Company, except as
may be required by law; or
(3) induce, attempt to induce or knowingly
encourage any Customer of the Company or any of its affiliates
or subsidiaries to divert any business or income from the
Company or any of its affiliates or subsidiaries or to stop or
alter the manner in which they are then doing business with
the Company or any of its affiliates or subsidiaries.
"Customer" shall mean any individual or business firm that was
or is a customer or client of, or one that was or is a party
in a selling agreement with, or whose business was actively
solicited by, the Company or any of its affiliates or
subsidiaries at any time, regardless of whether such customer
was generated, in whole or in part, by Employee's efforts.
3. Term. The term of this Agreement (the "Term") shall
commence on the date hereof and shall end on the later of (a) the
third (3rd) anniversary of the date of this Agreement, or (b)
three (3) years following the effective date on which notice of
non-renewal or termination of this Agreement is given to the
other by either the Employee or the Company. Thus, this
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Agreement shall be renewed automatically on a daily basis so that the
outstanding Term is always three (3) years following the effective date of any
notice of non-renewal or notice of termination given by the Company or the
Employee pursuant to Section 6.1.
4. Compensation.
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4.1 Cash Compensation. The Company shall compensate Employee
for services rendered under this Agreement in an amount of not less than
Employee's "Cash Compensation", as defined below, per year, as determined from
time to time by the Board of Directors. Employee shall be considered in the
Company's annual review of executive compensation and he shall be a participant
in the Company's executive bonus plans as may be in effect from time-to-time.
All cash compensation paid to Employee under this Agreement shall be considered
for purposes of meeting the requirement described in this paragraph, whether in
the form of annual compensation or in the form of bonuses.
"Cash Compensation" shall mean base salary $500,000.00 plus
(i) if the applicable target(s) relating to Employee's target bonus is achieved
for any year, an amount equal to one-half (1/2) of Employee's target bonus for
that year, or (ii) if the applicable target(s) relating to Employee's target
bonus is not achieved for that year, an amount equal to the lesser of Employee's
actual bonus for that year or one-half (1/2) of Employee's target bonus for that
year. Base Salary shall be determined in the discretion of the Board of
Directors.
4.2 Employee Benefits. Employee shall be entitled to receive
fringe benefits consistent with Employee's duties and position, which benefits
shall (except as specified below) be no less than those to which he is entitled
as of the date hereof, including but not limited to all plans of life, accident
and health, salary continuation and other insurance which is or becomes
generally available to other employees, officers or executives of the Company
and participation in the Company's Retirement Plan. Employee shall be provided
with the full time use of an automobile consistent with the Company's corporate
policy on automobiles as in effect from time to time. The Company reserves the
right to modify, suspend or discontinue any and all of its fringe benefits
referred to in this Section 4.2 at any time without recourse by Employee so long
as such action is taken generally with respect to other similarly situated peer
executives and does not single out Employee.
4.3 Expenses. Employee shall be reimbursed for all expenses
reasonably incurred in the furtherance of the business of the Company. Employee
shall keep complete and accurate records of all expenditures such that Employee
may fully account to the Board of Directors, if requested, or as may then be
required by the Internal Revenue Service.
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5. Confidential Information.
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5.1 General. Employee acknowledges that during his employment
by, and as a result of his relationship with, the Company he will obtain
knowledge of and gain access to information regarding the Company's business,
operations, products, proposed products, production methods, processes, customer
lists, advertising, marketing and promotional plans and materials, price lists,
pricing policies, financial information and other trade secrets, confidential
information and material proprietary to the Company or designated as being
confidential by the Company which is not generally known to non-Company
personnel, including information and material originated, discovered or
developed in whole or in part by Employee (collectively referred to herein as
"Confidential Information"). Employee agrees that during the term of this
Agreement and, to the fullest extent permitted by law, thereafter, he will, in a
fiduciary capacity for the benefit of the Company, hold all Confidential
Information strictly in confidence and will not directly or indirectly reveal,
report, disclose, publish or transfer any of such Confidential Information to
any person, firm or other entity, or utilize any of the Confidential Information
for any purpose, except in furtherance of his employment under this Agreement.
5.2 Return of Materials. Employee agrees that upon the
expiration or earlier termination of this Agreement, he will immediately
surrender and return to the Company all lists, books, records and other
Confidential Information of the Company, or obtained in connection with the
Company's business, it being expressly acknowledged by Employee that all such
items are the exclusive property of the Company, and all other property
belonging to the Company then in the possession of Employee, and Employee shall
not make or retain any copies thereof.
6. Termination Prior to Expiration of Term. Employee's
employment, and his rights under this Agreement, may be termi-
nated prior to the expiration of the Term of this Agreement (as
provided in section 3 hereof) only as provided in this section 6.
6.1 Discharge or Resignation.
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(a) Employee may be discharged prior to the
expiration of the term of this Agreement (1) for "Just Cause"; or (2)
upon 60 days written notice, even if "Just Cause" does not exist.
(b) For a discharge which occurs prior to a "Change
in Control," as defined herein, "Just Cause" shall mean that the
Company, acting in good faith based upon the information then known to
the Company, determines that Employee has: (1) committed a material
breach of his duties and responsibilities to the Company (other than as
a result
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of incapacity due to the Employee's disability); or (2) been convicted
of a crime involving moral turpitude; or (3) refused to perform his
required duties and responsibilities or performed them incompetently;
or (4) violated any fiduciary duty owed to the Company; or (5) taken
actions which are injurious to the Company and which involve moral
turpitude or actual malice towards the Company. For a discharge which
occurs coincident with or after a "Change in Control," "Just Cause"
means (x) Employee's conviction of a crime involving moral turpitude;
or (y) actions of Employee which are injurious to the Company and
involve moral turpitude or actual malice toward the Company.
(c) Employee may resign prior to the term of this
Agreement (1) for "Good Reason"; or (2) upon 60 days written notice,
even if "Good Reason" does not exist. Regardless of whether a
resignation occurs prior to, coincident with or after a "Change in
Control," "Good Reason" shall mean the material failure by the Company
to fulfill its obligations under this Agreement, to the extent not
remedied in a reasonable period of time after receipt of written notice
by the Employee specifying the material failure by the Company. Any
reduction or attempted reduction of compensation or benefits below that
required by Section 4 is deemed material. For a resignation which
occurs coincident with or following a Change in Control, "Good Reason"
shall also mean the failure by the Company or its successors to assume
expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if a
succession had not occurred.
(d) (1) If Employee is discharged for "Just Cause" or
resigns without "Good Reason," the Company shall not be
obligated to pay the Employee any sums of money other than all
compensation and benefits due employee as of the date of
discharge or resignation and the bonus (if any) for the period
of his employment prior to the discharge or resignation.
(2) If employee is discharged without "Just
Cause" or resigns for "Good Reason," Employee shall be
entitled to the following:
(i) all compensation and benefits
due Employee as of the date of discharge or
resignation and the bonus for the period of
employment prior to the discharge or resignation;
plus
(ii) A lump sum payment equal to the
present value of the compensation which would be
received by Employee (using the greater of (A) the
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Employee's highest annual amount of compensation
during any of the preceding three years regardless of
whether this Agreement was in force during such year,
or (B) the Employee's base salary and full target
bonus for the year in which the Employee's
resignation or discharge occurs) for the remaining
Term of this Agreement. The present value shall be
determined by using the applicable federal mid-term
rate, compounded monthly, as determined under Section
1274(d) of the Internal Revenue Code of 1986, as
amended (the "Code"), or its successor, as of the
date of discharge or resignation. The entire lump-sum
amount shall be paid within 30 days of the effective
date of resignation or discharge. Employee shall have
no duty to mitigate or attempt to mitigate his
damages.
(e) (1) Notwithstanding anything to the contrary in
this Agreement, payments to the Employee which constitute
"parachute payments," as defined in Section 280G of the Code,
shall be limited, if necessary, so that the maximum amount of
such payments to the Employee shall be one dollar ($1.00) less
than the amount which would cause the payments to the Employee
(including payments to the Employee which are not included in
this Agreement) to be subject to the excise tax imposed by
Section 4999 of the Code.
(2) Any determination that payments to the
Employee must be limited and the assumptions to be utilized in
arriving at such determination, shall be made by Xxxxxx
Xxxxxxxx and Company (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company
and the Employee within 15 business days of the time such
calculation is requested by the Company or the Employee. In
the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the
Change of Control, the Employee shall appoint another
nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely
by the Company. If the Accounting Firm determines that
payments to the Employee shall be limited, it shall furnish
the Employee with written opinion that failure to limit the
payments would result in the imposition of a tax under Section
4999 of the Code. Any determination by the Accounting Firm
shall be binding upon the Company and the Employee. As a
result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the
Accounting Firm
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hereunder, it is possible that payments to the Employee which
will not have been made by the Company should have been made
("Underpayment"). The Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for
the benefit of the Employee. In the event that any payment
made to the Employee shall be determined by the Accounting
Firm to result in the imposition of any tax under Section 4999
of the Code, the Employee shall promptly reimburse the Company
for the amount of such excess together with interest on such
amount (at the same rate as is applied to determine the
present value of payments under Section 280G or any successor
thereto), from the date the reimbursable payment was received
by the Employee to the date the same is repaid to the Company.
The parties hereto acknowledge and agree that the amount of
any such reimbursement shall be deemed never paid to the
Employee.
(f) For purposes of this Agreement; a "Change of Control"
shall be deemed to have occurred if (1) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Securities Exchange Act of 1934), directly or indirectly, or
securities of the Company representing 30% or more of the combined
voting power of the Company's then outstanding securities; or (2)
during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the
Company (the "Board") cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for election
by the Company's shareholders, of each new Board member was approved by
a vote of at least three-fourths of the Board members then still in
office who were Board members at the beginning of such period.
6.2 Disability. If the Company in good faith determines that
the Employee has become ill or injured and such illness or injury will prevent
Employee from performing the services required under this Agreement for a period
of more than 12 consecutive months on substantially a full time basis, the
Company may give Employee written notice that it intends to terminate the
employment of Employee. Such termination of employment shall become effective 30
days after receipt of such notice by Employee, provided that, within 30 days
after such receipt, Employee shall not have returned to full time performance of
his duties. If Employee's employment is so terminated, Employee shall be
entitled to receive his full compensation and benefits until the expiration of
12 months from the date on which he was first unable to substantially perform
his duties hereunder.
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6.3 Death. The death of Employee shall result in automatic
termination of this Agreement, and the Company shall not be obligated to pay the
estate or personal representative of Employee any sums of money other than any
and all compensation and benefits due Employee at the date of his death and
bonus for the period of his employment prior to death.
7. Arbitration.
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7.1 General. Any dispute, controversy or claim arising out of
or relating to this Agreement, the breach hereof or the coverage or
enforceability of this arbitration provision shall be settled by arbitration in
Los Angeles County, California, conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, as such rules are in
effect in Los Angeles on the date of delivery of demand for arbitration. The
arbitration of any such issue, including the determination of the amount of any
damages suffered by either party hereto by reason of the acts or omissions of
the other, shall be to the exclusion of any court of law. Notwithstanding the
foregoing, either party hereto may seek any provisional remedy in a court,
including but not limited to an action for injunctive relief or attachment,
without waiving the right to arbitration.
7.2 Procedure. There shall be three arbitrators, one to be
chosen by each party at will within 10 days from the date of delivery of demand
for arbitration and the third arbitrator to be selected by the two arbitrators
so chosen. If the two arbitrators are unable to select a third arbitrator within
10 days after the last of the two arbitrators is chosen by the parties, the
third arbitrator will be designated, on application by either party, by the
American Arbitration Association. The decision of a majority of the arbitrators
shall be final and binding on both parties and their respective heirs,
executors, administrators, personal representatives, successors and assigns. The
Company shall have the burden of proving Just Cause for any discharge of
Employee under section 6.1 hereof; for a resignation which occurs prior to a
Change in Control, the Employee shall have the burden of proving Good Reason,
and for a resignation which occur after a Change in Control, the Company shall
have the burden of proving that Good Reason did not exist. Judgment upon any
award of the arbitrators may be entered in any court having jurisdiction, or
application may be made to any such court for the judicial acceptance of the
award and for an order of enforcement.
7.3 Costs and Expenses. The Company shall pay the fees of all
arbitrators, witnesses and such other expenses as may be generated by the
arbitration, except Employee's attorneys fees, unless a majority of the
arbitrators concludes that such arbitration procedure was not instituted in good
faith by Employee. In such event the arbitrators shall be empowered to
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allocate fees and assess costs and other expenses of the arbitration, except
attorneys fees, as they may deem appropriate, bearing in mind the relative
financial abilities of the parties and the respective merits of their positions.
8. Non-Assignment. This Agreement shall not be assignable nor the
duties hereunder delegable by Employee. None of the payments hereunder may be
encumbered, transferred or in any way anticipated. The Company shall not assign
this Agreement nor shall it transfer all or any substantial part of its assets
without first obtaining in conjunction with such transfer the express assumption
of the obligations hereof by the assignee or transferee.
9. Remedies. Employee acknowledges that the services he is to render
under this Agreement are of a unique and special nature, the loss of which
cannot reasonably or adequately be compensated for in monetary damages, and that
irreparable injury and damage will result to the Company in the event of any
default or breach of this Agreement by Employee. Because of the unique nature of
the Confidential Information, Employee further acknowledges and agrees that the
Company will suffer irreparable harm if Employee fails to comply with his
obligations in section 5 hereof and that monetary damages would be inadequate to
compensate the Company for such breach. Accordingly, Employee agrees that the
Company will, in addition to any other remedies available to it at law, in
equity or, without limitation, otherwise, be entitled to injunctive relief
and/or specific performance to enforce the terms, or prevent or remedy the
violation, of any provisions of this Agreement. This provision shall not
constitute a waiver by the Company of any rights to damages or other remedies
which it may have pursuant to this Agreement or otherwise.
10. Survival. The provisions of sections 5, 7 and 9 shall survive the
expiration or earlier termination of this Agreement.
11. Notices. Any notices or other communications relating to this
Agreement shall be in writing and delivered personally or mailed by certified
mail, return receipt requested, to the party concerned at the address set
forth below:
If to Company: Wyle Electronics
00000 Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Senior Vice President
If to Employee: At his residence address as maintained
by the Company in the regular course of
its business for payroll purposes.
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Either party may change the address for the giving of notices at any time by
notice given to the other party under the provisions of this section 11.
12. Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior written and oral and all
contemporaneous oral agreements (including Employee's prior Employment Agreement
with the Company dated January 1, 1995), understandings and negotiations with
respect to the subject matter hereof. This Agreement may not be changed orally,
but only by an agreement in writing signed by both parties.
13. Construction. This Agreement shall be governed under and construed
in accordance with the laws of the State of California. The paragraph headings
and captions contained herein are for reference purposes and convenience only
and shall not in any way affect the meaning or interpretation of this Agreement.
It is intended by the parties that this Agreement be interpreted in accordance
with its fair and simple meaning, not for or against either party, and neither
party shall be deemed to be the drafter of this Agreement.
14. Severability. If any portion or provision of this Agreement is
determined by arbitration or by a court of competent jurisdiction to be invalid,
illegal or unenforceable, the remaining portions or provisions hereof shall not
be affected.
15. Binding Effect. The rights and obligations of the parties under
this Agreement shall be binding upon and inure to the benefit of the permitted
successors, assigns, heirs, administrators, executors and personal
representatives of the parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and in the year first written above.
WYLE ELECTRONICS
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Its: Senior Vice President
EMPLOYEE
/s/ Xxxxx X. Xxxxxxxxxxx
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Xxxxx X. Xxxxxxxxxxx
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