EMPLOYMENT AGREEMENT
EXHIBIT
10.1
The
parties to this Employment Agreement (this “Agreement”), dated as of August 15,
2006, are American Power Conversion Corporation, a Massachusetts corporation
(the “Company”), and Xxxxxx Xxxxxxx (the “Executive”). Accordingly, the parties,
intending to be legally bound, agree as follows:
1. Employment.
1.1 General.
The
Company hereby employs the Executive in the positions and capacities of
President and Chief Executive Officer, and the Executive hereby accepts such
employment, subject to the terms and conditions herein contained. In such
capacities, the Executive agrees faithfully to perform (i) such duties and
responsibilities as are customary for an executive with similar titles and
positions at similar publicly-traded companies and (ii) such additional duties
(consistent with his positions as President and Chief Executive Officer) as
may
reasonably be assigned to the Executive from time to time. The Executive
acknowledges that his duties will include such matters as certification of
the
Company’s quarterly and annual filings with the Securities and Exchange
Commission. The Executive further acknowledges that he is serving under this
Agreement solely on an interim basis while and until the Company completes
its
search for a new President and Chief Executive Officer, and subject to the
provisions hereof, the Executive may be removed from such positions, with or
without cause, at anytime by the Board of Directors of the Company.
1.2 Full-Time
Position.
The
Executive hereby agrees that, during the Employment Term he shall devote all
of
his business time, attention and skills to the business and affairs of the
Company and its subsidiaries, except during vacation time as provided by Section
3.3 hereof and any periods of illness. The Executive agrees that, during the
Employment Term, he will not seek employment with another entity. Subject to
the
foregoing, nothing in this Agreement shall restrict the Executive from (i)
managing his personal investments, personal business affairs and other personal
matters, (ii) serving on civic or charitable boards or committees or (iii)
delivering lectures, fulfilling speaking engagements or teaching at educational
institutions; provided
that
none of such activities, either singly or in the aggregate, interfere with
the
performance of his duties under this Agreement. The Executive must receive
approval of the Board of Directors of the Company (“Board”) prior to assuming
any directorships in accordance with any applicable policies of the Company.
2. Compensation.
2.1 Salary.
Subject
to the terms and conditions herein contained, during the Employment Term, the
Company shall pay to the Executive, and the Executive shall accept, for all
services to be rendered by him pursuant to this Agreement (including, but not
limited to, any services that may be
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rendered
by him to any subsidiary of the Company and any services that may be rendered
by
him as a member of the Board or of the board of any such subsidiary or any
committee(s) thereof) a base salary at a rate of $500,000.00 per annum, and
subject to increases, if any, as may be approved from time to time by the Board
or the Compensation and Stock Option Committee of the Board (the “Compensation
Committee”) in its discretion (such amount, together with any applicable
increases, shall be referred to herein as the “Base Salary”). The Executive’s
Base Salary shall be payable in such installments as are in effect from time
to
time in accordance with the regular payroll practices of the
Company.
2.2 Executive
Bonus.
In
addition to his Base Salary, the Executive shall be eligible to participate
in
the executive bonus program of the Company in respect of each calendar year
during the Employment Term (a “Bonus”), as such Bonus may be awarded pursuant
to, and in accordance with, the terms of the Company’s the executive bonus
program, as then in effect. The Company’s current executive bonus program
provides for the payment of a formulaic percentage of base salary actually
paid
to the executive for services in a calendar year.
3. Additional
Benefits.
3.1 Expenses.
The
Company shall reimburse the Executive (upon the submission by him of reasonably
itemized accounts therefore), or advance to the Executive, where appropriate,
an
amount for such costs and expenses as the Executive shall reasonably incur
(including, among other things, business travel and business entertainment
expenses) in connection with the performance by him of his duties hereunder
in
accordance with the Company’s policy with respect thereto as in effect from time
to time during the Employment Term and reimbursement of amounts paid by him
for
the annual planning and preparation of his tax returns in an amount reasonable
and customary for executives of similar status.
3.2 General
Fringe Benefits.
The
Executive shall be entitled to, and the Company shall provide, such fringe
benefits of the Company, with
eligibility to commence on the Effective Date, including,
but not limited to, participation in employee health and benefit plans and
the
Company’s purchase of health and/or disability insurance, which the Company may
from time to time generally offer its officers during the Employment Term and
for which the Executive is eligible.
3.3 Employee
Time Off.
The
Executive shall be entitled to twenty-two (22) days of time off annually during
the Employment Term in accordance with the Company’s policies and practices. The
Executive shall provide the Board with reasonable prior notice of his planned
vacation(s).
3.4 Other
Benefits.
Nothing
in this Agreement shall prevent the Company from, or obligate the Company to,
increase compensation (including without limitation any Base Salary or Bonus),
any other payments or any other benefits to the Executive, or from deciding
to
provide the Executive with any benefits in addition to those provided for
herein.
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4. Term
of Employment.
The
Executive’s employment hereunder shall commence on August 15, 2006 (the
“Effective Date”) and shall continue until the Board of Directors elects a new
President and/or Chief Executive Officer unless earlier terminated pursuant
to
Section 5 below. The period of such employment is herein referred to as the
“Employment Term.”
5. Termination.
5.1 Death.
The
Employment Term shall terminate automatically in the event of the Executive’s
death during the Employment Term and upon such termination, the obligations,
duties and liabilities of the Company to the Executive shall solely be as set
forth in Section 5.5.1 hereof.
5.2 Disability.
In the
event of the Executive’s failure to perform his duties by reason of his becoming
Disabled (as defined herein) during the Employment Term, the Company shall
have
the option to terminate the Employment Term, by giving written notice of such
termination to the Executive, which notice shall specify the effective date
of
termination. Upon such termination, the Executive shall have no further duties
hereunder (except as set forth in Section 7 hereof) and the obligations, duties
and liabilities of the Company to the Executive shall solely be as set forth
in
Section 5.5.1 hereof. For purposes of this Agreement, the term “Disabled” shall
mean the inability of the Executive, for medical reason(s) certified by a
physician selected by the Company and reasonably satisfactory to the Executive,
to substantially perform his duties hereunder for an aggregate of at least
180
days during any period of 365 consecutive days.
5.3 By
the
Company for Cause.
The
Company may, at its option, terminate the Employment Term, for any of the
following reasons (each a “Cause”), upon not less than five (5) business days’
prior written notice to the Executive that a meeting of the Board will be held
to consider such action, at which meeting the Executive shall be afforded an
opportunity to be heard (a “Hearing”). If
the
Board decides to terminate the Executive at the Hearing,
the
Executive shall have no further duties hereunder (except as set forth in Section
7 hereof) and the obligations, duties and liabilities of the Company to the
Executive shall solely be as set forth in Section 5.5.2 hereof:
5.3.1 Violation
of Law.
If the
Executive is convicted of or pleads nolo contendere to (i) any misdemeanor
relating to the affairs of the Company or any of its affiliates, (ii) a felony
under Federal or state law, or (iii) a willful violation of any federal or
state
securities law.
5.3.2 Failure
to Perform.
If,
without the prior express written consent of the Board, the Executive (i) fails
to perform (other than as a result of being Disabled, as to which Section 5.2
hereof could apply), in any material respect, any of his duties or obligations
to the Company or those duties or actions reasonably requested by the Board
or
the Chief Executive Officer of the Company, fails to observe Company policies,
practices or procedures, or breaches any contract or agreement with the Company,
and if such failure or breach continues for more than thirty (30) days after
written
notice by the
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Company
to the Executive specifying the nature of his failure or breach, provided,
however,
that if
such failure or breach is incapable of being cured, in the good faith
determination of the Board, the Employment Term shall terminate immediately
after the date of the Hearing,
(ii)
takes actions or omits to take actions in connection with his duties and/or
responsibilities hereunder that constitute willful misconduct or gross
negligence,
or
(iii)
commits any act of insubordination or disloyalty to the Company, its Board
or
management.
The
parties hereto acknowledge and agree that matters of the business judgment
of
the Executive or the economic performance of the Company or any segment thereof
shall not be factors in determining Cause, except to the extent that they
involve gross negligence or willful misconduct as referenced in the foregoing
paragraph.
5.4 By
the
Company Without Cause.
In
addition (and without prejudice) to its right to terminate the Employment Term
under the provisions of Section 5.3 hereof, the Company may, at its option,
terminate the Employment Term for any reason whatsoever by giving written notice
of termination to the Executive, specifying the date of termination.
5.5 Payments
Upon Termination.
In the
event that the Employment Term is terminated hereunder, the Company shall pay
to
the Executive the following amounts, and the Company shall thereupon have no
liability or other obligation of any kind or character under or in connection
with this Agreement (the effective date of any such termination is hereinafter
referred to as the “Termination Date”):
5.5.1 Death
or Disability.
In the
event that the Employment Term is terminated pursuant to Section 5.1 or Section
5.2 hereof, the Company shall pay to the Executive or to the Executive’s
executor, administrator, beneficiary or personal representative (the
“Representative”), as the case may be, the Base Salary due and owing through the
Termination Date, payable in accordance with the Company’s regular payroll
practices.
5.5.2 By
the
Company for Cause.
In the
event that the Employment Term is terminated pursuant to Section 5.3 hereof,
the
Company shall pay to the Executive his Base Salary due and owing to him through
the Termination Date payable in accordance with the Company’s regular payroll
practices.
5.5.3 By
the
Company without Cause.
In the
event that the Employment Term is terminated pursuant to Section 5.4 hereof,
the
Executive shall remain an employee of the Company in the position of Vice
President, Solutions Delivery Group at a base salary, bonus eligibility and
fringe benefits to be mutually agreed but which shall in no event be less than
the salary, bonus eligibility and fringe benefits in effect with respect to
the
Executive immediately prior to the effective date of this Agreement subject
to
changes in the bonus plan and fringe benefits available to officers generally
and which shall take into account the increased responsibilities of the position
of Vice President, Solutions Delivery Group as
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compared
with the Executive’s position immediately prior to the effectiveness of this
Agreement. Notwithstanding the foregoing, in the event the Company does not
offer the new (or comparable) position to the Executive upon the Termination
Date and the Executive ceases to be an employee of the Company other than as
provided in 5.1, 5.2 or 5.3, the Company shall pay to the Executive (i) his
Base
Salary due and owing to him through the Termination Date, payable in accordance
with the Company’s regular payroll practices, and (ii) an amount equal to the
Executive’s annual base salary as in effect immediately prior to the
effectiveness of this Agreement.
6. Arbitration.
6.1 General.
Any dispute under this Agreement, including
those arising out of or relating to Section 5 hereof,
shall be
settled by arbitration in accordance with this Section 6.
6.2 Commencement.
Either
party may serve upon the other party written notice that the dispute, specifying
the nature thereof, shall be submitted to arbitration. Within ten (10) days
after the service of such notice, each of the parties shall designate a person
as an arbitrator and serve written notice of such appointment upon the other
party. If either party fails within the specified time to appoint such
arbitrator, the other party (if such party shall timely designate an arbitrator)
shall be entitled to appoint both arbitrators. The two arbitrators so appointed
shall appoint a third arbitrator. If the two arbitrators appointed shall fail
to
agree upon a third arbitrator within ten (l0) days after their appointment,
then
an application may be made by either party hereto, upon written notice to the
other party, to the American Arbitration Association, or any successor thereto,
or if the American Arbitration Association or its successor shall fail to
appoint a third arbitrator within ten (10) days after such request, then either
party may apply, with written notice to the other, to any court of competent
jurisdiction for the appointment of a third arbitrator, and any such appointment
so made shall be binding upon both parties hereto.
6.3 Applicable
Rules and Procedures.
The
arbitration shall be conducted, to the extent consistent with this Section
6, in
accordance with the then prevailing rules and procedures of the American
Arbitration Association or its successor. The arbitrators shall have the right
to retain and consult experts and competent authorities skilled in the matters
under arbitration, but all consultations shall be made in the presence of both
parties, who shall have full right to cross-examine the experts and authorities.
Unless otherwise agreed by the parties, any such arbitration shall take place
in
Rhode Island and shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association.
6.4 Decision.
The
arbitrators shall render their award, upon the concurrence of at least two
of
their number, not later than thirty (30) days after the appointment of the
third
arbitrator. Their decision and award shall be in writing, and counterpart copies
shall be delivered to each of the parties. Such decision of the arbitrators
shall be final and binding upon the parties hereto. In rendering their award,
the
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arbitrators
shall have no power to modify any of the provisions of this Agreement, and
the
jurisdiction and power of the arbitrators are expressly limited accordingly.
Judgment may be entered on the award of the arbitrators and may, be enforced
in
any court having jurisdiction.
Each
of
the parties hereto shall bear all of its/his own fees, costs and expenses,
including attorneys’ fees, incurred by it in connection with any arbitration
proceeding pursuant to this Section 6. Notwithstanding the foregoing, in the
event any party fails to comply with the decision of the arbitrators and the
other party undertakes any action(s) or proceeding(s) to enforce such
compliance, all costs and expenses (including reasonable legal fees) incurred
by
the party seeking to enforce such compliance shall be borne by the party failing
to so comply.
7. Non-disclosure;
Non-compete; Availability.
7.1 Agreement.
The
Executive has been an employee of the Company prior to the date hereof, and
the
Executive acknowledges and agrees, as a condition precedent to the effectiveness
of this Agreement, that in his employment under this Agreement he remains bound
by and subject to the non-disclosure, non-competition, non-solicitation and
developments agreements (the “NDA”) currently in effect with the Executive.
7.2 Availability.
Reasonably subject to his employment commitments elsewhere, the Executive hereby
agrees to make himself available to the Company after the termination of the
Employment Term, at such reasonable time or times as may be required by the
Company in connection with any pending or threatened litigation or governmental
investigation involving the Company, not to exceed five (5) days in any calendar
quarter unless otherwise mutually agreed. The Company shall advance or reimburse
the Executive for any out-of-pocket expenses reasonably incurred by him in
fulfilling his obligations under this Section 7.2 upon the submission by him
of
reasonably itemized accounts therefore,
and
shall pay the Executive a mutually agreed upon per diem fee for any days in
excess of two (2) hereunder, including reasonable preparation time.
8. Miscellaneous
Provisions.
8.1 Withholding.
All
payments required to be made to the Executive by the Company hereunder shall
be
subject to any applicable withholding under applicable Federal, state and local
income tax laws. Any such withholding shall be based upon the most recent Form
W-4 filed by the Executive with the Company, and the Executive may from time
to
time revise such filing.
8.2 Severability.
If in
any jurisdiction any term or provision hereof is adjudicated to be invalid
or
unenforceable, (i) the remaining terms and provisions hereof shall be
unimpaired, (ii) any such invalidity or unenforceability in any jurisdiction
shall not invalidate, limit or render unenforceable such provision in any other
jurisdiction and (iii) the invalid or unenforceable term or provision shall,
for
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purposes
of such jurisdiction, be deemed replaced by a term or provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision.
8.3 Indemnification.
The
Company shall indemnify the Executive to the fullest extent permitted by
applicable law and
the
By-Laws of the Company for
all
amounts (including without limitation, judgments, fines, settlement payments,
costs, expenses and attorneys’ fees and expenses) reasonably incurred or paid by
the Executive in connection with any claim, action, suit, investigation or
proceeding arising out of or relating to performance by the Executive of
services for, or actions of the Executive as (or the Executive’s serving in the
position of) a director, officer or employee of, the Company, any subsidiary
or
affiliate of the Company or any enterprise at the Company’s request, and shall
advance to the Executive (subject to the Executive’s undertaking to repay any
advances if it is determined that he is not entitled to them) the reasonable
costs, including attorneys fees, of defending any such claim. The provisions
of
this Section 8.3 shall survive the termination of this Agreement.
8.4 Execution
in Counterparts.
This
Agreement may be executed in one or more counterparts, and by each of the
parties hereto in separate counterparts, each of which shall be deemed to be
an
original but all of which taken together shall constitute one and the same
agreement, and this Agreement shall become effective when one or more
counterparts has been signed by each of the parties hereto and delivered to
the
other party hereto.
8.5 Notices.
All
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed duly given when delivered by hand, or when delivered
if mailed by registered or certified mail or private courier service, postage
prepaid, to the respective addresses as follows:
If
to the
Company, to:
000
Xxxxxxxxxxx Xxxx
Xxxx
Xxxxxxxx, XX 00000
Attn:
Vice President & General Counsel
If
to the
Executive, to:
Xxxxxx
Xxxxxxx
c/o
000
Xxxxxxxxx Xxxxxx Xxxxx
X’Xxxxxx,
XX 00000
or
to
such other address(es) as either party hereto shall have designated by like
notice to the other Party hereto.
8.6 Amendment.
No
provision of this Agreement may be modified, amended or discharged in any
manner, except by a written instrument executed by each of the parties
hereto.
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8.7 Entire
Agreement.
This
Agreement constitutes the entire agreement of the parties hereto with respect
to
the subject matter hereof, and supersedes all prior agreements and
understandings of the parties hereto, oral and written, including all prior
or
existing employment agreements. Each party hereto hereby acknowledges and agrees
that, other than as contained herein, no other representations or warranties,
oral or written, have been made, expressly or impliedly, by the other party
hereto.
8.8 Applicable
Law.
This
Agreement shall be governed by the laws of the Commonwealth of Massachusetts,
without regard to its choice of law provisions.
8.9 Headings.
The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any
of
the terms or provisions of this Agreement.
8.10 Non-assignability.
8.10.1 By
the
Executive.
Neither
this Agreement nor any right, duty, obligation or interest hereunder shall
be
assignable or delegable by the Executive without the Company’s prior written
consent; however, that the Executive may designate any of his beneficiaries
to
receive (and such beneficiaries shall receive) any compensation, payments or
other benefits payable hereunder upon or after his death, or the foregoing
may
be transferred by the laws of descent or distribution.
8.10.2 By
the
Company.
This
Agreement and all of the Company’s rights and obligations hereunder may be
assigned or transferred by it through a merger, consolidation or other business
combination. Upon the occurrence of such a transaction, any such successor
company resulting therefrom shall be deemed to be substituted for all purposes
as the Company hereunder.
8.11 Binding
Effect; Benefits.
This
Agreement shall inure to the benefit of, and be binding upon, the parties hereto
and their respective heirs, legal representatives, successors and permitted
assigns.
8.12 Waiver.
The
failure of either of the parties hereto at any time to enforce any provision
of
this Agreement shall not be deemed or construed to be a waiver of any such
or
any other provision, nor to in any way affect the validity of this Agreement
or
any provision hereof or the right of either of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any breach
of
any of the provisions of this Agreement shall be effective unless set forth
in a
written instrument executed by the party against whom or which enforcement
of
such waiver is sought, and no waiver of any such breach shall be construed
or
deemed to be a waiver of any other or subsequent breach.
8.13 Capacity,
etc.
The
Executive hereby represents and warrants to the Company and the Company hereby
represents and warrants to the Executive that: (i) he (or it) has full power,
authority and capacity to execute and deliver this Agreement, and to perform
his
(or its) obligations hereunder, (ii) said execution, delivery and performance
will not (and with the giving of notice or lapse of time, or both, would not)
result in the breach of any agreement or other obligation to which he (or it)
is
a party or is
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otherwise
bound and (iii) this Agreement is his (or its) valid and binding obligation
enforceable in accordance with its terms.
IN
WITNESS WHEREOF, this Agreement has been executed and delivered by the parties
hereto as of the date first above written.
AMERICAN POWER CONVERSION CORPORATION | ||
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By: | /s/ Xxxxxx Xxxx | |
Title:
Vice President for HR & Organizational Development
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/s/
Xxxxxx X. Xxxxxxx
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Xxxxxx
Xxxxxxx
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