EXHIBIT 10.25
CHANGE-IN-CONTROL AGREEMENT
AGREEMENT, dated as of June 6, 2001, by and between IEC Electronics Corp.,
a Delaware corporation (the "Company"), and Randall C. Lainhart, Vice President,
New Business Development of the Company (the "Executive").
WHEREAS, in order to enhance Executive's continued service to the Company
in an effective manner without distraction by reason of the possibility of a
change in control of the Company and in order to assure both the Company and the
Executive of continuity of management in the event of any actual or threatened
change in control of the Company, the Company wishes to provide in this
agreement for severance benefits to the Executive in the event of change in
control of the Company.
NOW, THEREFORE, in consideration of the premises and of Executive agreeing
to serve as an employee of the Company, the parties hereto agree as follows:
1. Severance Payment. In the event of the termination of employment of
Executive within the two year period following a Change in Control (as
hereinafter defined) of the Company, and such termination is (i) by the Company
for any reason other than Termination for Cause (as hereinafter defined), death
or disability, or (ii) by the Executive for "Good Reason" (as hereinafter
defined), the Company will pay the Executive for a period of one year following
such termination an aggregate amount equal to the sum of (x) Executive's salary
at the annual rate then in effect and (y) the average annual performance bonus
paid to Executive during the three full fiscal years preceding termination.
Payments of such amount less any sums which may be due from Executive to the
Company at such time will be made in installments which are in accordance with
the customary payroll practices of the Company but will not be less than once a
month. In addition, Executive will be immediately vested in any retirement,
incentive, or option plans or agreements then in effect and the Company will
continue to provide Executive with Executive's then current health, dental, life
and accidental death and dismemberment insurance benefits for a period of one
year. All payments made to Executive hereunder will be subject to all applicable
employment and withholding taxes.
2. Limitations. Notwithstanding anything in this Agreement to the contrary,
the maximum amount of cash and other benefits payable (whether on a current or
deferred basis and whether or not includible in income for income tax purposes)
under Section 1 of this Agreement (the "Severance Benefits") shall be limited to
the extent necessary to avoid causing any portion of such Severance Benefits, or
any other payment in the nature of compensation to the Executive, to be treated
as a "parachute payment" within the meaning of Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended. Any adjustment required to satisfy
the limitation described in the preceding sentence shall be accomplished first
by reducing any cash payments that would otherwise be made to the Executive and
then, if further reductions are necessary, by adjusting other benefits as
determined by the Company.
3. Certain Definitions.
(a) Change in Control. A "Change in Control" shall be deemed to
have occurred (i) on the date that any person or group deemed a person under
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, other than
the Company or any person or group who has reported or is required to report
such ownership on Schedule 13G under such Act, in a transaction or series of
transactions, has become the beneficial owner, directly or indirectly (with
beneficial ownership as determined as provided in Rule 13d-3, or any successor
rule under such Act), of 15% or more of the outstanding voting securities of the
Company; or (ii) on the date on which one third or more of the members of the
Board of Directors shall consist of persons other than Current Directors (for
these purposes, as "Current Director" shall mean any member of the Board of
Directors elected at or continuing in office after, the 2001 Annual Meeting of
Stockholders, any successor of a Current Director who has been approved by a
majority of the Current Directors then on the Board, and any other person who
has been approved by a majority of the Current Directors then on the Board); or
(iii) on the date of (x) the merger or consolidation of the Company with another
corporation where the shareholders of the Company, immediately prior to the
merger or consolidation, would not beneficially own, immediately after the
merger or consolidation, shares entitling such shareholders to 50% or more of
all votes (without consideration of the rights of any class of stock to elect
directors by a separate class vote) to which all shareholders of the corporation
would be entitled in the election of directors or where the members of the Board
of Directors of the Company, immediately prior to the merger or consolidation,
would not immediately after the merger or consolidation, constitute a majority
of the Board of Directors of the corporation issuing cash or securities in the
merger or consolidation or (y) on the date of the sale or other disposition of
all or substantially all the assets of the Company.
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(b) Termination for Cause. The Company shall have the right to
terminate the services of Executive at any time without further liability or
obligations to Executive if: (i) Executive has failed or refused to perform such
services as may reasonably be delegated or assigned to Executive consistent with
the Executive's position, by the Chief Executive Officer or the Board of
Directors, (ii) Executive has been grossly negligent in connection with the
performance of Executive's duties, (iii) Executive has committed acts involving
dishonesty, willful misconduct, breach of fiduciary duty, fraud, or any similar
offense which materially affects Executive's ability to perform Executive's
duties for the Company or may materially adversely affect the Company, (iv)
Executive has been convicted of a felony; or (v) Executive has violated or
breached in any respect any material term, covenant or condition contained in
this Agreement or in any employment, confidentiality and/or non-competition
agreement between the Company and Executive.
Termination of the services of Executive for Cause shall not be
effective unless and until acted upon by the Board of Directors and unless and
until written notice shall have been given to Executive which notice shall
include identification with specificity of each and every factual basis or
incident upon which the termination is based.
(c) Good Reason. Good Reason shall mean the occurrence or
existence of any of the following with respect to Executive: (i) Executive's
annual rate of salary is reduced from the annual rate then currently in effect
or Executive's other employee benefits are in the aggregate materially reduced
from those then currently in effect (unless such reduction of employee benefits
applies to employees of the Company generally), or (ii) Executive's place of
employment is moved more than 50 miles from its then current location, or (iii)
Executive is assigned duties that are demeaning or are otherwise materially
inconsistent with the duties then currently performed by Executive. Before
Executive may terminate Executive's employment for Good Reason, Executive must
notify the Company in writing of Executive's intention to terminate and the
Company shall have 15 days after receiving such written notice to remedy the
situation, if possible.
4. Release. Notwithstanding the foregoing, IEC may condition the
entitlement of Executive or his estate, heirs and beneficiaries, as applicable,
to any payment or benefit under Section 1 upon receipt of a fully executed
general release in favor of IEC and its affiliates in reasonable form to be
prepared by IEC.
5. Confidential Information. Executive acknowledges and agrees that
Executive will be exposed to Confidential Information, knowledge or data as
described below and Executive further acknowledges and agrees that such
Confidential Information, knowledge or data is proprietary to and a valuable
trade secret of the Company and that any disclosure or unauthorized use thereof
will cause irreparable harm and loss to the Company. Executive understands that
the Company has invested large sums in developing these materials and it would
be difficult for Executive to develop these same materials from any independent
sources without expenditure of large sums of money and effort. Executive also
acknowledges that any use of the Company's materials other than in the scope of
Executive's employment with the Company would constitute an unlawful use and
taking of the materials from the Company for which the Company would have
remedies against Executive.
Executive agrees that during the period of Executive's employment by the
Company or by any parent or subsidiary of the Company or at any time thereafter,
Executive will not, directly or indirectly, disclose or authorize anyone else to
disclose or use or make known for Executive's or another's benefit any
Confidential Information, knowledge, or data of the Company whether or not
patentable or copyrightable, in any way acquired by Executive during Executive's
employment by the Company or by any parent or subsidiary of the Company.
Confidential Information, knowledge or data of the Company shall, for purposes
of this Agreement, include but not be limited to matters not readily available
to the public which are:
(a) of a technical nature, such as, but not limited to,
methods, know-how, formulae, compositions, drawings, blueprints, compounds,
processes, discoveries, machines, manufacturing procedures, techniques, computer
databases, source codes, computer codes, designs, programs, prototypes,
inventions, computer programs, and similar items;
(b) of a business nature such as, but not limited to,
information about sales or lists of customers (including mailing lists),
vendors, competitors, prices, costs, purchasing, profits, markets, sales and
marketing methods, documents, records, contract forms, computer disks containing
data or other materials and information relating to the products, services and
business of the Company, product strengths and weaknesses, business processes,
business and marketing plans and activities, financial information, and
personnel information;
(c) pertaining to future developments such as, but not limi ted
to, research and development, or future marketing or merchandising plans or
ideas.
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All records (whether in hard copy or digital form), books and computer
discs relating in any manner whatsoever to the Company shall be the exclusive
property of the Company regardless of who actually prepared the original record
or book. Executive shall not copy or cause to have copied any such records and
books except in the ordinary course of business. Immediately upon termination of
Executive's employment, Executive will deliver to the Company all copies of
data, information and knowledge, including without limitation, all documents,
correspondence, specifications, blueprints, notebooks, reports, sketches,
formulae, computer programs, sales and other manuals, price lists, customer
lists, samples, and all other materials and copies thereof relating to the
business of the Company obtained by Executive during the period of Executive's
employment by the Company or by any parent or subsidiary of the Company which
are in Executive's possession or under Executive's control.
The foregoing shall be in addition to any obligation Executive may have
under applicable law in respect of trade secrets and other legally protected
information.
6. Covenant Not to Compete.
During the period of employment and during the Non-Compete Period (as
hereinafter defined) the Executive will not, directly or indirectly (a) own,
manage, operate, control or participate in the ownership, management, operation
or control of, or be connected as an officer, employee, partner, director,
consultant, independent contractor, principal, agent, stockholder or otherwise
with, or have any financial interest in, or aid or assist any other person in
the conduct of, any entity or business in the electronics manufacturing services
industry which competes with any business, venture or activity being conducted
or proposed to be conducted on the date of termination of the Executive's
employment of any group, division or affiliate of the Company, in any geographic
area where such business is being conducted or is proposed to be conducted at
the date of cessation of the Executive's employment, or (b) persuade or attempt
to persuade any officer, employee or consultant of the Company to leave the
employ of the Company, or to stop providing services to the Company, or in any
way interfere with the relationship between the Company and any officer,
employee, director, shareholder or consultant thereof, or (c) solicit, hire or
cause to be hired, directly or through another entity any person who is an
employee of the Company on the date of termination of employment of Executive,
or (d) induce or attempt to induce any customer, dealer, supplier or licensee to
cease doing business with the Company, or in any way interfere with the
relationship between any such customer, dealer, supplier or licensee and the
Company or change that client's business relationship with the Company, or (e)
provide or assist in providing any products or services to any clients of the
Company (including any party to whom the Company has made a sales proposal
within 18 months prior to the termination of employment of Executive) of the
type offered by the Company. However, nothing herein shall prevent Executive
from owning not more than five percent (5%) of the outstanding publicly traded
shares of common stock of a corporation, as to which corporation Executive has
no relationship other than as a shareholder. For purposes of this Agreement,
"Non-Compete Period" shall mean the period during which Executive is receiving
severance payments and benefits pursuant to Section 1 hereof.
Executive specifically agrees that because of Executive's special expertise
and the special and unique services that Executive has been and will be
furnishing the Company, and because of the Confidential Information that has
been acquired by Executive or will be disclosed to Executive during Executive's
employment, the above stated geographic areas and time period, in and during
which Executive will not compete with the Company, are reasonable in scope and
duration and are necessary to afford the Company just and adequate protection
against the irreparable damage which would result to the Company from any
activities prohibited by this Section.
In connection with the foregoing provisions of this Section 6, the
Executive represents that Executive's experience, capabilities and circumstances
are such that such provisions will not unreasonably prevent Executive from
earning a livelihood and that the limitations set forth herein are reasonable
and properly required for the adequate protection of the Company and its
affiliates.
If Executive in any way breaches the obligations specified in this Section
6, the Company shall have the right, in addition to any other remedies available
to it, to terminate the further payment of any amounts due, any compensation,
any severance payments, or any benefits.
If the geographic or time restriction contained in this Section 6 shall be
determined by an arbitrator or court of law or equity to be unreasonable, the
arbitrator or court may amend this Section 6 to provide a reasonable geographic
or time restriction which shall then be binding upon the Company and the
Executive.
7. Injunctive Relief. Executive agrees that any breach or threatened breach
by Executive of any of the provisions contained in Sections 5 and 6 cannot be
remedied solely by the recovering of damages and the Company shall be entitled
to an injunction against such breach or threatened breach. Nothing herein,
however, shall be construed as prohibiting the Company from pursuing, in
conjunction with an injunction or otherwise, any other remedies available at law
or in equity for any such breach or threatened breach, including the recovery of
damages from Executive.
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8. Right to Employment. Nothing contained herein shall confer upon
Executive any right to be continued in the employment of the Company or
interfere in any way with the right of the Company to terminate Executive's
employment at any time for any reason. Executive hereby acknowledges that
Executive is and will remain an Executive-at-will of the Company, terminable
with or without Cause.
9. Notices. All notice given in connection with this Agreement shall be in
writing and shall be delivered either by personal delivery, by telegram, telex,
telecopy or similar facsimile means, by certified or registered mail, return
receipt requested, or by express courier or delivery services, addressed to the
parties hereto at the following addresses:
To Executive: To IEC Electronics Corp.:
Randall C. Lainhart IEC Electronics Corp.
401 Jodie Drive 105 Norton Street
Vestal, NY 13850 Newark, NY 14513
Attn: President & Chief Executive Officer
FAX: (315) 331-8185
or at such other address and number as either party shall have previously
designated by written notice given to the other party in the manner hereinabove
set forth. Notice shall be deemed given when received, if sent by telegram,
telex, telecopy or similar facsimile means (confirmation of such receipt by
confirmed facsimile transmission being deemed receipt of communications sent by
telex, telecopy or other facsimile means); and when delivered and receipted for
(or upon the date of attempted delivery where delivery is refused), if
hand-delivered, sent by express courier or delivery services, or sent by
certified or registered mail, return receipt requested.
10. Waiver. Any waiver of a breach of any of the terms of this Agreement
shall not operate as a waiver of any other breach of such terms or of any other
terms, nor shall failure to enforce any term hereof operate as a waiver of any
such term or of any other term.
11. Severability. If any term of this Agreement or the application thereof
is held invalid or unenforceable, the validity or unenforceability shall not
effect any other term of this Agreement which can be given effect without the
invalid or unenforceable term.
12. Governing Law; Venue. This Agreement shall be construed and enforced in
accordance with and governed by the internal laws of the State of New York,
without reference to conflict of law principles of any jurisdiction (including
without limitation New York) which would result in the application of the
domestic substantive laws of any other jurisdiction. The parties consent to the
exclusive jurisdiction of the Supreme Court of New York, Monroe County or of the
United States District Court of the Western District of New York for any legal
action instituted by any party against any other with respect to the subject
matter hereof.
13. Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof. This Agreement may not be
amended or changed except by a writing signed by both parties.
14. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the Company and its successors and assigns and Executive and his
heirs, executors, administrators and legal representatives.
IN WITNESS WHEREOF, Executive has executed this Agreement and the Company
has caused this Agreement to be executed as of the date set forth above.
IEC Electronics Corp.
By:
Thomas W. Lovelock
President and Chief Executive Officer
EXECUTIVE
Randall C. Lainhart
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