<PAGE> 1
DRAFT
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended July 3, 1999, Commission File No. 000-27308
AAVID THERMAL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 02-466826
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Eagle Square, Suite 509, Concord, NH 03301
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (603) 224-1117
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
The number of shares of common stock outstanding as of August 3, 1999 was
9,599,828.
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<PAGE> 2
AAVID THERMAL TECHNOLOGIES, INC.
INDEX TO FORM 10-Q
Page
----
Part I. Financial Information
Item 1. Financial Statements
a.) Consolidated Balance Sheets
as of July 3, 1999 and December 31, 1998.................. 3
b.) Consolidated Statements of Income
for the quarter and six months ended
July 3,1999 and June 27,1998.............................. 4
c.) Consolidated Statements of Cash Flows
for the six months ended July 3, 1999
and June 27, 1998......................................... 5
d.) Notes to Consolidated Financial Statements................ 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 12
Part II. Other Information
Item 1. Legal Proceedings..................................... 19
Item 6. Exhibits and Reports on Form 8-K...................... 20
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PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
AAVID THERMAL TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JULY 3, DECEMBER 31,
1999 1998
(Unaudited)
----------- ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 24,715 $ 20,027
Notes receivable -- 1,459
Accounts receivable 34,113 31,158
Inventories 14,839 15,283
Refundable income taxes 370 370
Deferred income taxes 9,257 9,072
Prepaid and other current assets 2,995 2,897
--------- ---------
Total current assets 86,289 80,266
Property, plant and equipment, net 40,397 42,497
Other assets, net 7,261 6,321
--------- ---------
Total Assets $ 133,947 $ 129,084
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of debt obligations $ 3,639 $ 3,442
Accounts payable - trade 13,992 17,377
Accrued expenses and other current liabilities 26,180 23,488
--------- ---------
Total current liabilities 43,811 44,307
Debt obligations, net of current portion 9,917 11,208
Deferred income taxes 2,189 2,218
--------- ---------
Total liabilities 55,917 57,733
--------- ---------
Commitments and Contingencies
Stockholders' equity:
Preferred Stock, $0.01 par value; authorized
4,000,000 shares; 0 outstanding at July 3,
1999 and December 31, 1998 -- --
Common Stock, $0.01 par value; authorized
25,000,000 shares; 9,307,097 and 9,251,391
shares issued and outstanding at July 3,
1999 and December 31, 1998,respectively 93 93
Additional paid-in capital 57,569 56,740
Cumulative translation adjustment (1,374) (902)
Retained earnings 21,742 15,420
--------- ---------
Total stockholders' equity 78,030 71,351
--------- ---------
Total liabilities and stockholders' equity $ 133,947 $ 129,084
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
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<PAGE> 4
AAVID THERMAL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(Unaudited)
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JULY 3, JUNE 27, JULY 3, JUNE 27,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 47,787 $ 54,287 $ 97,628 $ 109,845
Cost of goods sold 29,147 35,869 60,507 73,039
----------- ----------- ----------- -----------
Gross profit 18,640 18,418 37,121 36,806
Selling general and administrative expenses 11,713 11,239 23,080 22,246
Research and development 1,736 1,655 3,465 3,345
Buyout of compensation arrangements -- -- -- 1,858
----------- ----------- ----------- -----------
Income from operations 5,191 5,524 10,576 9,357
Interest expense, net (71) (356) (186) (815)
Other expense, net (246) (91) (489) (413)
----------- ----------- ----------- -----------
Income before income taxes 4,874 5,077 9,901 8,129
Income tax expense (1,741) (1,880) (3,600) (3,016)
----------- ----------- ----------- -----------
Net income $ 3,133 $ 3,197 $ 6,301 $ 5,113
=========== =========== =========== ===========
Net income per share, basic $ 0.34 $ 0.38 $ 0.68 $ 0.63
=========== =========== =========== ===========
Weighted average common shares 9,288,339 8,459,447 9,279,795 8,138,622
Net income per share, diluted $ 0.32 $ 0.34 $ 0.65 $ 0.54
=========== =========== =========== ===========
Weighted average common shares and equivalents 9,765,119 9,491,602 9,684,246 9,419,478
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
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<PAGE> 5
AAVID THERMAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JULY 3, JUNE 27,
1999 1998
-------- --------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income $ 6,301 $ 5,113
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 3,993 4,919
Loss on sale of property, plant and equipment 91 --
Deferred income taxes (211) (2,435)
Changes in assets and liabilities:
Accounts receivable (3,255) (4,735)
Note receivable 1,459 --
Inventories 738 254
Prepaid and other current assets (501) (1,666)
Other long term assets 200 36
Accounts payable - trade (3,586) (1,979)
Accrued expenses and other current assets 3,444 7,048
-------- --------
Total adjustments 2,372 1,441
-------- --------
Net cash provided by operating activities 8,673 6,554
Cash flows used in investing activities:
Purchase of property, plant & equipment (3,541) (5,881)
Net proceeds from sale of fixed assets 61 29
-------- --------
Net cash used in investing activities (3,480) (5,852)
Cash flows used in financing activities:
Issuance of common stock, net of expenses 829 2,438
Advances under line of credit -- 78,560
Repayments of line of credit -- (84,614)
Advances under other debt obligations 202 1,054
Principal payments under debt obligations (1,490) (1,628)
-------- --------
Net cash used in financing activities (459) (4,190)
Foreign exchange rate effect on cash and cash equivalents (46) (207)
Net increase (decrease) in cash and cash equivalents 4,688 (3,695)
Cash and cash equivalents, beginning of period 20,027 6,919
-------- --------
Cash and cash equivalents, end of period $ 24,715 $ 3,224
======== --------
Supplemental disclosure of cash flow information:
Interest paid $ 323 $ 471
======== ========
Income taxes paid $ 1,126 $ 562
======== ========
Supplemental disclosure of non-cash investing activities:
Sale of equipment in exchange for note receivable -- 1,152
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
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<PAGE> 6
AAVID THERMAL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
(1) BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated
financial statements reflect all adjustments, consisting only of normal
adjustments, necessary to present fairly the financial position of Aavid Thermal
Technologies, Inc. and its consolidated subsidiaries at July 3, 1999, and the
results of operations for the quarters and six months ended July 3, 1999 and
June 27, 1998, and the cash flows for the six months ended July 3, 1999 and June
27, 1998. The results of operations for the six months ended July 3, 1999 should
not necessarily be taken as indicative of the results of operations that may be
expected for the entire year 1999.
The financial information as of and for the periods ended July 3, 1999
should be read in conjunction with the financial statements contained in the
Company's Form 10-K Annual Report for 1998.
(2) ACCOUNTS RECEIVABLE
The components of accounts receivable at July 3, 1999 and December 31, 1998
are as follows:
<TABLE>
<CAPTION>
July 3, December 31,
1999 1998
---- ----
(Unaudited)
<S> <C> <C>
Accounts receivable $ 35,061 $ 31,895
Allowance for doubtful accounts (948) (737)
-------- --------
Net accounts receivable $ 34,113 $ 31,158
======== ========
</TABLE>
(3) INVENTORIES
Inventories are valued at the lower of cost or market with cost determined
principally on the average cost method. The cost of inventories of foreign
subsidiaries are valued on the first-in, first-out basis.
<TABLE>
<CAPTION>
July 3, December 31,
1999 1998
---- ----
(Unaudited)
<S> <C> <C>
Raw materials $ 9,098 $ 9,987
Work-in-process 2,349 2,364
Finished goods 3,392 2,932
------- -------
$14,839 $15,283
======= =======
</TABLE>
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<PAGE> 7
(4) COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income," which specifies the presentation and
disclosure requirements for comprehensive income. The following details
comprehensive income for the periods reported herein:
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
July 3, June 27, July 3, June 27,
1999 1998 1999 1998
------- ------- ------- -------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Income $ 3,133 $ 3,197 $ 6,301 $ 5,113
Foreign currency translation
adjustment (299) (493) (472) (175)
------- ------- ------- -------
Comprehensive Income $ 2,834 $ 2,704 $ 5,829 $ 4,938
======= ======= ======= =======
</TABLE>
(5) EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share," which specifies the computation, presentation, and
disclosure requirements for earnings per share ("EPS"). Basic earnings per share
excludes dilution and is computed by dividing net earnings by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share is computed based upon the weighted average number of common shares
outstanding and dilutive common stock equivalents. For purposes of this
calculation, outstanding options are considered common stock equivalents (using
the treasury stock method).
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<PAGE> 8
The following is a reconciliation of the numerators and denominators used
to calculate earnings per share in the Consolidated Statements of Operations:
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
----------------------------------------------------------------------------------------
July 3, 1999 June 27, 1998
--------------------------------------- --------------------------------------
Per- Per-
Income Shares Share Income Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Net Income $3,133 $3,197
====== ======
BASIC EPS:
Income Available to
Common Stockholders
$3,133 9,288,339 $ 0.34 3,197 8,459,447 $ 0.38
EFFECT OF DILUTIVE
SECURITIES:
Options and Warrants
476,780 1,032,155
------- ---------
DILUTED EPS:
Income Available to
Common Stockholders
$3,133 9,765,119 $ 0.32 $3,197 $9,491,602 $ 0.34
====== ========= ====== ====== ========== ======
<CAPTION>
FOR THE SIX MONTHS ENDED
---------------------------------------------------------------------------------------
July 3, 1999 June 27, 1998
--------------------------------------- -------------------------------------
Per- Per-
Income Shares Share Income Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Net Income $6,301 $5,113
====== ======
BASIC EPS:
Income Available to
Common Stockholders
$6,301 9,279,795 $ 0.68 5,113 8,138,622 $ 0.63
EFFECT OF DILUTIVE
SECURITIES:
Options and Warrants
404,451 1,280,856
------- ---------
DILUTED EPS:
Income Available to
Common Stockholders
$6,301 9,684,246 $ 0.65 $5,133 $9,419,478 $ 0.54
====== ========= ====== ====== ========== ======
</TABLE>
(6) NON-RECURRING CHARGES AND RESTRUCTURING RESERVES
During the first quarter of 1998, the Company recorded a non-recurring
pre-tax charge of $1.9 million, which related to financial obligations arising
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<PAGE> 9
from the Company's restructuring in 1993 and comprised two elements: First, the
Company terminated an arrangement with certain venture investors, under which it
was obligated to pay fixed fees until at least the year 2000. Second, the
Company provided for an obligation to pay a former director a bonus based on
profits in excess of certain thresholds.
During the third quarter of 1998, the Company recorded a non-recurring
pre-tax charge of $4.9 million reflecting the costs associated with the closure
of the Company's Manchester, New Hampshire, facility. This facility was
dedicated to manufacturing a specific large volume product for a single
customer. Following a change in product design by the customer, demand
significantly decreased during the fourth quarter of 1998 to $8.6 million, from
a level of $15 million in the second quarter of 1998. The restructuring is
expected to be concluded in the second half of 1999.
The costs associated with the closure of the Manchester facility include
the write-down and disposal of surplus equipment, totaling $2.8 million,
settlement of certain purchase commitments of $1.1 million, provisions for
leased property expenses of $0.4 million, and employee separation costs of $0.6
million. While the number of employees has been significantly reduced through
natural attrition, the plan included the termination of 120 employees comprised
of 90 direct and 30 indirect employees. The charge is offset by a $1 million
reduction in the previous estimate of obligations to pay a former director a
bonus, paid on profits in excess of certain thresholds.
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<PAGE> 10
The following amounts have been charged against the Manchester
restructuring reserves during the six months ended July 3, 1999:
<TABLE>
<CAPTION>
Restructuring Charges Against Restructuring
Reserves Balance at Reserves for the Reserves Balance
December 31, Six Months Ended at July 3,
1998 July 3, 1999 1999
------------------- ------------------ ----------------
<S> <C> <C> <C>
Surplus equipment $2,823 $(2,195) $628
Purchase commitments 691 (666) 25
Lease terminations and
leasehold improvements
reserve
328 (79) 249
Employee separation 327 (21) 306
------ -------- ------
Total $4,169 $(2,961) $1,208
====== ======== ======
</TABLE>
(7) SEGMENT REPORTING
Aavid provides thermal management solutions for microprocessors and
integrated circuits ("ICs") for digital and power applications. The Company
consists of three distinct reportable segments: thermal management products,
computational fluid dynamics ("CFD") software, and thermal design services.
Aavid's thermal management products consist of products and services that solve
problems associated with the dissipation of unwanted heat in electronic and
electrical components and systems. The Company develops and offers CFD software
for computer modeling and fluid flow analysis of products and processes that
reduce time and expense associated with physical models and the facilities to
test them. The Company also provides thermal design services to customers who
choose to outsource their thermal design needs.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies as disclosed in the Company's
Form 10-K for the year ending December 31, 1998.
The Company accounts for inter-segment sales and transfers as if the sales
or transfers were to third parties, that is, at current market prices.
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<PAGE> 11
The following summarizes the operations of each reportable segment for the
quarters ending July 3, 1999 and June 27, 1998:
<TABLE>
<CAPTION>
FOR THE QUARTER ENDING
-------------------------------------------------------------------------------------------
Segment
Revenues Income Before
From Taxes And Assets(Net Of
External Extraordinary Intercompany
Customers Items Balances)
--------- ------------- ------------
<S> <C> <C> <C>
July 3, 1999
Thermal Products $35,355 $3,014 $ 94,937
CFD Software 12,042 1,829 29,413
Thermal Design
Services 390 31 631
Corporate Office -- -- 8,966
------- ------ --------
Total................ $47,787 $4,874 $133,947
======= ====== ========
June 27, 1998
Thermal Products 44,816 3,681 88,375
CFD Software 9,124 1,354 22,790
Thermal Design
Services 347 42 640
Corporate Office -- -- 4,301
------- ------ --------
Total................ $54,287 $5,077 $116,106
======= ====== ========
<CAPTION>
FOR THE SIX MONTHS ENDING
-------------------------------------------------------------------------------------------
Segment
Revenues Income Before
From Taxes And
External Extraordinary
Customers Items
--------- -------------
<S> <C> <C>
July 3, 1999
Thermal Products $72,101 $5,399
CFD Software 24,943 4,455
Thermal Design
Services 584 47
Corporate Office -- --
------- ------
Total................ $97,628 $9,901
======= ======
June 27, 1998
Thermal Products 89,929 4,898
CFD Software 19,337 3,165
Thermal Design
Services 579 66
Corporate Office -- --
-------- ------
Total................ $109,845 $8,129
======== ======
</TABLE>
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<PAGE> 12
The following table provides geographic information about the Company's
operations. Revenues are attributable to a location based on shipment source.
Long-lived assets are attributable to a location based on physical location.
<TABLE>
<CAPTION>
July 3, 1999 June 27, 1998
-------------------------------------------- -------------------------------------------
Long-Lived Long-Lived
Revenues Assets Revenues Assets
For the For the Six For the For the Six
Quarter Ended Months Ended As of Period Quarter Months Ended As of
End Ended Period End
<S> <C> <C> <C> <C> <C> <C>
United States $ 34,862 $ 68,179 $ 37,767 $ 44,500 $ 92,558 $43,084
Taiwan 4,585 9,287 1,345 3,233 8,808 1,354
China 6,757 12,610 1,830 2,264 3,578 990
United Kingdom 4,261 8,924 2,263 4,256 8,814 2,673
Other International 8,672 19,505 4,453 5,029 9,483 2,590
Intercompany eliminations (11,350) (20,877) -- (4,995) (13,396) --
-------- -------- -------- -------- -------- -------
Consolidated Revenue $ 47,787 $ 97,628 $ 47,658 $ 54,287 $109,845 $50,691
======== ======== ======== ======== ======== =======
</TABLE>
Revenues from one customer of Aavid's thermal products division represents
approximately $15.0 million of the Company's consolidated revenues for the
quarter ending July 3, 1999, and $27.7 million for the six months then ended.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Statements in this Quarterly Report on Form 10-Q concerning the Company's
business outlook or future economic performance; anticipated profitability,
revenues, expenses or other financial items; introductions and advancements in
development of products, and plans and objectives related thereto; and
statements concerning assumptions made or expectations as to any future events,
conditions, performance or other matters, are "forward-looking statements" as
that term is defined under the Federal Securities Laws. Forward-looking
statements are subject to risks, uncertainties and other factors that could
cause actual results to differ materially from those stated in such statements.
Such risks, uncertainties and factors include, but are not limited to, changes
in the Company's markets, particularly the potentially volatile semiconductor
market, changes in and delays in product development plans and schedules,
customer acceptance of new products, changes in pricing or other actions by
competitors, patents owned by the Company and its competitors, risk of foreign
operations and markets, and general economic conditions, as well as other risks
detailed in the Company's filings with the Securities and Exchange Commission,
including the Company's Annual Report on Form 10-K for the year ended December
31, 1998.
Aavid Thermal Technologies, Inc. (the "Company" or "Aavid") is the leading
provider of thermal management solutions for digital and industrial electronics
applications. In today's electronic equipment environment, microprocessors and
their associated power supplies, hard drives, advanced video chips, and other
peripheral devices, draw large amounts of power, and consequently, dissipate a
significant amount of heat. The same heat generation occurs in power
semiconductors and integrated circuits in motor controls,
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<PAGE> 13
telecommunications switches and other smart electronics. Since microprocessors
and power semiconductors operate efficiently only in narrow temperature bands,
heat is an absolute constraint in electronic system design. The excessive heat
generated within the component not only degrades semiconductor and system
performance and reliability, but can also cause semiconductor and system
failure.
Increasingly, neither externally supplied off-the-shelf thermal management
products, nor internally designed and produced parts, have been able to
effectively address the expanding complexity of thermal management problems
resulting from increasing silicon integration and system integration. The
complexity of thermal management problems has been intensified by the increasing
amounts of power to be dissipated, reductions in system size, shorter
time-to-market, shorter product life cycles, and more demanding temperature
operating requirements.
Many electronics manufacturers do not have the internal resources to solve
these challenges and are turning to third parties to design thermal solutions.
Additionally, the increasing number of electronics systems manufactured outside
the United States, and the need for fast ramp-up of high volume production
capabilities, has forced these manufacturers to seek a highly integrated,
worldwide provider of thermal management solutions.
Aavid, through its three subsidiaries, approaches these thermal challenges
from different perspectives. Fluent Inc.'s ("Fluent") sophisticated
computational fluid dynamics ("CFD") software models and analyzes heat transfer,
air and other fluid flows for virtual prototyping of products, processes, and
systems. This greatly reduces development time and expenses associated with
physical models and the facilities to test them.
Applied Thermal Technologies, Inc. ("Applied") designs integrated thermal
solutions at the component-, board-, and system-levels. Applied works as an
extension of its clients' product design team, leveraging on technical and
manufacturing capabilities gained from both Fluent and Aavid Thermal Products to
develop, test, and validate thermal solutions.
Aavid Thermal Products, Inc. manufactures thermal products and supports
customer applications around the globe.
Using its design, analysis, and manufacturing strengths, the Company
intends to capitalize on the two principal trends in the electronics industry:
first, the trend to develop products which incorporate microprocessors and power
semiconductors with increasingly complex thermal dissipation problems, and
second, the trend to outsource development of thermal management solutions. Key
elements of the Company's strategy to provide "The Total Integrated Solution for
Cooling Electronics" globally are: (i) leverage the nearly 100 Ph.D.'s and 250
engineers, to expand its technological leadership; and (ii) grow its market
leadership by expanding its manufacturing, software, consulting, design, sales
and distribution activities, both domestically and overseas, through internal
growth and selective acquisitions.
Currently the Company counts Apple, Intel, HP, Silicon Graphics, Compaq,
AT&T, DEC, Ericsson, GE, Harris, IBM, Lockheed Martin, Lucent, Motorola, Square
D, and Zenith among the customers shared between the Company's
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<PAGE> 14
subsidiaries. In addition, Applied works with a number of companies for whom the
thermal challenge is emerging, or who are investigating outsourcing their
thermal design efforts. These customers include Bay Networks, Cisco Systems, and
Sun Microsystems.
Overall, the Company services a highly diversified base of more than 3,000
national and international customers including OEMs, distributors, and contract
manufacturers through a highly integrated network of software, development,
manufacturing, sales and distribution locations throughout North America,
Europe, and the Far East.
RESULTS OF OPERATIONS
QUARTER AND SIX MONTHS ENDED JULY 3, 1999 COMPARED WITH QUARTER AND SIX MONTHS
ENDED JUNE 27, 1998
THE COMPANY
Sales in the second quarter of 1999 were $47.8 million, a decrease of $6.5
million, or 12%, compared with the second quarter of 1998. Sales for the six
months ended July 3, 1999 were $97.6 million, a decrease of $12.2 million or
11.1%. The reduction in sales for both the quarter and six month period was the
result of the impact of the reduction in sales volume of a special product being
manufactured for Intel Corporation (the "Intel Special Product"). Company sales
for the six month period ending July 3, 1999, excluding sales to Intel
Corporation, however, increased 15.6% over the same period in the prior year.
International sales (which include North American exports) decreased to 35%
of sales for the second quarter of 1999 compared with 54% in the second quarter
of 1998. This decrease in the level of international sales is primarily the
result of the reduction in sales of the Intel Special Product, which declined
from a per quarter level of $15 million in the second quarter of 1998 to none in
the second quarter of 1999. The majority of the Intel Special Product was
shipped to locations outside the United States.
Intel Corporation was the only customer that generated more than 10% of the
Company's sales in the second quarter of 1998 and the six months ended June 27,
1998. Sales to Intel Corporation, including its foreign subsidiaries, accounted
for 27% and 25%, of total Company sales for the quarter and six months ended
June 27, 1998. No customer generated more than 10% of the Company's sales in the
second quarter or six months ended July 3, 1999.
The Company's gross profit for the second quarter of 1999 was $18.6
million, an increase of $0.2 million, or 1.2% higher than the second quarter of
1998. Gross margin as a percentage of sales increased from 33.9% in the second
quarter of 1998 to 39.0% for the second quarter of 1999. This increase resulted
from a decrease in the percentage of overall gross margin derived from the Intel
Special Product (which had a lower gross margin than the Company's other
products) and an increase in the percentage of overall gross margin derived from
Fluent, which generally has higher overall gross margin percentages than Aavid
Thermal Products.
The Company's second quarter 1999 operating income of $5.2 million was $0.3
million or 6.0% lower than the second quarter of 1998. The Company's operating
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<PAGE> 15
margins, as a percentage of sales, for the second quarter of 1999 were 10.9% as
compared with 10.2% for the second quarter of 1998. This improvement in margin
percentage is the result of an increase in the percentage of overall operating
profit derived from Fluent.
Interest charges for the Company were $0.1 million in the second quarter of
1999, which compares with $0.4 million for the second quarter of 1998 reflecting
lower levels of indebtedness. The effective tax rate in the second quarter of
1999 was 35.7%, compared with 37.1% in the second quarter of 1998. The decrease
in tax rate resulted from a shift of product mix to foreign lower tax
jurisdictions.
The Company's net income for the second quarter of 1999 was $3.1 million,
or $0.32 per share, compared with the second quarter of 1998 of $3.2 million, or
$0.34 per share.
During the first quarter of 1998, the Company recorded a non-recurring
pre-tax charge of $1.9 million (or $0.13 per share), which related to
obligations arising from the Company's financial restructuring in 1993 and
comprised two elements: First, the Company terminated an arrangement with
certain investors, under which it was previously obligated to pay fixed fees
until at least the year 2000. Second, the Company provided for an obligation to
pay a former director a bonus based on 1998 profits in excess of certain
thresholds.
During the third quarter of 1998, the Company recorded a non-recurring
pre-tax charge of $4.9 million reflecting the costs associated with the closure
in the fourth quarter of the Company's Manchester, New Hampshire facility. This
facility was dedicated to manufacturing the Intel Special Product. The charge
was offset by a $1.0 million reduction in the previous estimate of obligations
to pay a former director a bonus, paid on profits in excess of certain
thresholds. The combination of these two events resulted in a net third quarter
non-recurring pre-tax charge of $3.9 million or $0.25 per share.
The costs associated with the closure of the Manchester facility included
the write-down of surplus equipment of $2.8 million, settlement of certain
purchase commitments of $1.1 million, provisions for leased property expenses of
$0.4 million, and employee separation costs of $0.5 million. There were $3
million of payments and write-downs made relative to this plant closure during
the six months ending July 3, 1999.
THE SUBSIDIARIES
A discussion of the operations of the Company's three operating
subsidiaries excluding one-time charges, follows:
<TABLE>
<CAPTION>
Net Income Net Income
($ Million) ($ Million)
Second Quarter Six Months Ended
----------------------------------- -------------------------------
1999 1998 Increase 1999 1998 Increase
---- ---- -------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Fluent $1.1 $ 0.9 $ 0.2 $ 2.7 $2.0 $ 0.7
Applied Thermal Technologies 0.0 0.0 -- 0.0 0.0 --
Aavid Thermal Products 2.0 2.3 (0.3) 3.6 4.3 (0.7)
---- ----- ----- ------ ---- -----
$3.1 $ 3.2 $(0.1) $ 6.3 $6.3 $ --
==== ===== ======== ====== ===== =====
</TABLE>
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<PAGE> 16
Fluent software sales of $12.0 million in the second quarter of 1999 were
$2.8 million, or 30.9% higher than the second quarter of 1998. Of this increase,
approximately 40% of it was the result of sales increases resulting from the
Company's new subsidiary in Japan, which became operational in the first
quarter of 1999. The remainder of the increase was spread among all product
offerings due to overall growth in the market for computational fluid
dynamics design software, as well as the success of application specific
products, such as "Icepak".
Fluent's net income for the second quarter of 1999 increased to $1.1
million from $0.9 million for the second quarter of 1998, a 31.3% increase.
Operating margins decreased to 15.7% for the second quarter of 1999, compared
with 16.4% in the second quarter of 1998. Net margins were consistent at 9.3% of
revenues for the second quarter of 1999 and 1998.
Applied Thermal Technologies ("Applied") broke even in the second quarter
of 1999, consistent with the second quarter of 1998. Applied has established
itself as Silicon Valley's premier thermal design, validation and consulting
service, and has generated significant hardware sales opportunities for Aavid
Thermal Products.
Aavid Thermal Products' sales were $35.4 million in the second quarter of
1999, a decrease of $9.4 million, or 21.1%, compared with the second quarter of
1998. This decrease was primarily the result of the impact of the reduction in
sales volume of the Intel Special Product. Excluding sales to Intel, sales in
the second quarter of 1999 were up $5.6 million or 18.8% over the second quarter
of 1998 reflecting strong growth in sales to Computer and Networking customers
in which second quarter 1999 sales increased 42.9% over the second quarter of
1999. A breakdown of the sales of Aavid Thermal Products for the second quarter
of 1999 as compared to the second quarter of 1998 is shown below.
<TABLE>
QUARTER ENDING
SALES
$ Million
------------------------------------
July 3, June 27,
1999 1998 Increase
------- -------- --------
<S> <C> <C> <C>
Computers and Network -
"Core" $19.0 $13.3 42.9%
Industrial Electronics 16.4 16.5 (0.6)%
----- ----- -----
35.4 29.8 18.8%
Computers and Network - Intel -- 15.0 (100.0)%
----- ----- -----
Total Aavid Thermal Products $35.4 $44.8 (21.1)%
===== ===== =====
</TABLE>
Revenue in Computer and Network related products (excluding Intel) showed
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<PAGE> 17
strong growth in the second quarter of 1999, increasing 42.9% over the same
period in the prior year. Industrial electronics revenues, while down 0.6% from
the second quarter of 1998, are up 6.5% over the first quarter of 1999 and 26.2%
and 23.3% over the third and fourth quarters of 1998, respectively, marking a
strong recovery from the second half of 1998 which were impacted by the Asian
economic slowdown and a sharp correction of customer inventories.
Operating margins at Aavid Thermal Products for the second quarter of 1999 were
9.2%, which compares with 8.9% for the second quarter of 1998 and 7.1% for the
first quarter of 1999. The improvement in margins over the first quarter of 1999
is the result of the continued recovery of the industrial electronics market
following the slowdown during the second half of 1998.
Aavid Thermal Products net income for the second quarter of 1999 decreased
$0.3 million from the second quarter of 1998 to $2.0 million, a decrease of
12.4%. This was the direct result of decreased sales due to the loss of business
for the Intel Special Product. Net margins improved slightly in the second
quarter of 1999 to 5.7% of revenues from 5.2% in the second quarter of 1998,
primarily due to reduced interest charges and a more favorable tax rate which
resulted from the shift of product mix to foreign lower tax jurisdictions.
FINANCIAL CONDITION
JULY 3, 1999 COMPARED WITH DECEMBER 31, 1998
During the first six months of 1999, the Company generated $8.7 million of
cash from operations. The Company used $1.3 million of cash to reduce
indebtedness and $3.5 million for capital expenditures.
Total indebtedness at July 3, 1999 was $13.6 million, which compares with
$14.7 million at December 31, 1998. Total indebtedness as a percent of
stockholders' equity at July 3, 1999 was 17.4%, an improvement of 3.1% from the
20.5% at December 31, 1998. Long-term debt at July 3, 1999 was $9.9 million, a
decrease of $1.3 million from December 31, 1998. No borrowings were outstanding
under the Company's revolving line of credit on July 3, 1999 or December 31,
1998. Unused borrowing capacity under the Company's financing agreement was
approximately $32.7 million at July 3, 1999, which compares with $29.9 million
at December 31, 1998.
During the second quarter of 1999, the Company's capital expenditures were
$2.3 million compared with $2.4 million in the second quarter of 1998. There
were no material purchase commitments as of July 3, 1999.
At July 3, 1999, inventory turns were 7.0, which compare with 7.7 at
December 31, 1998. This reduction in turns is primarily the result of the
elimination of high turn Intel Special Products business .
At July 3, 1999, accounts receivable days sales outstanding ("DSO")were 65,
which compare with 56 days at December 31, 1998. While the number of days sales
outstanding are up from the end of 1998, 65 days is consistent with the average
DSO of 1998 as a whole.
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<PAGE> 18
ACQUISITIONS ANNOUNCEMENT
On June 22, 1999, the Company announced that it is in discussions with
respect to a possible sale of the Company to a private investment firm. The
Company indicated that the discussions are at a preliminary stage, and that any
transaction would be subject to, among other things, satisfactory due diligence,
obtaining of financing, completion of definitive documentation and other
customary conditions, including expiration of applicable Hart-Scott-Rodino
Anti-trust Improvements Act waiting periods, and the Company's receipt of an
opinion of Hambrecht & Quist, its financial advisor, that the consideration to
be paid for the transaction is fair to the Company's stockholders from a
financial point of view. The potential purchaser has indicated that it is
prepared to pay $24.50 in cash per share. There can be no assurance that a
transaction will be completed on these terms, on different terms or at all.
The Company also announced on June 22, 1999 that it had entered into a
non-binding letter of intent for a significant acquisition. This transaction
would also be subject to completion of satisfactory due diligence, obtaining of
financing, completion of definitive documentation and other customary
conditions, including expiration of applicable Hart-Scott-Rodino waiting
periods, and the Company's receipt of an opinion from its financial advisor that
the consideration to be paid in the transaction is fair to the Company's
shareholders from a financial point of view. There can be no assurance that a
transaction will be completed on these terms, on different terms or at all.
The Company does not currently intend to update the status of negotiations
by public announcement until either a definitive agreement is executed or
negotiations cease.
YEAR 2000
The Company is currently engaged in a comprehensive project to upgrade its
information, technology, manufacturing, and facilities computer hardware and
software programs to address the Year 2000 issue at its domestic and
international businesses. Many of the Company's systems include new hardware and
packaged software recently purchased from vendors who have represented that
these systems are already Year 2000 compliant.
As part of this project, the Company has formally communicated with its
significant suppliers, vendors, and large customers to determine the extent to
which the Company is vulnerable to those parties' failures to correct their own
Year 2000 issues. Responses received as of July 3, 1999, generally indicate that
these parties will be Year 2000 compliant.
The Company has completed an inventory and assessment of its information
technology systems. Both internal and external resources are being utilized to
test the Company's software for Year 2000 compliance and, where necessary, the
systems are being remediated through upgrading, replacement, or reprogramming.
Also, the Company is taking an inventory of its non-information technology
(embedded) systems, prioritizing the impact of each of these systems on the
Company's ability to conduct its operations and, as necessary, is obtaining
vendor verification and/or remediation of those systems. The process of
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<PAGE> 19
analyzing, prioritizing, remediating and testing will be an iterative process
until all systems are Year 2000 compliant.
The estimated cost for this project is estimated to be $125,000, which is
being funded through operating cash flows. The Company has spent approximately
$95,000 as of July 3, 1999, on this project, most of which has been for internal
remediation efforts. The Company believes that 90% of its systems are Year 2000
compliant as of July 3, 1999, with the remainder expected to be compliant by the
end of the third quarter of 1999.
Based upon currently available information and considering the Company's
diversified business base, decentralized systems and Year 2000 efforts,
management believes that the most reasonably likely worst case scenario could
result in minor short-term business interruptions. The Company is preparing
contingency plans which include alternative sourcing to minimize any disruptions
to its business resulting from a vendor or supplier not being Year 2000
compliant; however, failure by the company and/or vendors and customers to
complete Year 2000 compliance work in a timely manner could have a material
adverse effect on certain of the Company's operations. The Company's exposure
could increase or its timetable for Year 2000 compliance could be delayed as a
result of any new acquisitions.
The Company's software products have a very low dependency on dates, with
possible dependencies being license management, date display, and files
handling. The Company has tested its software products for Year 2000 compliance
and believes that all software products released after June 1998 are Year 2000
compliant, provided they are used with products that are also Year 2000
compliant. The Company has no control over the compliance of third party
products including, but not limited to, hardware, operating system software, and
firmware.
Part II. Other Information
Item 1. Legal Proceedings
On March 4, 1998, Materials Innovation, Inc. of Lebanon, New Hampshire
("Mii") and two of its principals, Alan Beane and Glenn Beane (all three the
"Petitioners"), filed a petition for declaratory judgment against Aavid Thermal
Products, Inc. in Grafton County (New Hampshire) Superior Court. The Petitioners
have asked the court to declare as terminated a contract between Petitioners and
Aavid dated October 14, 1993 (the "Agreement"). Petitioner Alan Beane is a
former Director and Chief Executive Officer of the Company, who, the Company
believes, beneficially owns more than 10% of the Company's common stock.
The Agreement grants to Aavid licenses for two patents, one involving a
clamp for attaching heatsinks to semiconductors, and the other involving a
process to make heatsinks by vacuum die casting. The Agreement also provides
Aavid with rights to potential technology of Mii relating to Aavid's thermal
products business, and prohibits Petitioners from competing against Aavid for
the ten-year term of the Agreement. Petitioners claim that Aavid has failed to
pay royalties associated with the vacuum die cast patent. The petition does not
seek monetary damages from Aavid.
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<PAGE> 20
On January 29, 1999, the Grafton County Superior Court granted the
Company's motion to dismiss the Petitioner's Declaratory Judgement petition. The
Petitioners appealed that dismissal then subsequently withdrew that appeal. Mii
has since commenced arbitration of the same issue. Although the Company believes
that the termination of the Mii Agreement would not have a materially adverse
effect on its business, results of operations or financial condition, there can
be no assurance it will not have such a materially adverse effect in the future.
The Company is involved in various other legal proceedings that are
incidental to the conduct of its business, none of which the Company believes
could reasonably be expected to have a materially adverse effect on the
Company's financial condition, liquidity, or results of operations.
Item 6. Exhibits and Reports on Form 8-K
Exhibit 10.1 "Amendment No. 1 to Employment Agreement" is included
in the electronically filed document as required.
Exhibit 10.2 "Amendment No. 1 to Employment Agreement" is included
in the electronically filed document as required.
Exhibit 10.3 "Employment Agreement" is included in the
electronically filed document as required.
Exhibit 10.4 "Employment Agreement" is included in the
electronically filed document as required.
Exhibit 10.5 "Agreement" is included in the electronically filed
document as required.
Exhibit 10.6 "Agreement" is included in the electronically filed
document as required.
Exhibit 10.7 "Agreement" is included in the electronically filed
document as required.
Exhibit 10.8 "Agreement" is included in the electronically filed
document as required.
Exhibit 10.9 "Agreement" is included in the electronically filed
document as required.
Exhibit 10.10 "Appendix A -- First Amendment to Employment Agreement"
is included in the electronically filed document as
required.
Exhibit 10.11 Notice of Grant of Stock Options
Exhibit 27.98 "Financial Data Schedule" is included in the
electronically filed document as required.
SIGNATURES
AAVID THERMAL TECHNOLOGIES, INC.
DATE: August 13, 1999
By /s/ Stephen D. Eldred
--------------------------------------
Vice President, Treasurer, and
Chief Financial Officer
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<PAGE> 21
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
10.1 "Amendment No. 1 to Employment Agreement" is included in the
electronically filed document as required.
10.2 "Amendment No. 1 to Employment Agreement" is included in the
electronically filed document as required.
10.3 "Employment Agreement" is included in the electronically filed
document as required.
10.4 "Employment Agreement" is included in the electronically filed
document as required.
10.5 "Agreement" is included in the electronically filed document as
required.
10.6 "Agreement" is included in the electronically filed document as
required.
10.7 "Agreement" is included in the electronically filed document as
required.
10.8 "Agreement" is included in the electronically filed document as
required.
10.9 "Agreement" is included in the electronically filed document as
required.
10.10 "Appendix A -- First Amendment to Employment Agreement" is included in
the electronically filed document as required.
10.11 Notice of Grant of Stock Options
27.98 "Financial Data Schedule" is included in the electronically filed
document as required.
<PAGE> 1
EXHIBIT 10.1
"AMENDMENT No. 1 TO EMPLOYMENT AGREEMENT"
This Amendment Number One To Employment Agreement is made as of April 15,
1999 and is entered into in Concord, New Hampshire, by and between Aavid Thermal
Technologies, Inc., a Delaware corporation with its principal place at Concord,
New Hampshire (the "Company"), and Stephen D. Eldred of Concord, New Hampshire
(the "Executive").
WHEREAS, the company and Executive entered into a certain Employment
Agreement as of June 20, 1997 (the "Employment Agreement").
WHEREAS, the parties wish to amend the terms and bonus provisions of the
Employment Agreement, and to provide for changes of control of the Company.
NOW, THEREFORE in consideration of the foregoing premises and the mutual
promises, terms, provisions and conditions set forth herein, the parties hereby
agree:
1. DEFINED TERMS. Words or terms not otherwise defined herein, shall have the
meaning as set forth in the Employment Agreement.
2. AMEND PARAGRAPH 2. Paragraph 2 shall be amended such that the automatic
renewal shall be extended from successive one (1) year terms to successive two
(2) year terms.
3. AMEND SCHEDULE A. Schedule A is hereby amended such that the annual bonus
target figure shall be the amount set annually by the Company's Compensation
Committee or Board of Directors.
4. NEW PARAGRAPHS. Add new paragraphs 14-21 to the Employment Agreement, as
follows, which describe Executive's "Change-In-Control" rights.
14) CHANGE-IN-CONTROL TERM. Notwithstanding any provision to the contrary
herein, this Change-In-Control provision shall be effective as of the
date of the date hereof and shall continue to be effective for the
period ending on the "Expiration Date" which shall coincide with the
end of the term of the Employment Agreement or any renewal thereof.
15) DEFINITION OF "CHANGE IN CONTROL". For the purposes of this Agreement,
a "Change in Control" of the Company shall be deemed to have occurred
upon:
a) An acquisition by any individual, entity or group (a "Person") of
beneficial ownership of fifty percent (50%) or more of the then
outstanding shares of common stock of the Company ("Common Stock");
b) A change in the composition of the Board such that the individuals
who, as of the date hereof, constitute the Board (the Board as of the
date hereof shall be hereinafter referred to as the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board;
provided, that in making such determination directors who were elected
by, or on the recommendation of, such present majority, shall be
excluded;
c) The occurrence of a (i) merger, consolidation, reorganization or
similar corporate transaction, in which the Company does not survive
as an independent public company; (ii) the sale or other disposition
of all or substantially all of the assets of the Company, or (iii) a
complete liquidation or dissolution of the Company.
16) COVERED TERMINATION. The termination benefits described in Section 17
hereof shall be provided to the Executive in the event that he suffers
a "Covered
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<PAGE> 2
Termination" of his employment with the Company during the "Protection
Period" or, to the extent provided in such Section 17, shall be
provided upon the earlier of a Change in Control or a Covered
Termination. For purposes hereof, the "Protection Period" shall be the
three-month period that commences on the date of the Change in
Control. For purposes hereof, "Covered Termination" shall mean (i)
termination of employment by the Company other than for "Cause" as
defined in this Employment Agreement or (ii) termination of employment
by the Executive for "Good Reason" as described below. During the
Protection Period, Company shall provide Executive with the same Base
Salary, bonus opportunities, and benefits as he received prior to the
Change-in-Control.
a) COMPENSATION DURING DISPUTE. If a dispute arises as to a
purported termination for Cause, and the Executive institutes a
proceeding for a determination as to rights under this Agreement,
the Company shall continue to pay the Executive the full
compensation in effect when the notice giving rise to the dispute
was given (including, but not limited to, salary and bonuses) and
continue the Executive as a participant in all compensation,
benefit and insurance plans in which the Executive was
participating when the notice giving rise to the dispute was
given, until final judicial determination as to whether Cause or
Good Reason existed. Amounts paid under this Section 25 are in
addition to all other amounts due under this Agreement and shall
not be offset against or reduce any other amounts due under this
Agreement.
b) TERMINATION FOR GOOD REASON. For purposes of this Agreement, the
Executive shall have "Good Reason" to terminate his employment
with the Company (i) if by the end of the Protection Period the
Company and Executive do not enter into a new or amended written
employment agreement; or (ii) if the Company breaches the terms
of this Employment Agreement as amended during the Protection
Period. For the purposes of subparagraph (i) above, Executive
shall have fifteen (15) days after the end of the Protection
Period to notify Company of his termination for Good Reason.
17) CONSEQUENCES OF COVERED TERMINATION. In the event that the Executive's
employment with the Company shall have been terminated during the
Protection Period in a manner that shall constitute a Covered
Termination, the Company shall provide the following severance
payments and benefits to the Executive:
a) BASE SALARY. Within fifteen (15) days following the Covered
Termination, the Company shall deliver to Executive a lump-sum cash
payment equal to 2.0 times the Executive's Base Salary in effect at
the time of the Covered Termination. For purposes of this Section 17,
the Executive's Base Salary shall be determined immediately prior to
any reduction in such salary rate that constitutes Good Reason under
Section 3 hereof.
b) BONUS. Within fifteen (15) days following the covered Termination, the
Executive shall receive a lump-sum cash payment of $75,000.00.
c) WELFARE BENEFITS. The Executive shall be entitled to coverage and
benefits, at the Company's sole expense, for a period of two years
following his Covered Termination (the "Continuation Period"), under
all welfare benefit plans of the Company. All such benefits shall
apply to the Executive and any of his dependents who would have been
eligible for coverage if the Executive had continued to be employed by
the Company for the Continuation Period. At the expiration of the
Continuation Period, the Executive shall be treated as a then
terminating employee of the Company with respect to the right to elect
continued medical and dental Coverages in accordance with section
4980B of the Internal Revenue Code of 1986, as amended.
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<PAGE> 3
d) OUTPLACEMENT. During the twelve-month period commencing on the
date of Covered Termination, the Company shall provide to the
Executive, at the Company's sole expense, executive outplacement
services (commensurate with the Executive's position), office
space and secretarial support services.
18) INSURANCE. The Company shall maintain in full force and effect for the
benefit of the Executive, for the duration of all applicable statute
of limitations periods, liability insurance policies at least as
favorable to the Executive as those maintained by the Company for the
benefit of its directors and officers at the time of the Change in
Control, provided that such policies are provided to its directors and
officers generally or are reasonably obtainable by the Company.
19) NO OBLIGATION TO MITIGATE. The Executive shall be under no obligation
to minimize or mitigate damages by seeking other employment, and the
obtaining of any such other employment shall in no event effect any
reduction of the Company's obligation to make the payments and provide
the benefit Coverages required under this Agreement.
20) SUCCESSORS AND ASSIGNS. This Agreement and all rights hereunder are
personal to the Executive and shall not be assignable; provided,
however, all of the Executive's rights to compensation following his
death shall inure to the benefit of his surviving spouse, personal
representatives or designees or other legal representatives, as the
case may be. The Company and any successor to its business and/or
assets shall remain liable to Executive hereunder.
21) LEGAL EXPENSES. The Company shall pay directly or reimburse the
Executive (at the Executive's option) for any and all legal fees and
expenses incurred by the Executive relating to the enforcement or the
attempted enforcement, of any obligation of the Company hereunder,
regardless of outcome, provided that the Executive's claims in such
regard are not determined by a trier of fact to be frivolous.
4. CONTINUATION OF EMPLOYMENT AGREEMENT. Except as specifically amended
herein, the Employment Agreement remains in full force and effect and the
parties agree to be bound thereby. To the extent there is any conflict between
the terms of Sections 14 through 21 herein and the remainder of the Agreement,
the terms of Sections 14 through 21 shall govern.
This Agreement is executed as of the date set forth in the opening
paragraph.
IN WITNESS WHEREOF, the parties have executed these presents as of the day
and year first above written.
AAVID THERMAL TECHNOLOGIES, INC. EXECUTIVE
By s/s Ronald F. Borelli s/s Stephen D. Eldred
---------------------------------- ------------------------------------
Name Ronald F. Borelli Name Stephen D. Eldred
-------------------------------- -------------------------------
Title Chief Executive Officer Title Chief Financial Officer
------------------------------- -------------------------------
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<PAGE> 1
EXHIBIT 10.2
"AMENDMENT No. 1 TO EMPLOYMENT AGREEMENT"
This Amendment Number One To Employment Agreement is made as of March 24,
1999 and is entered into in Concord, New Hampshire, by and between Aavid Thermal
Technologies, Inc., a Delaware corporation with its principal place at Concord,
New Hampshire (the "Company"), and John W. Mitchell of Gilford, New Hampshire
(the "Executive").
WHEREAS, the Company and Executive entered into a certain Employment
Agreement as of December 5, 1995 (the "Employment Agreement").
WHEREAS, the parties wish to amend the term and bonus provisions of the
Employment Agreement and to provide for changes of control of the Company.
NOW, THEREFORE in consideration of the foregoing premises and the mutual
promises, terms, provisions and conditions set forth herein, the parties hereby
agree:
1. DEFINED TERMS. Words or terms not otherwise defined herein, shall have the
meaning as set forth in the Employment Agreement.
2. AMEND PARAGRAPH 2. Paragraph 2 shall be amended such that the automatic
renewal shall be extended from successive one (1) year terms to successive two
(2) year terms, and the notice period of a party's intent not to renew the
Employment Agreement is extended from ninety (90) days to one hundred and eighty
(180) days.
3. AMEND PARAGRAPH 4(B). Paragraph 4(b) of the Employment Agreement is hereby
amended in its entirety to read as follows:
(b) INCENTIVE AND BONUS COMPENSATION. The Executive shall participate in
Incentive and Bonus Compensation Programs made available to executives of the
company generally, or any key management incentive plans, such that the annual
bonus target figure shall be the amount set annually by the Company's
Compensation Committee or Board of Directors.
4. Add new Paragraphs 23 through 30 to the Employment Agreement which describe
Executive's "Change-In-Control" rights, as follows:
23. CHANGE-IN-CONTROL TERM. Notwithstanding any provision to the contrary
herein, this Change-In-Control provision shall be effective as of the
date of the date hereof and shall continue to be effective for the
period ending on the "Expiration Date" which shall coincide with the
end of the term of the Employment Agreement or any renewal thereof.
24. DEFINITION OF "CHANGE IN CONTROL". For the purposes of this Agreement,
a "Change in Control" of the Company shall be deemed to have occurred
upon:
a) An acquisition by any individual, entity or group (a "Person") of
beneficial ownership of fifty percent (50%) or more of the then
outstanding shares of common stock of the Company ("Common
Stock").
b) A change in the composition of the Board such that the
individuals who, as of the date hereof, constitute the Board (the
Board as of the date hereof shall be hereinafter referred to as
the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, that in making such
determination directors who were elected by, or on the
recommendation of, such present majority, shall be excluded;
-1-
<PAGE> 2
c) The occurrence of a (i) merger, consolidation, reorganization or
similar corporate transaction, in which the Company does not
survive as an independent public company; (ii) the sale or other
disposition of all or substantially all of the assets of the
Company, or (iii) a complete liquidation or dissolution of the
Company.
25. COVERED TERMINATION. The termination benefits described in Section 26
hereof shall be provided to the Executive in the event that he suffers
a "Covered Termination" of his employment with the Company during the
"Protection Period" or, to the extent provided in such Section 26,
shall be provided upon the earlier of a Change in Control or a Covered
Termination. For purposes hereof, the "Protection Period" shall be the
six month period that commences on the date of the Change in Control.
For purposes hereof, "Covered Termination" shall mean (i) termination
of employment by the Company other than for "Cause" as defined in this
Employment Agreement or (ii) termination of employment by the
Executive for "Good Reason" as described below. During the Protection
Period, Company shall provide Executive with the same Base Salary,
bonus opportunities, and benefits as he received prior to the
Change-in-Control.
a) COMPENSATION DURING DISPUTE. If a dispute arises as to a
purported termination for Cause, and the Executive institutes a
proceeding for a determination as to rights under this Agreement,
the Company shall continue to pay the Executive the full
compensation in effect when the notice giving rise to the dispute
was given (including, but not limited to, salary and bonuses) and
continue the Executive as a participant in all compensation,
benefit and insurance plans in which the Executive was
participating when the notice giving rise to the dispute was
given, until final judicial determination as to whether Cause or
Good Reason existed. Amounts paid under this Section 25 are in
addition to all other amounts due under this Agreement and shall
not be offset against or reduce any other amounts due under this
Agreement.
b) TERMINATION FOR GOOD REASON. For purposes of this Agreement, the
Executive shall have "Good Reason" to terminate his employment
with the Company (i) if by the end of the Protection Period the
Company and Executive do not enter into a new or amended written
employment agreement; or (ii) if the Company breaches the terms
of this Employment Agreement as amended during the Protection
Period. For the purpose of subparagraph (i) above, Executive
shall have fifteen (15) days after the end of the Protection
Period to notify Company of his termination for Good Reason.
26. CONSEQUENCES OF COVERED TERMINATION. In the event that the Executive's
employment with the Company shall have been terminated during the
Protection Period in a manner that shall constitute a Covered
Termination, the Company shall provide the following severance
payments and benefits to the Executive:
a) BASE SALARY. Within fifteen (15) days following the Covered
Termination, the Company shall deliver to Executive a lump-sum
cash payment equal to 2.0 times the Executive's Base Salary in
effect at the time of the Covered Termination. For purposes of
this Section 26, the Executive's Base Salary shall be determined
immediately prior to the Change-in-Control.
b) WELFARE BENEFITS. The Executive shall be entitled to coverage and
benefits, at the Company's sole expense, for a period of two
years following his Covered Termination (the "Continuation
Period"), under all welfare benefit plans of the Company. All
such benefits shall apply to the Executive and any of his
dependents who would have been eligible for coverage if the
Executive had continued to be employed by the Company for the
Continuation Period. At the expiration of the Continuation
Period, the Executive shall be treated as a then terminating
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<PAGE> 3
employee of the Company with respect to the right to elect
continued medical and dental Coverages in accordance with section
4980B of the Internal Revenue Code of 1986, as amended.
c) OUTPLACEMENT. During the twelve-month period commencing on the
date of Covered Termination, the Company shall provide to the
Executive, at the Company's sole expense, executive outplacement
services (commensurate with the Executive's position), office
space and secretarial support services.
27. INSURANCE. The Company shall maintain in full force and effect
for the benefit of the Executive, for the duration of all
applicable statute of limitations periods, liability insurance
policies at least as favorable to the Executive as those
maintained by the Company for the benefit of its directors and
officers at the time of the Change in Control, provided that such
policies are provided to its directors and officers generally or
are reasonably obtainable by the Company.
28. NO OBLIGATION TO MITIGATE. The Executive shall be under no
obligation to minimize or mitigate damages by seeking other
employment, and the obtaining of any such other employment shall
in no event effect any reduction of the Company's obligation to
make the payments and provide the benefit Coverages required
under this Agreement.
29. SUCCESSORS AND ASSIGNS. This Agreement and all rights hereunder
are personal to the Executive and shall not be assignable;
provided, however, all of the Executive's rights to compensation
following his death shall inure to the benefit of his surviving
spouse, personal representatives or designees or other legal
representatives, as the case may be. The Company and any
successor to its business and/or assets shall remain liable to
Executive hereunder.
30. LEGAL EXPENSES. The Company shall pay directly or reimburse the
Executive (at the Executive's option) for any and all legal fees
and expenses incurred by the Executive relating to the
enforcement or the attempted enforcement, of any obligation of
the Company hereunder, regardless of outcome, provided that the
Executive's claims in such regard are not determined by a trier
of fact to be frivolous.
5. CONTINUATION OF EMPLOYMENT AGREEMENT. Except as specifically amended
herein, the Employment Agreement remains in full force and effect and the
parties agree to be bound thereby. To the extent there is any conflict
between the terms of Sections 26 through 30 herein and the remainder of the
Agreement, the terms of Sections 26 through 30 shall govern.
6. CHANGE OF PARTY. Aavid Engineering, Inc. shall no longer be a party to
the Employment Agreement.
-3-
<PAGE> 4
This Agreement is executed as of the date set forth in the opening
paragraph.
IN WITNESS WHEREOF, the parties have executed these presents as of the day
and year first above written.
AAVID THERMAL TECHNOLOGIES, INC.
and AAVID THERMAL PRODUCTS, INC.
(Formerly AAVID ENGINEERING, INC.) EXECUTIVE
By s/s Ronald F. Borelli s/s John W. Mitchell
---------------------------------- --------------------------------------
Name Ronald F. Borelli Name John W. Mitchell
-------------------------------- ----------------------------------
Title Chief Executive Officer Title Vice President & General Counsel
------------------------------- ---------------------------------
-4-
<PAGE> 1
Page 1 of 4
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made as of the 20th day of
June 1997, by and between Aavid Thermal Technologies, Inc., a Delaware
Corporation with its headquarters in Concord, New Hampshire (the "Company"), and
Stephen Eldred of Essex, England (the "Executive").
BACKGROUND
The Company desires to engage Executive as the Chief Financial Officer
("CFO") of the Company to provide financial business and industry expertise in a
variety of areas, and to lead and provide direction to the Company's financial
matters, and such other business matters as may be assigned by the Company, to
assist the Company, its subsidiaries and affiliates to build a strong and
profitable publicly traded company in the thermal management and related areas,
with the flexibility to expand into emerging markets.
Accordingly, the Company and Executive wish to set forth the terms of their
agreement as follows.
1. EMPLOYMENT. The Company offers and the Executive accepts full time
employment as CFO of the Company. The Executive shall report to the Chief
Executive Officer ("CEO") of the Company and the Board of Directors of the
Company, and shall have all powers and duties as would normally be associated
with the position of CFO of a publicly traded company, with the purpose of
carrying out the mission of the Company as set forth in the Background paragraph
above. The Executive shall also perform such other duties as may reasonably be
requested from time to time by the CEO and Board of Directors of the Company.
The Executive shall work at the Company's headquarters in Concord New Hampshire,
or within reasonable commuting distance of Concord, New Hampshire.
2. TERM. The initial term of employment under the Agreement shall begin on
or about September 1, 1997, and shall continue until midnight on September 1,
1998 (the "Term"), subject to prior termination in accordance with the terms
hereof. Thereafter, the Agreement shall automatically renew for successive one
year terms unless the Company shall give 6 months prior written notice of its
intent not to renew for any additional renewal. The Executive shall be entitled
to terminate his employment at any time by giving ninety (90) days notice to the
Company.
3. COMPENSATION.
3.1 BASE SALARY. During the term hereof, the Executive will receive a
base salary of $ 165,000.00 per year, payable in accordance with the Company's
payroll procedures for its executives.
3.2 ANNUAL INCENTIVE. The Executive shall have the opportunity to
earn an individual annual incentive bonus with a target of $35,000 as set forth
in Exhibit A.
3.4 BENEFITS. The Executive shall receive medical and other benefits
as provided to other executives from time to time. The Executive shall be
entitled to four weeks of vacation per year.
<PAGE> 2
Page 2 of 4
3.5 EXPENSES AND FACILITIES. The Company shall reimburse the
Executive for reasonable out-of-pocket expenses incurred in fulfilling his
duties. The Company shall provide the Executive with suitable office facilities,
equipment, supplies and staff.
3.6. OUTSIDE DIRECTORSHIPS. The Company shall provide Executive with
sufficient time to serve as a director of other companies for profit and not
for profit, so long as such directorships do not unreasonably interfere with
Executive's duties with the Company.
4. STOCK OPTIONS. Upon commencement of employment, the Company shall
grant to Executive incentive stock options for 65,000 shares of Aavid Thermal
Technologies, Inc. ("Aavid") common stock, $.01 par value, at an exercise price
of $16.50 per share, with annual vesting over three years, with 25% exercisable
upon grant, and 25% vesting annually thereafter on each of the following
anniversary dates of the grant. The grant of the option shall be governed by a
separate Stock Option Agreement between Aavid and Executive.
5. TERMINATION.
5.1 FOR CAUSE. The Company may terminate the Executive's employment
at any time "for cause" with immediate effect upon delivering written notice to
the Executive. For purposes of this agreement, "for cause" shall include: (a)
embezzlement, fraud, or other acts of dishonesty; (b) material breach by
Executive of any of his obligations under this Agreement; (c) conviction or
entrance of a plea of guilty or nolo contendre to a felony or other crime
involving moral turpitude, fraud or misrepresentation; or (d) conduct involving
moral turpitude. Upon termination for cause, the Company's sole and exclusive
obligation will be to pay the Executive his compensation earned through the date
of termination, and the Executive shall not be entitled to any compensation
after the date of termination, other than payments for non-competition as set
forth in subparagraph 6.1.3 herein.
5.2 UPON DEATH OR DISABILITY. In the event of the Executive's death
or total disability during the term of this Agreement, the Company's sole and
exclusive obligation will be to pay to the Executive, if disabled, or to his
estate, if deceased, the Executive's compensation and bonus earned through the
date of death or disability. The Executive shall be deemed to be totally
disabled if he is unable to perform his duties under this Agreement by reason of
mental or physical illness or accident for a period of three consecutive months.
5.3 WITHOUT CAUSE. Other than as set forth in Sections 5.2 and 5.4
herein, in the event Executive is terminated without cause prior to the
expiration of the Term, he shall be entitled to continued payment of his base
salary for the longer of the remainder of the Term or (i) during the initial
term, nine (9) months, and (ii) for any renewals thereafter, six (6) months.;
and his stock options as set forth in Paragraph 4 shall continue to vest until
fully vested.
5.4 MATERIAL CHANGE. In the event there is a material change in the
makeup of the Board of Directors as a result of merger, acquisition or
financing, and such change is not consented to by Executive, and Executive's
employment is terminated as a result of such material change, or Executive
elects to voluntarily terminate his employment as a result of such material
change, then he shall be entitled to continued payment of his base salary for
the longer of the remainder of the Term or nine (9) months. If Executive elects
to voluntarily terminate, he must elect to do so within ninety days of the
material change or such right to elect shall be waived.
<PAGE> 3
Page 3 of 4
6. COVENANT NOT TO COMPETE.
6.1 COVENANT. While the Executive continues to be employed by the
Company, and for a one (1) year period after termination of employment, for any
reason, the Executive will not directly or indirectly:
6.1.1. Enter into or attempt the "Restricted Business" as defined
in Exhibit B attached hereto.
6.1.2. Induce or attempt to persuade any former, current or
future employee or other participant in the Company's business to terminate such
employment or other relationship in order to enter into any relationship with
the Executive, any business organization in which the Executive is a participant
in, or any other business organization in competition with the Company's
business.
7. CONFIDENTIALITY AND INVENTIONS. The Executive acknowledges that he
will develop and be exposed to information that is or will be confidential and
proprietary to the Company. The information includes, but is not limited to,
financial information, customer lists, marketing plans, price data, product
plans, software, trade secrets, and other intangible information. Such
information shall be deemed confidential to the extent not disclosed to the
public, or not generally known within the trade. The Executive agrees, during
the term of the Agreement and thereafter, to make use of such information only
in the performance of his duties under this Agreement, to maintain such
information in confidence and to disclose the information only to persons with a
need to know as determined by the Company.
Executive agrees that any inventions, suggestions, ideas, innovations, or
reports made by him as a result of the services performed hereunder shall be
promptly disclosed to Company and shall be the sole property of Company.
Executive will cooperate with Company in obtaining patents on any such
inventions and shall execute any documents tendered by Company to convey or
perfect ownership in such inventions. Executive will assist Company at Company's
expense, in any manner which Company deems necessary to obtain, maintain, or
sustain such patents. Should any such inventions, suggestions, ideas, or reports
be the result of combined efforts with, or inventions of, any person or persons
other than Executive, Executive will so inform Company at the time of submission
thereof. Executive's obligations hereunder shall survive termination of the
Agreement.
8. OTHER AGREEMENTS. Executive represents and warrants to Company that he
is not bound by agreements with other entities, including non-competition and
non-disclosure agreements.
9. SEVERABILITY. If, in any judicial proceeding, a court of competent
jurisdiction shall refuse to enforce any separate covenants deemed included in
this Agreement, or shall find that the term or geographic scope of one or more
of the separate covenants is unreasonably broad, then the court shall modify the
provision to the minimum extent necessary to permit enforcement, and the
remainder of this Agreement shall not be affected thereby.
10. REMEDIES. The Executive acknowledges that monetary damages would be
inadequate to compensate the Company for any breach by the Executive of the
covenants set forth in Sections 6 and 7 above. The Executive agrees that, in
addition to other remedies which may be available, the Company shall be entitled
to obtain injunctive relief against the threatened breach of this Agreement or
the continuation of any breach, or both, without the necessity of proving actual
damages.
<PAGE> 4
Page 4 of 4
11. NOTICES. Any notices permitted or required under this Agreement shall
be deemed given upon the date of personal delivery or forty-eight (48) hours
after deposit in the United States mail, postage fully prepaid, return receipt
requested, to the address set forth in the first paragraph or at any other
address as any party may, from time to time, designate by notice given in
compliance with this Section.
12. MISCELLANEOUS. This Agreement shall be governed by and constructed in
accordance with the laws of the state of New Hampshire, and contains the entire
understanding between the parties, and supersedes any prior understandings and
agreements among them. Further, this Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto, and the
waiver by the Company of any breach of this Agreement by Executive shall not act
as a waiver of any subsequent breach by the Executive.
13. SEPARATE COUNSEL. The parties acknowledge that the Company has been
represented in this transaction by its General Counsel, that the Executive has
not been represented in this trans-action by the Company's attorneys, and the
Executive has been advised that it is important for him to seek separate legal
advice and representation in this matter.
Date:
AAVID THERMAL TECHNOLOGIES, INC.
a Delaware Corporation
By: Ronald F. Borelli s/s Stephen Eldred
---------------------------------- ----------------------------------
Stephen Eldred
Its: Chief Executive Officer
----------------------------------
<PAGE> 1
EXHIBIT 10.4
"EMPLOYMENT AGREEMENT"
This Employment Agreement (the "Agreement") is made as of the first day of
May, 1999, by and between Fluent, Inc., a New Hampshire Corporation with its
headquarters in Lebanon, New Hampshire (the "Company"), and Bharatan R. Patel of
Hanover, New Hampshire (the "Executive").
BACKGROUND
The Company desires to engage Executive as the President and Chief
Operating Officer ("COO") of the Company to provide business and industry
expertise in a variety of areas, and to lead and provide strategic direction to
the Company, its subsidiaries and affiliates to build a strong and profitable
company in the computational fluid dynamics software and related areas, with the
flexibility to expand into additional markets.
Accordingly, the Company and Executive wish to set forth the terms of their
agreement as follows:
1. EMPLOYMENT. The company offers and the Executive accepts full time
employment as President and COO of the Company, and Chief Executive Officer of
Fluent Europe, Inc. The Executive shall report to the Board of Directors of the
Company, and shall have all powers and duties as would normally be associated
with the position of President and COO, with the purpose of carrying out the
mission of the Company as set forth in the Background paragraph above. The
Executive shall also perform such other duties as may reasonably be requested
from time to time by the Board of Directors of the Company. The Executive shall
work at the Company's headquarters in Concord, New Hampshire, or at such other
place or places as the company may reasonably request.
2. TERM. The initial term of employment under the Agreement shall continue
until midnight on May 1, 2001 (the "Term"), subject to prior termination in
accordance with the terms hereof. Thereafter, the Agreement shall automatically
renew for successive two year terms unless either party shall give the other one
hundred eighty (180) days written notice prior to the end of any applicable term
of its intent not to renew the Agreement.
3. COMPENSATION
3.1. BASE SALARY. During the term hereof, the Executive will receive a base
salary of $250,000.00 per year, payable in accordance with the Company's payroll
procedures for its executives.
3.2. ANNUAL INCENTIVE. The Executive shall have the opportunity to earn an
individual annual incentive bonus of not less than $125,000.00 as set by the
Board of Directors.
3.3. BENEFITS. The Executive shall receive medical and other benefits as
provided to other senior executives from time to time. The Executive shall be
entitled to five (5) weeks of vacation per year.
-1-
<PAGE> 2
3.4. EXPENSES AND FACILITIES. The Company shall reimburse the Executive for
reasonable out-of-pocket expenses incurred in fulfilling his duties. The Company
shall provide the Executive with suitable office facilities, equipment,
supplies, and staff.
3.5. OUTSIDE DIRECTORSHIPS. The Company shall provide Executive with
sufficient time to serve as a director of other companies so long as such
directorships do not unreasonably interfere with Executive's duties with the
Company.
4. NOT USED
5. TERMINATION
5.1. FOR CAUSE. The Company may terminate the Executive's employment at any
time "for cause" with immediate effect upon delivering written notice to the
Executive. For purposes of this Agreement, "for cause" shall include: (a)
embezzlement, fraud, or other acts of dishonesty; (b) material breach by
Executive of any of his obligations under this Agreement; (c) conviction or
entrance of a plea of guilty or nolo contendre to a felony or other crime
involving oral turpitude, fraud, or misrepresentation; or (d) conduct involving
moral turpitude. Upon termination for cause, the Company's sole and exclusive
obligation will be to pay the Executive his compensation earned through the date
of termination, and the Executive shall not be entitled to any compensation
after the date of termination, other than payments for noncompetition as set
forth in subparagraph 6.1.3 herein.
5.2. UPON DEATH OR DISABILITY. In the event of Executive's death or total
disability during the term of this Agreement, the Company's sole and exclusive
obligation will be to pay to the Executive, if disabled, or to this estate, if
deceased, the Executive's compensation and bonus earned through the date of
death or disability. The Executive shall be deemed to be totally disabled if he
is unable to perform his duties under this Agreement by reason of mental or
physical illness or accident for a period of three consecutive months.
5.3. WITHOUT CAUSE. Other than as set forth in Section 5.4 herein, in the
event Executive is terminated without cause prior to the expiration of the Term,
he shall be entitled to continued payment of his vase salary for the longer of
the remainder of the Term or twelve (12) months.
5.4. MATERIAL CHANGE. In the event there is a material change in the makeup
of the Board of Directors as a result of merger, acquisition, or financing, and
such change is not consented to by Executive, and Executive's employment is
terminated as a result of such material change, or Executive elects to
voluntarily terminate his employment as a result of such material change, then
he shall be entitled to continued payment of his base salary for the longer of
the remainder of the Term or twelve months. If Executive elects to voluntarily
terminate, he must so elect within ninety (90) days of the material change or
such right to elect shall be waived.
-2-
<PAGE> 3
6. COVENANT NOT TO COMPETE
6.1. COVENANT. While the Executive continues to be employed by the Company,
and for a two-year period after termination of employment, for any reason, the
Executive will not directly or indirectly:
6.1.1. Enter into or attempt the "Restricted Business" as defined in
Exhibit A attached hereto.
6.1.2. Induce or attempt to persuade any former, current, or future
employee or other participant in the company's business to terminate such
employment or other relationship in order to enter into any relationship with
the Executive, any business organization in which the Executive is a participant
in, or any other business organization in competition with the Company's
business.
6.1.3. In consideration for Executive's agreement not to compete, the
Company agrees to pay Executive $10,000 per month for each month of the
non-competition period. The Company may waive the post-employment
non-competition provision after the Term upon ninety (90) days prior notice to
Executive. Such notice may be given prior to the end of the Term. The Company
may cease paying the post-employment non-competition payments after the
completion of the ninety day notice period.
7. CONFIDENTIALITY AND INVENTIONS. The Executive acknowledges that he will
develop and be exposed to information that is or will be confidential and
proprietary to the Company. The information includes, but is not limited to,
customer lists, marketing plans, price data, product plans, financial
information, software, trade secrets, and other intangible information. Such
information shall be deemed confidential to the extent not generally known
within the trade. The Executive agrees, during the term of the Agreement and
thereafter, to make use of such information only in the performance of his
duties under this Agreement, to maintain such information in confidence and to
disclosed the information only to persons with a need to know, as determined by
the Company.
Executive agrees that any inventions, suggestions, ideas, innovations, or
reports made by him as a result of the services performed hereunder shall be
promptly disclosed to Company and shall be the sole property of Company.
Executive will cooperate with Company in obtaining patents on any such
inventions and shall execute any documents tendered by Company to convey or
perfect ownership in such inventions. Executive will assist Company at Company's
expense, in any manner which Company deems necessary to obtain, maintain, or
sustain such patents. Should any such inventions, suggestions, ideas, or reports
be the result of combined efforts with, or inventions of, any person or persons
other than Executive, Executive will so inform Company at the time of submission
thereof. Executive's obligations hereunder shall survive termination of the
Agreement.
8. OTHER AGREEMENTS. Executive represents and warrants to Company that he is
not bound by agreements with other entities, including non-competition and
non-disclosure agreements.
9. SEVERABILITY. If, in any judicial proceeding, a court of competent
jurisdiction shall refuse to enforce any separate covenants deemed included in
this Agreement, or shall
-3-
<PAGE> 4
find that the term or geographic scope of one or more of the separate covenants
is unreasonably broad, then the court shall modify the provision to the minimum
extent necessary to permit enforcement, and the remainder of this Agreement
shall not be affected thereby.
10. REMEDIES. The Executive acknowledges that monetary damages would be
inadequate to compensate the Company for any breach by the Executive of the
covenants set forth in Sections 6 and 7 above. The Executive agrees that, in
addition to other remedies which may be available, the Company shall be entitled
to obtain injunctive relief against the threatened breach of this Agreement or
the continuation of nay breach, or both, without the necessity of proving actual
damages.
11. NOTICES. Any notices permitted or required under this Agreement shall be
deemed given upon the date of personal delivery or forty-eight (48) hours after
deposit in the United States mail, postage fully prepaid, return receipt
requested, to the address set forth in the first paragraph or at any other
address as any party may, from time to time, designate by notice given in
compliance with this Section.
12. MISCELLANEOUS. This Agreement shall be governed by and constructed in
accordance with the laws of the state of New Hampshire, and contains the entire
understanding between the parties, and supersedes any prior understandings and
agreements among them, including all prior agreements between Executive of
fluent, Inc. Further, this Agreement shall be binding upon the heirs, executors,
administrators, successors and assigns of the parties hereto, and the waiver by
the Company of any breach of this Agreement by Executive shall not act as a
waiver of any subsequent breach by the Executive.
13. SEPARATE COUNSEL. The parties acknowledge that the Company has been
represented in this transaction by its General Counsel, that the Executive has
not been represented in this transaction by the company's attorneys, and the
Executive has been advised that it is important for him to seek separate legal
advice and representation in this matter.
Date
AAVID THERMAL TECHNOLOGIES, INC.
A Delaware Corporation
By s/s John W. Mitchell s/s Bharatan R. Patel
--------------------------------- -------------------------------
John W. Mitchell Bharatan Patel
VP and General Counsel
-4-
<PAGE> 1
EXHIBIT 10.5
"AGREEMENT"
This INDEMNITY AGREEMENT made and entered into as of August 17, 1998, by
and between Aavid Thermal Technologies, Inc., a Delaware corporation (the
"Company"), and Peter L. Christie, the ("Indemnitee").
WHEREAS, highly competent persons are becoming more reluctant to serve
corporations as directors, officers or in other capacities unless they are
provided with adequate protection through insurance and indemnification against
inordinate risks of claims and actions against them arising out of their service
to and activities on behalf of the Company; and
WHEREAS, the current difficulties of obtaining adequate insurance have
increased the difficulty of attracting and retaining such persons; and
WHEREAS, the Board of Directors has determined that the inability to
attract and retain such persons I detrimental to the best interests of the
company's stockholders and that the Company should act to assure such persons
that there will be increased certainty of such protection in the future; and
WHEREAS, it is reasonable, prudent, and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
company free from undue concern that they will not be so indemnified; and
WHEREAS, the Indemnitee is willing to serve, continue to serve and take on
additional service for or on behalf of the Company on the condition that he be
so indemnified.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and the indemnitee do hereby covenant and agree as
follows:
SECTION 1. INDEMNIFICATION. The Company shall indemnify the Indemnitee to
the fullest extent permitted by applicable law in effect on the date hereof or
as such laws may from time to time be amended. Without diminishing the scope of
the indemnification provided by this Section 1, the rights of indemnification of
the Indemnitee provided hereunder shall include but shall not be limited to
those rights hereinafter set forth, except that no indemnification shall be paid
to the Indemnitee:
(a) On account of any suit in which judgment is rendered against the
Indemnitee for an accounting of profits made from the purchase or sale by the
Indemnitee of securities of the Company pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state, or local statutory law;
(b) On account of the Indemnitee's conduct which is finally adjudged to
have been knowingly fraudulent or deliberately dishonest, or to constitute
willful misconduct;
(c) To the extent expressly prohibited by applicable law;
(d) For which payment is actually made to the Indemnitee under a valid and
collectible insurance policy or under a valid and enforceable indemnity clause,
by-law or agreement, except in respect of any excess beyond payment under such
insurance, clause, by-law or agreement;
(e) If a final decision by a court having jurisdiction in the matter shall
determine that such indemnification is not lawful (and, in this respect, both
the Company and the indemnitee have been advised that the Securities and
Exchange Commission believes that indemnification for liabilities arising under
the federal securities laws is against public policy and is, therefore,
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<PAGE> 2
unenforceable and that claims for indemnification should be submitted to the
appropriate court for adjudication); or
(f) In connection with any proceeding (or part thereof) initiated by the
Indemnitee, or any proceeding by the Indemnitee against the Company or its
directors, officers, employees or other Indemnitees, unless (i) such
indemnification is expressly required to be made by law, (ii) the proceeding was
authorized by the Board of Directors of the Company, (iii) such indemnification
is provided by the Company, in its sole discretion, pursuant to the powers
vested in the Company under applicable law, or (iv) except as provided in
Sections 11 and 12 hereof.
SECTION 2. ACTION OF PROCEEDING OTHER THAN AN ACTION BY OR IN THE RIGHT OF
THE COMPANY. The Indemnitee shall be entitled to the indemnification rights
provided in this section if he is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in nature, other than an action by or
in the right of the Company, by reason of the fact that he is or was a director,
officer, employee, agent or fiduciary of the Company, or is or was serving at
the request of the Company as a director, officer, employee, agent or fiduciary
of any other entity, including, but not limited to, another corporation,
partnership, joint venture, trust or other enterprise, or by reason of anything
done or not done by him in any such capacity. Pursuant to this Section, the
Indemnitee shall be indemnified against all expenses (including attorney's
fees), costs, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding (including, but not limited to, the investigation, defense or appeal
thereof), if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
SECTION 3. ACTIONS BY OR IN THE RIGHT OF THE COMPANY. The Indemnitee shall
be entitled to the indemnification rights provided in this Section if he is a
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding brought by or in the
right of the Company to procure a judgment in its favor by reason of the fact
that he is or was a director, officer, employee, agent or fiduciary of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, agent or fiduciary of another entity, including, but not
limited to, another corporation, partnership, joint venture or other enterprise,
trust, or by reason of anything done or not done by him in any such capacity.
Pursuant to this Section, the Indemnitee shall be indemnified against all
expenses (including Attorney's fees), costs and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding (including, but not limited to, the investigation, defense or appeal
thereof) if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company; provided, however, that
no such indemnification shall be made in respect of any claim, issue, or matter
as to which the Indemnitee shall have been adjudged to be liable to the Company
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, the Indemnitee is fairly and reasonably entitled
to indemnity for such expenses and costs which the Court of Chancery or such
other court shall deem proper.
SECTION 4. INDEMNIFICATION FOR COSTS, CHARGES AND EXPENSES OF SUCCESSFUL
PARTY. Notwithstanding the other provisions of this Agreement, to the extent
that the Indemnitee has served as a witness on behalf of the Company or has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 2 and 3 hereof, or in defense of any claim,
issue or matter therein, including, without limitation, the dismissal of any
action without prejudice, he shall be indemnified against all costs, charges and
expenses (including attorney's fees) actually and reasonably incurred by him in
connection therewith.
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<PAGE> 3
SECTION 5. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses (including attorney's fees), costs, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with the investigation, defense, appeal or settlement of such suit, action,
investigation or proceeding described in Section 2 or 3 hereof, but not,
however, for all of the total amount thereof, the Company shall nevertheless
indemnify the Indemnitee for the portion of such expenses (including reasonable
attorney's fees), costs, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him to which the Indemnitee is
entitled.
SECTION 6. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. Upon written
request by the Indemnitee for indemnification pursuant to Section 2 or 3 hereof,
the entitlement of the Indemnitee to indemnification pursuant to the terms of
this Agreement shall be determined by the following person or persons who shall
be empowered to make such determination: (a) by a majority vote of Disinterested
Directors (as defined in Section 18 below), even though less than a quorum; (b)
if there are no Disinterested Directors, or if a majority of Disinterested
Directors so directs, by Independent Counsel (as defined in Section 18 below) in
a written opinion to the Board of Directors, a copy of which shall be delivered
to the Indemnitee; or (c) by the stockholders; provided, however, that
notwithstanding the foregoing, following the occurrence of a change in Control
of the Company (as defined in Section 18 below), the determination as to whether
or not the Indemnitee has met the applicable standard for indemnification set
forth in Section 2 or 3 hereof, which shall be applicable, shall in all events
be made by Independent counsel. Such Independent Counsel shall be selected by
the board of Directors and approved by the Indemnitee. Upon failure of the Board
to so select such Independent Counsel or upon failure of the Indemnitee to so
approve, such Independent Counsel shall be selected by the Chancellor of the
State of Delaware or such other person as the Chancellor shall designate to make
such selection. Such determination of entitlement to indemnification shall be
made not later than 45 days after receipt by the Company of a written request
for indemnification. Such request shall include documentation or information
which is necessary for such determination and which is reasonably available to
the Indemnitee. Any costs or expenses (including attorney's fees) incurred by
the Indemnitee in connection with his request for indemnification hereunder
shall be borne by the Company. The Company hereby indemnifies and agrees to hold
the Indemnitee harmless therefrom irrespective of the outcome of the
determination of the Indemnitee's entitlement to indemnification. If the person
making such determination shall determine that the Indemnitee is entitled to
indemnification as part (but not all) of the application for indemnification,
such person shall reasonably prorate such partial indemnification among such
claims, issues, or matters.
SECTION 7. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS. The Secretary of
the Company shall, promptly upon receipt of the Indemnitee's request for
indemnification, advise in writing the Board of Directors or such other person
or persons empowered to make the determination as provided in Section 6 that the
Indemnitee has made such request for indemnification. Upon making such request
for indemnification, the Indemnitee shall be presumed to be entitled to
indemnification hereunder and the Company shall have the burden of proof in
making of any determination contrary to such presumption. If the person or
persons so empowered to make such determination shall have failed to make the
requested indemnification within 45 days after receipt by the Company of such
request, the requisite determination of entitlement to indemnification shall be
deemed to have been made and the indemnitee shall be absolutely entitled to such
indemnification, absent actual and material fraud in the request for
indemnification. The termination of any action, suit, investigation or
proceeding described in Section 2 or 3 hereof by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself: (a) create a presumption that the Indemnitee did not act in good faith
and in a manner which he reasonably believed to be in or not opposed to the best
interests of the company, and, with respect to any criminal action or
proceeding, that the Indemnitee had reasonable cause to believe that his conduct
was unlawful; or (b) otherwise adversely affect the rights of the Indemnitee to
indemnification except as may be provided herein.
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<PAGE> 4
SECTION 8. ADVANCEMENT OF EXPENSES AND COSTS. All reasonable expenses and
costs incurred by the Indemnitee (including Attorneys' fees, retainers and
advances of disbursements required of the Indemnitee) shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding
at the request of the Indemnitee within twenty days after the receipt by the
Company of a statement or statements from the Indemnitee requesting such advance
or advances from time to time. The Indemnitee's entitlement to such expenses
shall include those incurred in connection with any proceeding by the Indemnitee
seeking an adjudication or award in arbitration pursuant to this Agreement. Such
statement or statements shall reasonably evidence the expenses and costs
incurred by him in connection therewith and shall include or be accompanied by
an undertaking by or on behalf of the Indemnitee to repay such amount if it is
ultimately determined that the Indemnitee is not entitled to be indemnified
against such expenses and costs by the Company as provided by this Agreement or
otherwise.
SECTION 9. REMEDIES OF THE INDEMNITEE IN CASES OF DETERMINATION NOT TO
INDEMNIFY OR TO ADVANCE EXPENSES. In the event that a determination is made that
the Indemnitee is not entitled to indemnification hereunder or if payment has
not been timely made following a determination of entitlement to indemnification
pursuant to Sections 6 and 7, or if expenses are not advanced pursuant to
Section 8, the Indemnitee shall be entitled to a final adjudication in an
appropriate court of the State of Delaware or any other court of competent
jurisdiction of his entitlement to such indemnification or advance.
Alternatively, the Indemnitee at his option may seek an aware in arbitration to
be conducted by a single arbitrator pursuant to the rules of the American
Arbitration Association, such aware to be made within sixty days following the
filing of the demand for arbitration. The Company shall not oppose the
Indemnitee's right to seek any such adjudication or award in arbitration or any
other claim. Such judicial proceeding or arbitration shall be made de novo and
the Indemnitee shall not be prejudiced by reason of a determination (if so made)
that he is not entitled to indemnification. If a determination is made or deemed
to have been made pursuant to the terms of Section 6 or Section 7 hereof that
the Indemnitee is entitled to indemnification, the Company shall be bound by
such determination and is precluded from asserting that such determination has
not been made or that the procedure by which such determination was made is not
valid, binding and enforceable. The Company further agrees to stipulate in any
such court or before any such arbitrator that the Company is bound by all the
provisions of this Agreement and is precluded from making any assertions to the
contrary. If the court or arbitrator shall determine that the Indemnitee is
entitled to any indemnification hereunder, the Company shall pay all reasonable
expenses (including attorneys' fees) and costs actually incurred by the
Indemnitee in connection with such adjudication or award in arbitration
(including, but not limited to, any appellant proceedings).
SECTION 10. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by
the Indemnitee of notice of the commencement of any action, suit or proceeding,
the Indemnitee will, if a claim in respect thereof is to be made against the
Company under this Agreement, notify the Company in writing of the commencement
thereof; but the omission to so notify the Company will not relieve it from any
liability that it may have to the Indemnitee otherwise than under this
Agreement. Notwithstanding any other provision of this Agreement, with respect
to any such action, suit or proceeding as to which the Indemnitee notified the
Company of the commencement thereof:
(a) The Company will be entitled to participate therein at its own
expense; and
(b) Except as otherwise provided in this Section 10(b), to the extent
that it may wish, the Company, jointly with any other indemnifying party
similarly notified, shall be entitled to assume the defense thereof, with
counsel satisfactory to the Indemnitee. After notice from the Company to the
Indemnitee of its election to so assume the defense thereof, the Company shall
not be liable to the Indemnitee under this Agreement for any legal or other
expenses subsequently incurred by the Indemnitee in connection with the defense
thereof other than reasonable costs of investigation or as otherwise provided
below. The Indemnitee shall
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<PAGE> 5
have the right to employ his own counsel in such action, suit proceeding, but
the fees and expenses of such counsel incurred after notice from the Company of
its assumption of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been authorized by
the Company, (ii) the Indemnitee shall have reasonably concluded that there may
be a conflict of interest between the Company and the Indemnitee in the conduct
of the defense of such action, or (iii) the Company shall not in fact have
employed counsel to assume the defense of the action, in each of which cases the
fees and expenses of counsel shall be at the expense of the Company. The Company
shall not be entitled to assume the defense of any action, suit or proceeding
brought by or on behalf of the Company or as to which the Indemnitee shall have
made the conclusion provided for in (ii) above.
(c) The Company shall not be liable to indemnify the Indemnitee under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any action or
claim in any manner that would impose any penalty or limitation on the
Indemnitee without the Indemnitee's written consent. Neither the Company nor the
Indemnitee will unreasonably withhold their consent to any proposed settlement.
SECTION 11. OTHER RIGHTS TO INDEMNIFICATION. The indemnification and
advancement of expenses (including attorneys' fees) and costs provided by this
Agreement shall not be deemed exclusive of any other rights to which the
Indemnitee may now or in the future be entitled under any provision of the
By-Laws, agreement, provision of the Certificate of Incorporation of the
Company, vote of stock-holders or Disinterested Directors, provision of law or
otherwise.
SECTION 12. CERTAIN AGREEMENTS OF INDEMNITEE. (i) Indemnitee agrees to do
all things reason-ably requested by the Board of Directors to enable the Company
to coordinate Indemnitee's defense with, if applicable, the Company's defense,
provided, however, that Indemnitee shall not be required to take any action that
would in any way prejudice his or her defense or waive any defense or position
available to him or her in connection with any action; and (ii) Indemnitee
agrees to cooperate with the Company and its counsel and to maintain any
confidences revealed to him or her by the Company in connection with the
Company's defense of any action. The Company agrees to cooperate with Indemnitee
and his or her counsel and to maintain any confidence revealed to it by
Indemnitee in connection with Indemnitee's defense of any action.
SECTION 13. ATTORNEYS' FEES AND OTHER EXPENSES TO ENFORCE AGREEMENT. In the
event that the Indemnitee is subject to or intervenes in any proceeding in which
the validity or enforceability of this Agreement is at issue or seeks an
adjudication or award in arbitration to enforce his rights under, or to recover
damages for breach of, this Agreement, the Indemnitee, if he prevails in whole
or in part in such action, shall be entitled to recover from the Company and
shall be indemnified by the Company against any actual expenses for attorneys'
fees and disbursement reasonably incurred by him.
SECTION 14. DURATION OF AGREEMENT. This Agreement shall continue until and
terminate upon the later of: (a) ten years after the Indemnitee has ceased to
occupy any of the positions or have any relationships described in Section 2 and
3 of this Agreement; and (b) the final termination of all pending or threatened
actions, suits, proceedings or investigations to which the Indemnitee may be
subject by reason of the fact that he is or was a director, officer, employee,
agent or fiduciary of the Company or is or was serving at the request of the
Company as a director, officer, employee, agent or fiduciary of any other
entity, including, but not limited to, another corporation, partnership, joint
venture, trust or other enterprise, or by reason of anything done or not done by
him in any such capacity. The indemnification provided under this Agreement
shall continue as to the Indemnitee even though he may have ceased to be a
director or officer of the Company. This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of the
Indemnitee and his spouse,
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<PAGE> 6
assigns, heirs, devises, executors, administrators or other legal
representatives. Nothing in this Agreement shall confer upon the Indemnitee the
right to continue in the employ of the Company or affect the rights of the
Company to terminate the Indemnitee's employment at any time in the sole
discretion of the Company, with or without cause.
SECTION 15. SEVERABILITY. If any provision or provisions of this Agreement
shall be held invalid, illegal or unenforceable for any reason whatsoever, (a)
the validity, legality and enforceability of the remaining provisions of this
Agreement (including, without limitation, all portions of any paragraph of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (b) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifest by the provision held invalid, illegal or unenforceable.
SECTION 16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
SECTION 17. HEADINGS. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
SECTION 18. DEFINITIONS. For purposes of this Agreement:
(a) A "Change in control of the Company" shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended), who is not currently a
stockholder of the Company, other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a corporation owned
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 20% or more of the total
voting power of the then outstanding shares of capital stock of the Company
entitled to vote generally in the election of directors (the "Voting Stock"), or
(ii) during any period of two consecutive years, individuals, who at the
beginning of such period constitute the Board of Directors of the Company, and
any new director, whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof,
or (iii) the stockholders of the Company approved a merger or consolidation with
any other corporation, other than a merger or consolidation which would result
in the Voting Stock outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80% of the total voting power
represented by the Voting Stock or the voting securities of such surviving
entity outstanding immediately after such merger or consolidation, or the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(b) "Disinterested Director" shall mean a director of the Company who
is not or was not a party to the action, suit, investigation or proceeding in
respect of which indemnification is being sought by the Indemnitee.
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<PAGE> 7
(c) "Independent Counsel" shall mean a law firm or a member of a law
firm that neither is presently nor in the past five years has been retained to
represent: (i) the Company or the Indemnitee in any matter material to either
such party, or (ii) any other party to the action, suit, investigation or
proceeding giving rise to a claim for indemnification hereunder. Notwithstanding
the foregoing, the term "Independent Counsel" shall not include any person who,
under the applicable standard of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or the Indemnitee
in an action to determine the Indemnitee's right to indemnification under this
Agreement.
SECTION 19. MODIFICATION AND WAIVER. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
SECTION 20. NOTICES. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand or by courier, on the date of delivery, or (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to the Indemnitee, to:
Peter L. Christie
5 Sugar Maple Lane
Etna, NH 03750
(b) If to the Company, to:
Aavid Thermal Technologies, Inc.
One Eagle Square, Suite 509
Concord, NH 03301
Attention: President
With a copy to:
Paul Jacobs, Esq.
Fulbright & Jaworski, LLP
666 Fifth Avenue
New York, NY 10103
Or to such other address as may be furnished to the Indemnitee by the Company or
to the Company by the Indemnitee, as the case may be.
SECTION 21. GOVERNING LAW. The parties hereto agree that this Agreement
shall be governed by, construed and enforced in accordance with, the laws of the
State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
AAVID THERMAL TECHNOLOGIES, INC.
s/s Peter L. Christie By s/s Bharatan R. Patel
- ---------------------------------- -----------------------------------
(Indemnitee)
President & COO
-------------------------------------
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<PAGE> 1
EXHIBIT 10.6
"AGREEMENT"
This INDEMNITY AGREEMENT made and entered into as of April 10, 1997, by and
between Aavid Thermal Technologies, Inc., a Delaware corporation (the
"Company"), and Charles A. Dickinson, the ("Indemnitee").
WHEREAS, highly competent persons are becoming more reluctant to serve
corporations as directors, officers or in other capacities unless they are
provided with adequate protection through insurance and indemnification against
inordinate risks of claims and actions against them arising out of their service
to and activities on behalf of the Company; and
WHEREAS, the current difficulties of obtaining adequate insurance have
increased the difficulty of attracting and retaining such persons; and
WHEREAS, the Board of Directors has determined that the inability to
attract and retain such persons I detrimental to the best interests of the
company's stockholders and that the Company should act to assure such persons
that there will be increased certainty of such protection in the future; and
WHEREAS, it is reasonable, prudent, and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
company free from undue concern that they will not be so indemnified; and
WHEREAS, the Indemnitee is willing to serve, continue to serve and take on
additional service for or on behalf of the Company on the condition that he be
so indemnified.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and the indemnitee do hereby covenant and agree as
follows:
SECTION 1. INDEMNIFICATION. The Company shall indemnify the Indemnitee to
the fullest extent permitted by applicable law in effect on the date hereof or
as such laws may from time to time be amended. Without diminishing the scope of
the indemnification provided by this Section 1, the rights of indemnification of
the Indemnitee provided hereunder shall include but shall not be limited to
those rights hereinafter set forth, except that no indemnification shall be paid
to the Indemnitee:
(a) On account of any suit in which judgment is rendered against the
Indemnitee for an accounting of profits made from the purchase or sale by the
Indemnitee of securities of the Company pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state, or local statutory law;
(b) On account of the Indemnitee's conduct which is finally adjudged to
have been knowingly fraudulent or deliberately dishonest, or to constitute
willful misconduct;
(c) To the extent expressly prohibited by applicable law;
(d) For which payment is actually made to the Indemnitee under a valid and
collectible insurance policy or under a valid and enforceable indemnity clause,
by-law or agreement, except in respect of any excess beyond payment under such
insurance, clause, by-law or agreement;
(e) If a final decision by a court having jurisdiction in the matter shall
determine that such indemnification is not lawful (and, in this respect, both
the Company and the indemnitee have been advised that the Securities and
Exchange Commission believes that indemnification for liabilities arising under
the federal securities laws is against public policy and is, therefore,
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<PAGE> 2
unenforceable and that claims for indemnification should be submitted to the
appropriate court for adjudication); or
(f) In connection with any proceeding (or part thereof) initiated by the
Indemnitee, or any proceeding by the Indemnitee against the Company or its
directors, officers, employees or other Indemnitees, unless (i) such
indemnification is expressly required to be made by law, (ii) the proceeding was
authorized by the Board of Directors of the Company, (iii) such indemnification
is provided by the Company, in its sole discretion, pursuant to the powers
vested in the Company under applicable law, or (iv) except as provided in
Sections 11 and 12 hereof.
SECTION 2. ACTION OF PROCEEDING OTHER THAN AN ACTION BY OR IN THE RIGHT OF
THE COMPANY. The Indemnitee shall be entitled to the indemnification rights
provided in this section if he is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in nature, other than an action by or
in the right of the Company, by reason of the fact that he is or was a director,
officer, employee, agent or fiduciary of the Company, or is or was serving at
the request of the Company as a director, officer, employee, agent or fiduciary
of any other entity, including, but not limited to, another corporation,
partnership, joint venture, trust or other enterprise, or by reason of anything
done or not done by him in any such capacity. Pursuant to this Section, the
Indemnitee shall be indemnified against all expenses (including attorney's
fees), costs, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding (including, but not limited to, the investigation, defense or appeal
thereof), if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
SECTION 3. ACTIONS BY OR IN THE RIGHT OF THE COMPANY. The Indemnitee shall
be entitled to the indemnification rights provided in this Section if he is a
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding brought by or in the
right of the Company to procure a judgment in its favor by reason of the fact
that he is or was a director, officer, employee, agent or fiduciary of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, agent or fiduciary of another entity, including, but not
limited to, another corporation, partnership, joint venture or other enterprise,
trust, or by reason of anything done or not done by him in any such capacity.
Pursuant to this Section, the Indemnitee shall be indemnified against all
expenses (including Attorney's fees), costs and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding (including, but not limited to, the investigation, defense or appeal
thereof) if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company; provided, however, that
no such indemnification shall be made in respect of any claim, issue, or matter
as to which the Indemnitee shall have been adjudged to be liable to the Company
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, the Indemnitee is fairly and reasonably entitled
to indemnity for such expenses and costs which the Court of Chancery or such
other court shall deem proper.
SECTION 4. INDEMNIFICATION FOR COSTS, CHARGES AND EXPENSES OF SUCCESSFUL
PARTY. Notwithstanding the other provisions of this Agreement, to the extent
that the Indemnitee has served as a witness on behalf of the Company or has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 2 and 3 hereof, or in defense of any claim,
issue or matter therein, including, without limitation, the dismissal of any
action without prejudice, he shall be indemnified against all costs, charges and
expenses (including attorney's fees) actually and reasonably incurred by him in
connection therewith.
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<PAGE> 3
SECTION 5. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses (including attorney's fees), costs, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with the investigation, defense, appeal or settlement of such suit, action,
investigation or proceeding described in Section 2 or 3 hereof, but not,
however, for all of the total amount thereof, the Company shall nevertheless
indemnify the Indemnitee for the portion of such expenses (including reasonable
attorney's fees), costs, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him to which the Indemnitee is
entitled.
SECTION 6. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. Upon written
request by the Indemnitee for indemnification pursuant to Section 2 or 3 hereof,
the entitlement of the Indemnitee to indemnification pursuant to the terms of
this Agreement shall be determined by the following person or persons who shall
be empowered to make such determination: (a) by a majority vote of Disinterested
Directors (as defined in Section 18 below), even though less than a quorum; (b)
if there are no Disinterested Directors, or if a majority of Disinterested
Directors so directs, by Independent Counsel (as defined in Section 18 below) in
a written opinion to the Board of Directors, a copy of which shall be delivered
to the Indemnitee; or (c) by the stockholders; provided, however, that
notwithstanding the foregoing, following the occurrence of a change in Control
of the Company (as defined in Section 18 below), the determination as to whether
or not the Indemnitee has met the applicable standard for indemnification set
forth in Section 2 or 3 hereof, which shall be applicable, shall in all events
be made by Independent counsel. Such Independent Counsel shall be selected by
the board of Directors and approved by the Indemnitee. Upon failure of the Board
to so select such Independent Counsel or upon failure of the Indemnitee to so
approve, such Independent Counsel shall be selected by the Chancellor of the
State of Delaware or such other person as the Chancellor shall designate to make
such selection. Such determination of entitlement to indemnification shall be
made not later than 45 days after receipt by the Company of a written request
for indemnification. Such request shall include documentation or information
which is necessary for such determination and which is reasonably available to
the Indemnitee. Any costs or expenses (including attorney's fees) incurred by
the Indemnitee in connection with his request for indemnification hereunder
shall be borne by the Company. The Company hereby indemnifies and agrees to hold
the Indemnitee harmless therefrom irrespective of the outcome of the
determination of the Indemnitee's entitlement to indemnification. If the person
making such determination shall determine that the Indemnitee is entitled to
indemnification as part (but not all) of the application for indemnification,
such person shall reasonably prorate such partial indemnification among such
claims, issues, or matters.
SECTION 7. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS. The Secretary of
the Company shall, promptly upon receipt of the Indemnitee's request for
indemnification, advise in writing the Board of Directors or such other person
or persons empowered to make the determination as provided in Section 6 that the
Indemnitee has made such request for indemnification. Upon making such request
for indemnification, the Indemnitee shall be presumed to be entitled to
indemnification hereunder and the Company shall have the burden of proof in
making of any determination contrary to such presumption. If the person or
persons so empowered to make such determination shall have failed to make the
requested indemnification within 45 days after receipt by the Company of such
request, the requisite determination of entitlement to indemnification shall be
deemed to have been made and the indemnitee shall be absolutely entitled to such
indemnification, absent actual and material fraud in the request for
indemnification. The termination of any action, suit, investigation or
proceeding described in Section 2 or 3 hereof by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself: (a) create a presumption that the Indemnitee did not act in good faith
and in a manner which he reasonably believed to be in or not opposed to the best
interests of the company, and, with respect to any criminal action or
proceeding, that the Indemnitee had reasonable cause to believe that his conduct
was unlawful; or (b) otherwise adversely affect the rights of the Indemnitee to
indemnification except as may be provided herein.
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<PAGE> 4
SECTION 8. ADVANCEMENT OF EXPENSES AND COSTS. All reasonable expenses and
costs incurred by the Indemnitee (including Attorneys' fees, retainers and
advances of disbursements required of the Indemnitee) shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding
at the request of the Indemnitee within twenty days after the receipt by the
Company of a statement or statements from the Indemnitee requesting such advance
or advances from time to time. The Indemnitee's entitlement to such expenses
shall include those incurred in connection with any proceeding by the Indemnitee
seeking an adjudication or award in arbitration pursuant to this Agreement. Such
statement or statements shall reasonably evidence the expenses and costs
incurred by him in connection therewith and shall include or be accompanied by
an undertaking by or on behalf of the Indemnitee to repay such amount if it is
ultimately determined that the Indemnitee is not entitled to be indemnified
against such expenses and costs by the Company as provided by this Agreement or
otherwise.
SECTION 9. REMEDIES OF THE INDEMNITEE IN CASES OF DETERMINATION NOT TO
INDEMNIFY OR TO ADVANCE EXPENSES. In the event that a determination is made that
the Indemnitee is not entitled to indemnification hereunder or if payment has
not been timely made following a determination of entitlement to indemnification
pursuant to Sections 6 and 7, or if expenses are not advanced pursuant to
Section 8, the Indemnitee shall be entitled to a final adjudication in an
appropriate court of the State of Delaware or any other court of competent
jurisdiction of his entitlement to such indemnification or advance.
Alternatively, the Indemnitee at his option may seek an aware in arbitration to
be conducted by a single arbitrator pursuant to the rules of the American
Arbitration Association, such aware to be made within sixty days following the
filing of the demand for arbitration. The Company shall not oppose the
Indemnitee's right to seek any such adjudication or award in arbitration or any
other claim. Such judicial proceeding or arbitration shall be made de novo and
the Indemnitee shall not be prejudiced by reason of a determination (if so made)
that he is not entitled to indemnification. If a determination is made or deemed
to have been made pursuant to the terms of Section 6 or Section 7 hereof that
the Indemnitee is entitled to indemnification, the Company shall be bound by
such determination and is precluded from asserting that such determination has
not been made or that the procedure by which such determination was made is not
valid, binding and enforceable. The Company further agrees to stipulate in any
such court or before any such arbitrator that the Company is bound by all the
provisions of this Agreement and is precluded from making any assertions to the
contrary. If the court or arbitrator shall determine that the Indemnitee is
entitled to any indemnification hereunder, the Company shall pay all reasonable
expenses (including attorneys' fees) and costs actually incurred by the
Indemnitee in connection with such adjudication or award in arbitration
(including, but not limited to, any appellant proceedings).
SECTION 10. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by
the Indemnitee of notice of the commencement of any action, suit or proceeding,
the Indemnitee will, if a claim in respect thereof is to be made against the
Company under this Agreement, notify the Company in writing of the commencement
thereof; but the omission to so notify the Company will not relieve it from any
liability that it may have to the Indemnitee otherwise than under this
Agreement. Notwithstanding any other provision of this Agreement, with respect
to any such action, suit or proceeding as to which the Indemnitee notified the
Company of the commencement thereof:
(a) The Company will be entitled to participate therein at its own
expense; and
(b) Except as otherwise provided in this Section 10(b), to the extent
that it may wish, the Company, jointly with any other indemnifying party
similarly notified, shall be entitled to assume the defense thereof, with
counsel satisfactory to the Indemnitee. After notice from the Company to the
Indemnitee of its election to so assume the defense thereof, the Company shall
not be liable to the Indemnitee under this Agreement for any legal or other
expenses subsequently incurred by the Indemnitee in connection with the defense
thereof other than reasonable costs of investigation or as otherwise provided
below. The Indemnitee shall
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<PAGE> 5
have the right to employ his own counsel in such action, suit proceeding, but
the fees and expenses of such counsel incurred after notice from the Company of
its assumption of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been authorized by
the Company, (ii) the Indemnitee shall have reasonably concluded that there may
be a conflict of interest between the Company and the Indemnitee in the conduct
of the defense of such action, or (iii) the Company shall not in fact have
employed counsel to assume the defense of the action, in each of which cases the
fees and expenses of counsel shall be at the expense of the Company. The Company
shall not be entitled to assume the defense of any action, suit or proceeding
brought by or on behalf of the Company or as to which the Indemnitee shall have
made the conclusion provided for in (ii) above.
(c) The Company shall not be liable to indemnify the Indemnitee under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any action or
claim in any manner that would impose any penalty or limitation on the
Indemnitee without the Indemnitee's written consent. Neither the Company nor the
Indemnitee will unreasonably withhold their consent to any proposed settlement.
SECTION 11. OTHER RIGHTS TO INDEMNIFICATION. The indemnification and
advancement of expenses (including attorneys' fees) and costs provided by this
Agreement shall not be deemed exclusive of any other rights to which the
Indemnitee may now or in the future be entitled under any provision of the
By-Laws, agreement, provision of the Certificate of Incorporation of the
Company, vote of stock-holders or Disinterested Directors, provision of law or
otherwise.
SECTION 12. CERTAIN AGREEMENTS OF INDEMNITEE. (i) Indemnitee agrees to do
all things reason-ably requested by the Board of Directors to enable the Company
to coordinate Indemnitee's defense with, if applicable, the Company's defense,
provided, however, that Indemnitee shall not be required to take any action that
would in any way prejudice his or her defense or waive any defense or position
available to him or her in connection with any action; and (ii) Indemnitee
agrees to cooperate with the Company and its counsel and to maintain any
confidences revealed to him or her by the Company in connection with the
Company's defense of any action. The Company agrees to cooperate with Indemnitee
and his or her counsel and to maintain any confidence revealed to it by
Indemnitee in connection with Indemnitee's defense of any action.
SECTION 13. ATTORNEYS' FEES AND OTHER EXPENSES TO ENFORCE AGREEMENT. In the
event that the Indemnitee is subject to or intervenes in any proceeding in which
the validity or enforceability of this Agreement is at issue or seeks an
adjudication or award in arbitration to enforce his rights under, or to recover
damages for breach of, this Agreement, the Indemnitee, if he prevails in whole
or in part in such action, shall be entitled to recover from the Company and
shall be indemnified by the Company against any actual expenses for attorneys'
fees and disbursement reasonably incurred by him.
SECTION 14. DURATION OF AGREEMENT. This Agreement shall continue until and
terminate upon the later of: (a) ten years after the Indemnitee has ceased to
occupy any of the positions or have any relationships described in Section 2 and
3 of this Agreement; and (b) the final termination of all pending or threatened
actions, suits, proceedings or investigations to which the Indemnitee may be
subject by reason of the fact that he is or was a director, officer, employee,
agent or fiduciary of the Company or is or was serving at the request of the
Company as a director, officer, employee, agent or fiduciary of any other
entity, including, but not limited to, another corporation, partnership, joint
venture, trust or other enterprise, or by reason of anything done or not done by
him in any such capacity. The indemnification provided under this Agreement
shall continue as to the Indemnitee even though he may have ceased to be a
director or officer of the Company. This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of the
Indemnitee and his spouse,
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<PAGE> 6
assigns, heirs, devises, executors, administrators or other legal
representatives. Nothing in this Agreement shall confer upon the Indemnitee the
right to continue in the employ of the Company or affect the rights of the
Company to terminate the Indemnitee's employment at any time in the sole
discretion of the Company, with or without cause.
SECTION 15. SEVERABILITY. If any provision or provisions of this Agreement
shall be held invalid, illegal or unenforceable for any reason whatsoever, (a)
the validity, legality and enforceability of the remaining provisions of this
Agreement (including, without limitation, all portions of any paragraph of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (b) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifest by the provision held invalid, illegal or unenforceable.
SECTION 16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
SECTION 17. HEADINGS. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
SECTION 18. DEFINITIONS. For purposes of this Agreement:
(a) A "Change in control of the Company" shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended), who is not currently a
stockholder of the Company, other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a corporation owned
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 20% or more of the total
voting power of the then outstanding shares of capital stock of the Company
entitled to vote generally in the election of directors (the "Voting Stock"), or
(ii) during any period of two consecutive years, individuals, who at the
beginning of such period constitute the Board of Directors of the Company, and
any new director, whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof,
or (iii) the stockholders of the Company approved a merger or consolidation with
any other corporation, other than a merger or consolidation which would result
in the Voting Stock outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80% of the total voting power
represented by the Voting Stock or the voting securities of such surviving
entity outstanding immediately after such merger or consolidation, or the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(b) "Disinterested Director" shall mean a director of the Company who
is not or was not a party to the action, suit, investigation or proceeding in
respect of which indemnification is being sought by the Indemnitee.
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<PAGE> 7
(c) "Independent Counsel" shall mean a law firm or a member of a law
firm that neither is presently nor in the past five years has been retained to
represent: (i) the Company or the Indemnitee in any matter material to either
such party, or (ii) any other party to the action, suit, investigation or
proceeding giving rise to a claim for indemnification hereunder. Notwithstanding
the foregoing, the term "Independent Counsel" shall not include any person who,
under the applicable standard of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or the Indemnitee
in an action to determine the Indemnitee's right to indemnification under this
Agreement.
SECTION 19. MODIFICATION AND WAIVER. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
SECTION 20. NOTICES. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand or by courier, on the date of delivery, or (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to the Indemnitee, to:
Charles A. Dickinson
Route 1 -- Box 1484
Williamstown, VT 05679
(b) If to the Company, to:
Aavid Thermal Technologies, Inc.
One Eagle Square, Suite 509
Concord, NH 03301
Attention: President
With a copy to:
Paul Jacobs, Esq.
Fulbright & Jaworski, LLP
666 Fifth Avenue
New York, NY 10103
Or to such other address as may be furnished to the Indemnitee by the Company or
to the Company by the Indemnitee, as the case may be.
SECTION 21. GOVERNING LAW. The parties hereto agree that this Agreement
shall be governed by, construed and enforced in accordance with, the laws of the
State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
AAVID THERMAL TECHNOLOGIES, INC.
s/s Charles A. Dickinson By s/s Ronald F. Borelli
- ----------------------------------- --------------------------------------
(Indemnitee)
Chairman of the Board & CEO
----------------------------------------
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<PAGE> 1
EXHIBIT 10.7
"AGREEMENT"
This INDEMNITY AGREEMENT made and entered into as of September 12, 1997, by
and between Aavid Thermal Technologies, Inc., a Delaware corporation (the
"Company"), and Stephen D. Eldred, the ("Indemnitee").
WHEREAS, highly competent persons are becoming more reluctant to serve
corporations as directors, officers or in other capacities unless they are
provided with adequate protection through insurance and indemnification against
inordinate risks of claims and actions against them arising out of their service
to and activities on behalf of the Company; and
WHEREAS, the current difficulties of obtaining adequate insurance have
increased the difficulty of attracting and retaining such persons; and
WHEREAS, the Board of Directors has determined that the inability to
attract and retain such persons I detrimental to the best interests of the
company's stockholders and that the Company should act to assure such persons
that there will be increased certainty of such protection in the future; and
WHEREAS, it is reasonable, prudent, and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
company free from undue concern that they will not be so indemnified; and
WHEREAS, the Indemnitee is willing to serve, continue to serve and take on
additional service for or on behalf of the Company on the condition that he be
so indemnified.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and the indemnitee do hereby covenant and agree as
follows:
SECTION 1. INDEMNIFICATION. The Company shall indemnify the Indemnitee to
the fullest extent permitted by applicable law in effect on the date hereof or
as such laws may from time to time be amended. Without diminishing the scope of
the indemnification provided by this Section 1, the rights of indemnification of
the Indemnitee provided hereunder shall include but shall not be limited to
those rights hereinafter set forth, except that no indemnification shall be paid
to the Indemnitee:
(a) On account of any suit in which judgment is rendered against the
Indemnitee for an accounting of profits made from the purchase or sale by the
Indemnitee of securities of the Company pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state, or local statutory law;
(b) On account of the Indemnitee's conduct which is finally adjudged to
have been knowingly fraudulent or deliberately dishonest, or to constitute
willful misconduct;
(c) To the extent expressly prohibited by applicable law;
(d) For which payment is actually made to the Indemnitee under a valid and
collectible insurance policy or under a valid and enforceable indemnity clause,
by-law or agreement, except in respect of any excess beyond payment under such
insurance, clause, by-law or agreement;
(e) If a final decision by a court having jurisdiction in the matter shall
determine that such indemnification is not lawful (and, in this respect, both
the Company and the indemnitee have been advised that the Securities and
Exchange Commission believes that indemnification for liabilities arising under
the federal securities laws is against public policy and is, therefore,
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<PAGE> 2
unenforceable and that claims for indemnification should be submitted to the
appropriate court for adjudication); or
(f) In connection with any proceeding (or part thereof) initiated by the
Indemnitee, or any proceeding by the Indemnitee against the Company or its
directors, officers, employees or other Indemnitees, unless (i) such
indemnification is expressly required to be made by law, (ii) the proceeding was
authorized by the Board of Directors of the Company, (iii) such indemnification
is provided by the Company, in its sole discretion, pursuant to the powers
vested in the Company under applicable law, or (iv) except as provided in
Sections 11 and 12 hereof.
SECTION 2. ACTION OF PROCEEDING OTHER THAN AN ACTION BY OR IN THE RIGHT OF
THE COMPANY. The Indemnitee shall be entitled to the indemnification rights
provided in this section if he is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in nature, other than an action by or
in the right of the Company, by reason of the fact that he is or was a director,
officer, employee, agent or fiduciary of the Company, or is or was serving at
the request of the Company as a director, officer, employee, agent or fiduciary
of any other entity, including, but not limited to, another corporation,
partnership, joint venture, trust or other enterprise, or by reason of anything
done or not done by him in any such capacity. Pursuant to this Section, the
Indemnitee shall be indemnified against all expenses (including attorney's
fees), costs, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding (including, but not limited to, the investigation, defense or appeal
thereof), if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
SECTION 3. ACTIONS BY OR IN THE RIGHT OF THE COMPANY. The Indemnitee shall
be entitled to the indemnification rights provided in this Section if he is a
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding brought by or in the
right of the Company to procure a judgment in its favor by reason of the fact
that he is or was a director, officer, employee, agent or fiduciary of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, agent or fiduciary of another entity, including, but not
limited to, another corporation, partnership, joint venture or other enterprise,
trust, or by reason of anything done or not done by him in any such capacity.
Pursuant to this Section, the Indemnitee shall be indemnified against all
expenses (including Attorney's fees), costs and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding (including, but not limited to, the investigation, defense or appeal
thereof) if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company; provided, however, that
no such indemnification shall be made in respect of any claim, issue, or matter
as to which the Indemnitee shall have been adjudged to be liable to the Company
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, the Indemnitee is fairly and reasonably entitled
to indemnity for such expenses and costs which the Court of Chancery or such
other court shall deem proper.
SECTION 4. INDEMNIFICATION FOR COSTS, CHARGES AND EXPENSES OF SUCCESSFUL
PARTY. Notwithstanding the other provisions of this Agreement, to the extent
that the Indemnitee has served as a witness on behalf of the Company or has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 2 and 3 hereof, or in defense of any claim,
issue or matter therein, including, without limitation, the dismissal of any
action without prejudice, he shall be indemnified against all costs, charges and
expenses (including attorney's fees) actually and reasonably incurred by him in
connection therewith.
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<PAGE> 3
SECTION 5. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses (including attorney's fees), costs, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with the investigation, defense, appeal or settlement of such suit, action,
investigation or proceeding described in Section 2 or 3 hereof, but not,
however, for all of the total amount thereof, the Company shall nevertheless
indemnify the Indemnitee for the portion of such expenses (including reasonable
attorney's fees), costs, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him to which the Indemnitee is
entitled.
SECTION 6. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. Upon written
request by the Indemnitee for indemnification pursuant to Section 2 or 3 hereof,
the entitlement of the Indemnitee to indemnification pursuant to the terms of
this Agreement shall be determined by the following person or persons who shall
be empowered to make such determination: (a) by a majority vote of Disinterested
Directors (as defined in Section 18 below), even though less than a quorum; (b)
if there are no Disinterested Directors, or if a majority of Disinterested
Directors so directs, by Independent Counsel (as defined in Section 18 below) in
a written opinion to the Board of Directors, a copy of which shall be delivered
to the Indemnitee; or (c) by the stockholders; provided, however, that
notwithstanding the foregoing, following the occurrence of a change in Control
of the Company (as defined in Section 18 below), the determination as to whether
or not the Indemnitee has met the applicable standard for indemnification set
forth in Section 2 or 3 hereof, which shall be applicable, shall in all events
be made by Independent counsel. Such Independent Counsel shall be selected by
the board of Directors and approved by the Indemnitee. Upon failure of the Board
to so select such Independent Counsel or upon failure of the Indemnitee to so
approve, such Independent Counsel shall be selected by the Chancellor of the
State of Delaware or such other person as the Chancellor shall designate to make
such selection. Such determination of entitlement to indemnification shall be
made not later than 45 days after receipt by the Company of a written request
for indemnification. Such request shall include documentation or information
which is necessary for such determination and which is reasonably available to
the Indemnitee. Any costs or expenses (including attorney's fees) incurred by
the Indemnitee in connection with his request for indemnification hereunder
shall be borne by the Company. The Company hereby indemnifies and agrees to hold
the Indemnitee harmless therefrom irrespective of the outcome of the
determination of the Indemnitee's entitlement to indemnification. If the person
making such determination shall determine that the Indemnitee is entitled to
indemnification as part (but not all) of the application for indemnification,
such person shall reasonably prorate such partial indemnification among such
claims, issues, or matters.
SECTION 7. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS. The Secretary of
the Company shall, promptly upon receipt of the Indemnitee's request for
indemnification, advise in writing the Board of Directors or such other person
or persons empowered to make the determination as provided in Section 6 that the
Indemnitee has made such request for indemnification. Upon making such request
for indemnification, the Indemnitee shall be presumed to be entitled to
indemnification hereunder and the Company shall have the burden of proof in
making of any determination contrary to such presumption. If the person or
persons so empowered to make such determination shall have failed to make the
requested indemnification within 45 days after receipt by the Company of such
request, the requisite determination of entitlement to indemnification shall be
deemed to have been made and the indemnitee shall be absolutely entitled to such
indemnification, absent actual and material fraud in the request for
indemnification. The termination of any action, suit, investigation or
proceeding described in Section 2 or 3 hereof by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself: (a) create a presumption that the Indemnitee did not act in good faith
and in a manner which he reasonably believed to be in or not opposed to the best
interests of the company, and, with respect to any criminal action or
proceeding, that the Indemnitee had reasonable cause to believe that his conduct
was unlawful; or (b) otherwise adversely affect the rights of the Indemnitee to
indemnification except as may be provided herein.
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<PAGE> 4
SECTION 8. ADVANCEMENT OF EXPENSES AND COSTS. All reasonable expenses and
costs incurred by the Indemnitee (including Attorneys' fees, retainers and
advances of disbursements required of the Indemnitee) shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding
at the request of the Indemnitee within twenty days after the receipt by the
Company of a statement or statements from the Indemnitee requesting such advance
or advances from time to time. The Indemnitee's entitlement to such expenses
shall include those incurred in connection with any proceeding by the Indemnitee
seeking an adjudication or award in arbitration pursuant to this Agreement. Such
statement or statements shall reasonably evidence the expenses and costs
incurred by him in connection therewith and shall include or be accompanied by
an undertaking by or on behalf of the Indemnitee to repay such amount if it is
ultimately determined that the Indemnitee is not entitled to be indemnified
against such expenses and costs by the Company as provided by this Agreement or
otherwise.
SECTION 9. REMEDIES OF THE INDEMNITEE IN CASES OF DETERMINATION NOT TO
INDEMNIFY OR TO ADVANCE EXPENSES. In the event that a determination is made that
the Indemnitee is not entitled to indemnification hereunder or if payment has
not been timely made following a determination of entitlement to indemnification
pursuant to Sections 6 and 7, or if expenses are not advanced pursuant to
Section 8, the Indemnitee shall be entitled to a final adjudication in an
appropriate court of the State of Delaware or any other court of competent
jurisdiction of his entitlement to such indemnification or advance.
Alternatively, the Indemnitee at his option may seek an aware in arbitration to
be conducted by a single arbitrator pursuant to the rules of the American
Arbitration Association, such aware to be made within sixty days following the
filing of the demand for arbitration. The Company shall not oppose the
Indemnitee's right to seek any such adjudication or award in arbitration or any
other claim. Such judicial proceeding or arbitration shall be made de novo and
the Indemnitee shall not be prejudiced by reason of a determination (if so made)
that he is not entitled to indemnification. If a determination is made or deemed
to have been made pursuant to the terms of Section 6 or Section 7 hereof that
the Indemnitee is entitled to indemnification, the Company shall be bound by
such determination and is precluded from asserting that such determination has
not been made or that the procedure by which such determination was made is not
valid, binding and enforceable. The Company further agrees to stipulate in any
such court or before any such arbitrator that the Company is bound by all the
provisions of this Agreement and is precluded from making any assertions to the
contrary. If the court or arbitrator shall determine that the Indemnitee is
entitled to any indemnification hereunder, the Company shall pay all reasonable
expenses (including attorneys' fees) and costs actually incurred by the
Indemnitee in connection with such adjudication or award in arbitration
(including, but not limited to, any appellant proceedings).
SECTION 10. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by
the Indemnitee of notice of the commencement of any action, suit or proceeding,
the Indemnitee will, if a claim in respect thereof is to be made against the
Company under this Agreement, notify the Company in writing of the commencement
thereof; but the omission to so notify the Company will not relieve it from any
liability that it may have to the Indemnitee otherwise than under this
Agreement. Notwithstanding any other provision of this Agreement, with respect
to any such action, suit or proceeding as to which the Indemnitee notified the
Company of the commencement thereof:
(a) The Company will be entitled to participate therein at its own
expense; and
(b) Except as otherwise provided in this Section 10(b), to the extent
that it may wish, the Company, jointly with any other indemnifying party
similarly notified, shall be entitled to assume the defense thereof, with
counsel satisfactory to the Indemnitee. After notice from the Company to the
Indemnitee of its election to so assume the defense thereof, the Company shall
not be liable to the Indemnitee under this Agreement for any legal or other
expenses subsequently incurred by the Indemnitee in connection with the defense
thereof other than reasonable costs of investigation or as otherwise provided
below. The Indemnitee shall
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<PAGE> 5
have the right to employ his own counsel in such action, suit proceeding, but
the fees and expenses of such counsel incurred after notice from the Company of
its assumption of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been authorized by
the Company, (ii) the Indemnitee shall have reasonably concluded that there may
be a conflict of interest between the Company and the Indemnitee in the conduct
of the defense of such action, or (iii) the Company shall not in fact have
employed counsel to assume the defense of the action, in each of which cases the
fees and expenses of counsel shall be at the expense of the Company. The Company
shall not be entitled to assume the defense of any action, suit or proceeding
brought by or on behalf of the Company or as to which the Indemnitee shall have
made the conclusion provided for in (ii) above.
(c) The Company shall not be liable to indemnify the Indemnitee under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any action or
claim in any manner that would impose any penalty or limitation on the
Indemnitee without the Indemnitee's written consent. Neither the Company nor the
Indemnitee will unreasonably withhold their consent to any proposed settlement.
SECTION 11. OTHER RIGHTS TO INDEMNIFICATION. The indemnification and
advancement of expenses (including attorneys' fees) and costs provided by this
Agreement shall not be deemed exclusive of any other rights to which the
Indemnitee may now or in the future be entitled under any provision of the
By-Laws, agreement, provision of the Certificate of Incorporation of the
Company, vote of stock-holders or Disinterested Directors, provision of law or
otherwise.
SECTION 12. CERTAIN AGREEMENTS OF INDEMNITEE. (i) Indemnitee agrees to do
all things reason-ably requested by the Board of Directors to enable the Company
to coordinate Indemnitee's defense with, if applicable, the Company's defense,
provided, however, that Indemnitee shall not be required to take any action that
would in any way prejudice his or her defense or waive any defense or position
available to him or her in connection with any action; and (ii) Indemnitee
agrees to cooperate with the Company and its counsel and to maintain any
confidences revealed to him or her by the Company in connection with the
Company's defense of any action. The Company agrees to cooperate with Indemnitee
and his or her counsel and to maintain any confidence revealed to it by
Indemnitee in connection with Indemnitee's defense of any action.
SECTION 13. ATTORNEYS' FEES AND OTHER EXPENSES TO ENFORCE AGREEMENT. In the
event that the Indemnitee is subject to or intervenes in any proceeding in which
the validity or enforceability of this Agreement is at issue or seeks an
adjudication or award in arbitration to enforce his rights under, or to recover
damages for breach of, this Agreement, the Indemnitee, if he prevails in whole
or in part in such action, shall be entitled to recover from the Company and
shall be indemnified by the Company against any actual expenses for attorneys'
fees and disbursement reasonably incurred by him.
SECTION 14. DURATION OF AGREEMENT. This Agreement shall continue until and
terminate upon the later of: (a) ten years after the Indemnitee has ceased to
occupy any of the positions or have any relationships described in Section 2 and
3 of this Agreement; and (b) the final termination of all pending or threatened
actions, suits, proceedings or investigations to which the Indemnitee may be
subject by reason of the fact that he is or was a director, officer, employee,
agent or fiduciary of the Company or is or was serving at the request of the
Company as a director, officer, employee, agent or fiduciary of any other
entity, including, but not limited to, another corporation, partnership, joint
venture, trust or other enterprise, or by reason of anything done or not done by
him in any such capacity. The indemnification provided under this Agreement
shall continue as to the Indemnitee even though he may have ceased to be a
director or officer of the Company. This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of the
Indemnitee and his spouse,
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<PAGE> 6
assigns, heirs, devises, executors, administrators or other legal
representatives. Nothing in this Agreement shall confer upon the Indemnitee the
right to continue in the employ of the Company or affect the rights of the
Company to terminate the Indemnitee's employment at any time in the sole
discretion of the Company, with or without cause.
SECTION 15. SEVERABILITY. If any provision or provisions of this Agreement
shall be held invalid, illegal or unenforceable for any reason whatsoever, (a)
the validity, legality and enforceability of the remaining provisions of this
Agreement (including, without limitation, all portions of any paragraph of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (b) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifest by the provision held invalid, illegal or unenforceable.
SECTION 16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
SECTION 17. HEADINGS. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
SECTION 18. DEFINITIONS. For purposes of this Agreement:
(a) A "Change in control of the Company" shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended), who is not currently a
stockholder of the Company, other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a corporation owned
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 20% or more of the total
voting power of the then outstanding shares of capital stock of the Company
entitled to vote generally in the election of directors (the "Voting Stock"), or
(ii) during any period of two consecutive years, individuals, who at the
beginning of such period constitute the Board of Directors of the Company, and
any new director, whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof,
or (iii) the stockholders of the Company approved a merger or consolidation with
any other corporation, other than a merger or consolidation which would result
in the Voting Stock outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80% of the total voting power
represented by the Voting Stock or the voting securities of such surviving
entity outstanding immediately after such merger or consolidation, or the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(b) "Disinterested Director" shall mean a director of the Company who
is not or was not a party to the action, suit, investigation or proceeding in
respect of which indemnification is being sought by the Indemnitee.
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<PAGE> 7
(c) "Independent Counsel" shall mean a law firm or a member of a law
firm that neither is presently nor in the past five years has been retained to
represent: (i) the Company or the Indemnitee in any matter material to either
such party, or (ii) any other party to the action, suit, investigation or
proceeding giving rise to a claim for indemnification hereunder. Notwithstanding
the foregoing, the term "Independent Counsel" shall not include any person who,
under the applicable standard of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or the Indemnitee
in an action to determine the Indemnitee's right to indemnification under this
Agreement.
SECTION 19. MODIFICATION AND WAIVER. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
SECTION 20. NOTICES. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand or by courier, on the date of delivery, or (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to the Indemnitee, to:
Stephen D. Eldred
94 School Street
Concord, NH 03301
(b) If to the Company, to:
Aavid Thermal Technologies, Inc.
One Eagle Square, Suite 509
Concord, NH 03301
Attention: President
With a copy to:
Paul Jacobs, Esq.
Fulbright & Jaworski, LLP
666 Fifth Avenue
New York, NY 10103
Or to such other address as may be furnished to the Indemnitee by the Company or
to the Company by the Indemnitee, as the case may be.
SECTION 21. GOVERNING LAW. The parties hereto agree that this Agreement
shall be governed by, construed and enforced in accordance with, the laws of the
State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
AAVID THERMAL TECHNOLOGIES, INC.
s/s Stephen D. Eldred By s/s Bharatan R. Patel
- ------------------------------ -------------------------------------
(Indemnitee)
President & COO
---------------------------------------
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<PAGE> 1
EXHIBIT 10.8
"AGREEMENT"
This INDEMNITY AGREEMENT made and entered into as of January 5, 1997, by
and between Aavid Thermal Technologies, Inc., a Delaware corporation (the
"Company"), and Paul E. Landers, the ("Indemnitee").
WHEREAS, highly competent persons are becoming more reluctant to serve
corporations as directors, officers or in other capacities unless they are
provided with adequate protection through insurance and indemnification against
inordinate risks of claims and actions against them arising out of their service
to and activities on behalf of the Company; and
WHEREAS, the current difficulties of obtaining adequate insurance have
increased the difficulty of attracting and retaining such persons; and
WHEREAS, the Board of Directors has determined that the inability to
attract and retain such persons I detrimental to the best interests of the
company's stockholders and that the Company should act to assure such persons
that there will be increased certainty of such protection in the future; and
WHEREAS, it is reasonable, prudent, and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
company free from undue concern that they will not be so indemnified; and
WHEREAS, the Indemnitee is willing to serve, continue to serve and take on
additional service for or on behalf of the Company on the condition that he be
so indemnified.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and the indemnitee do hereby covenant and agree as
follows:
SECTION 1. INDEMNIFICATION. The Company shall indemnify the Indemnitee to
the fullest extent permitted by applicable law in effect on the date hereof or
as such laws may from time to time be amended. Without diminishing the scope of
the indemnification provided by this Section 1, the rights of indemnification of
the Indemnitee provided hereunder shall include but shall not be limited to
those rights hereinafter set forth, except that no indemnification shall be paid
to the Indemnitee:
(a) On account of any suit in which judgment is rendered against the
Indemnitee for an accounting of profits made from the purchase or sale by the
Indemnitee of securities of the Company pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state, or local statutory law;
(b) On account of the Indemnitee's conduct which is finally adjudged to
have been knowingly fraudulent or deliberately dishonest, or to constitute
willful misconduct;
(c) To the extent expressly prohibited by applicable law;
(d) For which payment is actually made to the Indemnitee under a valid and
collectible insurance policy or under a valid and enforceable indemnity clause,
by-law or agreement, except in respect of any excess beyond payment under such
insurance, clause, by-law or agreement;
(e) If a final decision by a court having jurisdiction in the matter shall
determine that such indemnification is not lawful (and, in this respect, both
the Company and the indemnitee have been advised that the Securities and
Exchange Commission believes that indemnification for liabilities arising under
the federal securities laws is against public policy and is, therefore,
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<PAGE> 2
unenforceable and that claims for indemnification should be submitted to the
appropriate court for adjudication); or
(f) In connection with any proceeding (or part thereof) initiated by the
Indemnitee, or any proceeding by the Indemnitee against the Company or its
directors, officers, employees or other Indemnitees, unless (i) such
indemnification is expressly required to be made by law, (ii) the proceeding was
authorized by the Board of Directors of the Company, (iii) such indemnification
is provided by the Company, in its sole discretion, pursuant to the powers
vested in the Company under applicable law, or (iv) except as provided in
Sections 11 and 12 hereof.
SECTION 2. ACTION OF PROCEEDING OTHER THAN AN ACTION BY OR IN THE RIGHT OF
THE COMPANY. The Indemnitee shall be entitled to the indemnification rights
provided in this section if he is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in nature, other than an action by or
in the right of the Company, by reason of the fact that he is or was a director,
officer, employee, agent or fiduciary of the Company, or is or was serving at
the request of the Company as a director, officer, employee, agent or fiduciary
of any other entity, including, but not limited to, another corporation,
partnership, joint venture, trust or other enterprise, or by reason of anything
done or not done by him in any such capacity. Pursuant to this Section, the
Indemnitee shall be indemnified against all expenses (including attorney's
fees), costs, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding (including, but not limited to, the investigation, defense or appeal
thereof), if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
SECTION 3. ACTIONS BY OR IN THE RIGHT OF THE COMPANY. The Indemnitee shall
be entitled to the indemnification rights provided in this Section if he is a
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding brought by or in the
right of the Company to procure a judgment in its favor by reason of the fact
that he is or was a director, officer, employee, agent or fiduciary of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, agent or fiduciary of another entity, including, but not
limited to, another corporation, partnership, joint venture or other enterprise,
trust, or by reason of anything done or not done by him in any such capacity.
Pursuant to this Section, the Indemnitee shall be indemnified against all
expenses (including Attorney's fees), costs and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding (including, but not limited to, the investigation, defense or appeal
thereof) if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company; provided, however, that
no such indemnification shall be made in respect of any claim, issue, or matter
as to which the Indemnitee shall have been adjudged to be liable to the Company
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, the Indemnitee is fairly and reasonably entitled
to indemnity for such expenses and costs which the Court of Chancery or such
other court shall deem proper.
SECTION 4. INDEMNIFICATION FOR COSTS, CHARGES AND EXPENSES OF SUCCESSFUL
PARTY. Notwithstanding the other provisions of this Agreement, to the extent
that the Indemnitee has served as a witness on behalf of the Company or has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 2 and 3 hereof, or in defense of any claim,
issue or matter therein, including, without limitation, the dismissal of any
action without prejudice, he shall be indemnified against all costs, charges and
expenses (including attorney's fees) actually and reasonably incurred by him in
connection therewith.
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<PAGE> 3
SECTION 5. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses (including attorney's fees), costs, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with the investigation, defense, appeal or settlement of such suit, action,
investigation or proceeding described in Section 2 or 3 hereof, but not,
however, for all of the total amount thereof, the Company shall nevertheless
indemnify the Indemnitee for the portion of such expenses (including reasonable
attorney's fees), costs, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him to which the Indemnitee is
entitled.
SECTION 6. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. Upon written
request by the Indemnitee for indemnification pursuant to Section 2 or 3 hereof,
the entitlement of the Indemnitee to indemnification pursuant to the terms of
this Agreement shall be determined by the following person or persons who shall
be empowered to make such determination: (a) by a majority vote of Disinterested
Directors (as defined in Section 18 below), even though less than a quorum; (b)
if there are no Disinterested Directors, or if a majority of Disinterested
Directors so directs, by Independent Counsel (as defined in Section 18 below) in
a written opinion to the Board of Directors, a copy of which shall be delivered
to the Indemnitee; or (c) by the stockholders; provided, however, that
notwithstanding the foregoing, following the occurrence of a change in Control
of the Company (as defined in Section 18 below), the determination as to whether
or not the Indemnitee has met the applicable standard for indemnification set
forth in Section 2 or 3 hereof, which shall be applicable, shall in all events
be made by Independent counsel. Such Independent Counsel shall be selected by
the board of Directors and approved by the Indemnitee. Upon failure of the Board
to so select such Independent Counsel or upon failure of the Indemnitee to so
approve, such Independent Counsel shall be selected by the Chancellor of the
State of Delaware or such other person as the Chancellor shall designate to make
such selection. Such determination of entitlement to indemnification shall be
made not later than 45 days after receipt by the Company of a written request
for indemnification. Such request shall include documentation or information
which is necessary for such determination and which is reasonably available to
the Indemnitee. Any costs or expenses (including attorney's fees) incurred by
the Indemnitee in connection with his request for indemnification hereunder
shall be borne by the Company. The Company hereby indemnifies and agrees to hold
the Indemnitee harmless therefrom irrespective of the outcome of the
determination of the Indemnitee's entitlement to indemnification. If the person
making such determination shall determine that the Indemnitee is entitled to
indemnification as part (but not all) of the application for indemnification,
such person shall reasonably prorate such partial indemnification among such
claims, issues, or matters.
SECTION 7. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS. The Secretary of
the Company shall, promptly upon receipt of the Indemnitee's request for
indemnification, advise in writing the Board of Directors or such other person
or persons empowered to make the determination as provided in Section 6 that the
Indemnitee has made such request for indemnification. Upon making such request
for indemnification, the Indemnitee shall be presumed to be entitled to
indemnification hereunder and the Company shall have the burden of proof in
making of any determination contrary to such presumption. If the person or
persons so empowered to make such determination shall have failed to make the
requested indemnification within 45 days after receipt by the Company of such
request, the requisite determination of entitlement to indemnification shall be
deemed to have been made and the indemnitee shall be absolutely entitled to such
indemnification, absent actual and material fraud in the request for
indemnification. The termination of any action, suit, investigation or
proceeding described in Section 2 or 3 hereof by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself: (a) create a presumption that the Indemnitee did not act in good faith
and in a manner which he reasonably believed to be in or not opposed to the best
interests of the company, and, with respect to any criminal action or
proceeding, that the Indemnitee had reasonable cause to believe that his conduct
was unlawful; or (b) otherwise adversely affect the rights of the Indemnitee to
indemnification except as may be provided herein.
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<PAGE> 4
SECTION 8. ADVANCEMENT OF EXPENSES AND COSTS. All reasonable expenses and
costs incurred by the Indemnitee (including Attorneys' fees, retainers and
advances of disbursements required of the Indemnitee) shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding
at the request of the Indemnitee within twenty days after the receipt by the
Company of a statement or statements from the Indemnitee requesting such advance
or advances from time to time. The Indemnitee's entitlement to such expenses
shall include those incurred in connection with any proceeding by the Indemnitee
seeking an adjudication or award in arbitration pursuant to this Agreement. Such
statement or statements shall reasonably evidence the expenses and costs
incurred by him in connection therewith and shall include or be accompanied by
an undertaking by or on behalf of the Indemnitee to repay such amount if it is
ultimately determined that the Indemnitee is not entitled to be indemnified
against such expenses and costs by the Company as provided by this Agreement or
otherwise.
SECTION 9. REMEDIES OF THE INDEMNITEE IN CASES OF DETERMINATION NOT TO
INDEMNIFY OR TO ADVANCE EXPENSES. In the event that a determination is made that
the Indemnitee is not entitled to indemnification hereunder or if payment has
not been timely made following a determination of entitlement to indemnification
pursuant to Sections 6 and 7, or if expenses are not advanced pursuant to
Section 8, the Indemnitee shall be entitled to a final adjudication in an
appropriate court of the State of Delaware or any other court of competent
jurisdiction of his entitlement to such indemnification or advance.
Alternatively, the Indemnitee at his option may seek an aware in arbitration to
be conducted by a single arbitrator pursuant to the rules of the American
Arbitration Association, such aware to be made within sixty days following the
filing of the demand for arbitration. The Company shall not oppose the
Indemnitee's right to seek any such adjudication or award in arbitration or any
other claim. Such judicial proceeding or arbitration shall be made de novo and
the Indemnitee shall not be prejudiced by reason of a determination (if so made)
that he is not entitled to indemnification. If a determination is made or deemed
to have been made pursuant to the terms of Section 6 or Section 7 hereof that
the Indemnitee is entitled to indemnification, the Company shall be bound by
such determination and is precluded from asserting that such determination has
not been made or that the procedure by which such determination was made is not
valid, binding and enforceable. The Company further agrees to stipulate in any
such court or before any such arbitrator that the Company is bound by all the
provisions of this Agreement and is precluded from making any assertions to the
contrary. If the court or arbitrator shall determine that the Indemnitee is
entitled to any indemnification hereunder, the Company shall pay all reasonable
expenses (including attorneys' fees) and costs actually incurred by the
Indemnitee in connection with such adjudication or award in arbitration
(including, but not limited to, any appellant proceedings).
SECTION 10. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by
the Indemnitee of notice of the commencement of any action, suit or proceeding,
the Indemnitee will, if a claim in respect thereof is to be made against the
Company under this Agreement, notify the Company in writing of the commencement
thereof; but the omission to so notify the Company will not relieve it from any
liability that it may have to the Indemnitee otherwise than under this
Agreement. Notwithstanding any other provision of this Agreement, with respect
to any such action, suit or proceeding as to which the Indemnitee notified the
Company of the commencement thereof:
(a) The Company will be entitled to participate therein at its own
expense; and
(b) Except as otherwise provided in this Section 10(b), to the extent
that it may wish, the Company, jointly with any other indemnifying party
similarly notified, shall be entitled to assume the defense thereof, with
counsel satisfactory to the Indemnitee. After notice from the Company to the
Indemnitee of its election to so assume the defense thereof, the Company shall
not be liable to the Indemnitee under this Agreement for any legal or other
expenses subsequently incurred by the Indemnitee in connection with the defense
thereof other than reasonable costs of investigation or as otherwise provided
below. The Indemnitee shall
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<PAGE> 5
have the right to employ his own counsel in such action, suit proceeding, but
the fees and expenses of such counsel incurred after notice from the Company of
its assumption of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been authorized by
the Company, (ii) the Indemnitee shall have reasonably concluded that there may
be a conflict of interest between the Company and the Indemnitee in the conduct
of the defense of such action, or (iii) the Company shall not in fact have
employed counsel to assume the defense of the action, in each of which cases the
fees and expenses of counsel shall be at the expense of the Company. The Company
shall not be entitled to assume the defense of any action, suit or proceeding
brought by or on behalf of the Company or as to which the Indemnitee shall have
made the conclusion provided for in (ii) above.
(c) The Company shall not be liable to indemnify the Indemnitee under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any action or
claim in any manner that would impose any penalty or limitation on the
Indemnitee without the Indemnitee's written consent. Neither the Company nor the
Indemnitee will unreasonably withhold their consent to any proposed settlement.
SECTION 11. OTHER RIGHTS TO INDEMNIFICATION. The indemnification and
advancement of expenses (including attorneys' fees) and costs provided by this
Agreement shall not be deemed exclusive of any other rights to which the
Indemnitee may now or in the future be entitled under any provision of the
By-Laws, agreement, provision of the Certificate of Incorporation of the
Company, vote of stock-holders or Disinterested Directors, provision of law or
otherwise.
SECTION 12. CERTAIN AGREEMENTS OF INDEMNITEE. (i) Indemnitee agrees to do
all things reason-ably requested by the Board of Directors to enable the Company
to coordinate Indemnitee's defense with, if applicable, the Company's defense,
provided, however, that Indemnitee shall not be required to take any action that
would in any way prejudice his or her defense or waive any defense or position
available to him or her in connection with any action; and (ii) Indemnitee
agrees to cooperate with the Company and its counsel and to maintain any
confidences revealed to him or her by the Company in connection with the
Company's defense of any action. The Company agrees to cooperate with Indemnitee
and his or her counsel and to maintain any confidence revealed to it by
Indemnitee in connection with Indemnitee's defense of any action.
SECTION 13. ATTORNEYS' FEES AND OTHER EXPENSES TO ENFORCE AGREEMENT. In the
event that the Indemnitee is subject to or intervenes in any proceeding in which
the validity or enforceability of this Agreement is at issue or seeks an
adjudication or award in arbitration to enforce his rights under, or to recover
damages for breach of, this Agreement, the Indemnitee, if he prevails in whole
or in part in such action, shall be entitled to recover from the Company and
shall be indemnified by the Company against any actual expenses for attorneys'
fees and disbursement reasonably incurred by him.
SECTION 14. DURATION OF AGREEMENT. This Agreement shall continue until and
terminate upon the later of: (a) ten years after the Indemnitee has ceased to
occupy any of the positions or have any relationships described in Section 2 and
3 of this Agreement; and (b) the final termination of all pending or threatened
actions, suits, proceedings or investigations to which the Indemnitee may be
subject by reason of the fact that he is or was a director, officer, employee,
agent or fiduciary of the Company or is or was serving at the request of the
Company as a director, officer, employee, agent or fiduciary of any other
entity, including, but not limited to, another corporation, partnership, joint
venture, trust or other enterprise, or by reason of anything done or not done by
him in any such capacity. The indemnification provided under this Agreement
shall continue as to the Indemnitee even though he may have ceased to be a
director or officer of the Company. This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of the
Indemnitee and his spouse,
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<PAGE> 6
assigns, heirs, devises, executors, administrators or other legal
representatives. Nothing in this Agreement shall confer upon the Indemnitee the
right to continue in the employ of the Company or affect the rights of the
Company to terminate the Indemnitee's employment at any time in the sole
discretion of the Company, with or without cause.
SECTION 15. SEVERABILITY. If any provision or provisions of this Agreement
shall be held invalid, illegal or unenforceable for any reason whatsoever, (a)
the validity, legality and enforceability of the remaining provisions of this
Agreement (including, without limitation, all portions of any paragraph of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (b) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifest by the provision held invalid, illegal or unenforceable.
SECTION 16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
SECTION 17. HEADINGS. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
SECTION 18. DEFINITIONS. For purposes of this Agreement:
(a) A "Change in control of the Company" shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended), who is not currently a
stockholder of the Company, other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a corporation owned
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 20% or more of the total
voting power of the then outstanding shares of capital stock of the Company
entitled to vote generally in the election of directors (the "Voting Stock"), or
(ii) during any period of two consecutive years, individuals, who at the
beginning of such period constitute the Board of Directors of the Company, and
any new director, whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof,
or (iii) the stockholders of the Company approved a merger or consolidation with
any other corporation, other than a merger or consolidation which would result
in the Voting Stock outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80% of the total voting power
represented by the Voting Stock or the voting securities of such surviving
entity outstanding immediately after such merger or consolidation, or the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(b) "Disinterested Director" shall mean a director of the Company who
is not or was not a party to the action, suit, investigation or proceeding in
respect of which indemnification is being sought by the Indemnitee.
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<PAGE> 7
(c) "Independent Counsel" shall mean a law firm or a member of a law
firm that neither is presently nor in the past five years has been retained to
represent: (i) the Company or the Indemnitee in any matter material to either
such party, or (ii) any other party to the action, suit, investigation or
proceeding giving rise to a claim for indemnification hereunder. Notwithstanding
the foregoing, the term "Independent Counsel" shall not include any person who,
under the applicable standard of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or the Indemnitee
in an action to determine the Indemnitee's right to indemnification under this
Agreement.
SECTION 19. MODIFICATION AND WAIVER. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
SECTION 20. NOTICES. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand or by courier, on the date of delivery, or (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to the Indemnitee, to:
Paul E. Landers
1345 Old North Main Street
Laconia, NH 03246
(b) If to the Company, to:
Aavid Thermal Technologies, Inc.
One Eagle Square, Suite 509
Concord, NH 03301
Attention: President
With a copy to:
Paul Jacobs, Esq.
Fulbright & Jaworski, LLP
666 Fifth Avenue
New York, NY 10103
Or to such other address as may be furnished to the Indemnitee by the Company or
to the Company by the Indemnitee, as the case may be.
SECTION 21. GOVERNING LAW. The parties hereto agree that this Agreement
shall be governed by, construed and enforced in accordance with, the laws of the
State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
AAVID THERMAL TECHNOLOGIES, INC.
s/s Paul E. Landers By s/s John W. Mitchell
- -------------------------------- ---------------------------------
(Indemnitee)
VP & General Counsel
-----------------------------------
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<PAGE> 1
EXHIBIT 10.9
"AGREEMENT"
This INDEMNITY AGREEMENT made and entered into as of June 11, 1998, by and
between Aavid Thermal Technologies, Inc., a Delaware corporation (the
"Company"), and Frank J. Pipp, the ("Indemnitee").
WHEREAS, highly competent persons are becoming more reluctant to serve
corporations as directors, officers or in other capacities unless they are
provided with adequate protection through insurance and indemnification against
inordinate risks of claims and actions against them arising out of their service
to and activities on behalf of the Company; and
WHEREAS, the current difficulties of obtaining adequate insurance have
increased the difficulty of attracting and retaining such persons; and
WHEREAS, the Board of Directors has determined that the inability to
attract and retain such persons I detrimental to the best interests of the
company's stockholders and that the Company should act to assure such persons
that there will be increased certainty of such protection in the future; and
WHEREAS, it is reasonable, prudent, and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
company free from undue concern that they will not be so indemnified; and
WHEREAS, the Indemnitee is willing to serve, continue to serve and take on
additional service for or on behalf of the Company on the condition that he be
so indemnified.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and the indemnitee do hereby covenant and agree as
follows:
SECTION 1. INDEMNIFICATION. The Company shall indemnify the Indemnitee to
the fullest extent permitted by applicable law in effect on the date hereof or
as such laws may from time to time be amended. Without diminishing the scope of
the indemnification provided by this Section 1, the rights of indemnification of
the Indemnitee provided hereunder shall include but shall not be limited to
those rights hereinafter set forth, except that no indemnification shall be paid
to the Indemnitee:
(a) On account of any suit in which judgment is rendered against the
Indemnitee for an accounting of profits made from the purchase or sale by the
Indemnitee of securities of the Company pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state, or local statutory law;
(b) On account of the Indemnitee's conduct which is finally adjudged to
have been knowingly fraudulent or deliberately dishonest, or to constitute
willful misconduct;
(c) To the extent expressly prohibited by applicable law;
(d) For which payment is actually made to the Indemnitee under a valid and
collectible insurance policy or under a valid and enforceable indemnity clause,
by-law or agreement, except in respect of any excess beyond payment under such
insurance, clause, by-law or agreement;
(e) If a final decision by a court having jurisdiction in the matter shall
determine that such indemnification is not lawful (and, in this respect, both
the Company and the indemnitee have been advised that the Securities and
Exchange Commission believes that indemnification for liabilities arising under
the federal securities laws is against public policy and is, therefore,
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<PAGE> 2
unenforceable and that claims for indemnification should be submitted to the
appropriate court for adjudication); or
(f) In connection with any proceeding (or part thereof) initiated by the
Indemnitee, or any proceeding by the Indemnitee against the Company or its
directors, officers, employees or other Indemnitees, unless (i) such
indemnification is expressly required to be made by law, (ii) the proceeding was
authorized by the Board of Directors of the Company, (iii) such indemnification
is provided by the Company, in its sole discretion, pursuant to the powers
vested in the Company under applicable law, or (iv) except as provided in
Sections 11 and 12 hereof.
SECTION 2. ACTION OF PROCEEDING OTHER THAN AN ACTION BY OR IN THE RIGHT OF
THE COMPANY. The Indemnitee shall be entitled to the indemnification rights
provided in this section if he is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in nature, other than an action by or
in the right of the Company, by reason of the fact that he is or was a director,
officer, employee, agent or fiduciary of the Company, or is or was serving at
the request of the Company as a director, officer, employee, agent or fiduciary
of any other entity, including, but not limited to, another corporation,
partnership, joint venture, trust or other enterprise, or by reason of anything
done or not done by him in any such capacity. Pursuant to this Section, the
Indemnitee shall be indemnified against all expenses (including attorney's
fees), costs, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding (including, but not limited to, the investigation, defense or appeal
thereof), if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
SECTION 3. ACTIONS BY OR IN THE RIGHT OF THE COMPANY. The Indemnitee shall
be entitled to the indemnification rights provided in this Section if he is a
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding brought by or in the
right of the Company to procure a judgment in its favor by reason of the fact
that he is or was a director, officer, employee, agent or fiduciary of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, agent or fiduciary of another entity, including, but not
limited to, another corporation, partnership, joint venture or other enterprise,
trust, or by reason of anything done or not done by him in any such capacity.
Pursuant to this Section, the Indemnitee shall be indemnified against all
expenses (including Attorney's fees), costs and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding (including, but not limited to, the investigation, defense or appeal
thereof) if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company; provided, however, that
no such indemnification shall be made in respect of any claim, issue, or matter
as to which the Indemnitee shall have been adjudged to be liable to the Company
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, the Indemnitee is fairly and reasonably entitled
to indemnity for such expenses and costs which the Court of Chancery or such
other court shall deem proper.
SECTION 4. INDEMNIFICATION FOR COSTS, CHARGES AND EXPENSES OF SUCCESSFUL
PARTY. Notwithstanding the other provisions of this Agreement, to the extent
that the Indemnitee has served as a witness on behalf of the Company or has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 2 and 3 hereof, or in defense of any claim,
issue or matter therein, including, without limitation, the dismissal of any
action without prejudice, he shall be indemnified against all costs, charges and
expenses (including attorney's fees) actually and reasonably incurred by him in
connection therewith.
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<PAGE> 3
SECTION 5. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses (including attorney's fees), costs, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with the investigation, defense, appeal or settlement of such suit, action,
investigation or proceeding described in Section 2 or 3 hereof, but not,
however, for all of the total amount thereof, the Company shall nevertheless
indemnify the Indemnitee for the portion of such expenses (including reasonable
attorney's fees), costs, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him to which the Indemnitee is
entitled.
SECTION 6. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. Upon written
request by the Indemnitee for indemnification pursuant to Section 2 or 3 hereof,
the entitlement of the Indemnitee to indemnification pursuant to the terms of
this Agreement shall be determined by the following person or persons who shall
be empowered to make such determination: (a) by a majority vote of Disinterested
Directors (as defined in Section 18 below), even though less than a quorum; (b)
if there are no Disinterested Directors, or if a majority of Disinterested
Directors so directs, by Independent Counsel (as defined in Section 18 below) in
a written opinion to the Board of Directors, a copy of which shall be delivered
to the Indemnitee; or (c) by the stockholders; provided, however, that
notwithstanding the foregoing, following the occurrence of a change in Control
of the Company (as defined in Section 18 below), the determination as to whether
or not the Indemnitee has met the applicable standard for indemnification set
forth in Section 2 or 3 hereof, which shall be applicable, shall in all events
be made by Independent counsel. Such Independent Counsel shall be selected by
the board of Directors and approved by the Indemnitee. Upon failure of the Board
to so select such Independent Counsel or upon failure of the Indemnitee to so
approve, such Independent Counsel shall be selected by the Chancellor of the
State of Delaware or such other person as the Chancellor shall designate to make
such selection. Such determination of entitlement to indemnification shall be
made not later than 45 days after receipt by the Company of a written request
for indemnification. Such request shall include documentation or information
which is necessary for such determination and which is reasonably available to
the Indemnitee. Any costs or expenses (including attorney's fees) incurred by
the Indemnitee in connection with his request for indemnification hereunder
shall be borne by the Company. The Company hereby indemnifies and agrees to hold
the Indemnitee harmless therefrom irrespective of the outcome of the
determination of the Indemnitee's entitlement to indemnification. If the person
making such determination shall determine that the Indemnitee is entitled to
indemnification as part (but not all) of the application for indemnification,
such person shall reasonably prorate such partial indemnification among such
claims, issues, or matters.
SECTION 7. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS. The Secretary of
the Company shall, promptly upon receipt of the Indemnitee's request for
indemnification, advise in writing the Board of Directors or such other person
or persons empowered to make the determination as provided in Section 6 that the
Indemnitee has made such request for indemnification. Upon making such request
for indemnification, the Indemnitee shall be presumed to be entitled to
indemnification hereunder and the Company shall have the burden of proof in
making of any determination contrary to such presumption. If the person or
persons so empowered to make such determination shall have failed to make the
requested indemnification within 45 days after receipt by the Company of such
request, the requisite determination of entitlement to indemnification shall be
deemed to have been made and the indemnitee shall be absolutely entitled to such
indemnification, absent actual and material fraud in the request for
indemnification. The termination of any action, suit, investigation or
proceeding described in Section 2 or 3 hereof by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself: (a) create a presumption that the Indemnitee did not act in good faith
and in a manner which he reasonably believed to be in or not opposed to the best
interests of the company, and, with respect to any criminal action or
proceeding, that the Indemnitee had reasonable cause to believe that his conduct
was unlawful; or (b) otherwise adversely affect the rights of the Indemnitee to
indemnification except as may be provided herein.
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<PAGE> 4
SECTION 8. ADVANCEMENT OF EXPENSES AND COSTS. All reasonable expenses and
costs incurred by the Indemnitee (including Attorneys' fees, retainers and
advances of disbursements required of the Indemnitee) shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding
at the request of the Indemnitee within twenty days after the receipt by the
Company of a statement or statements from the Indemnitee requesting such advance
or advances from time to time. The Indemnitee's entitlement to such expenses
shall include those incurred in connection with any proceeding by the Indemnitee
seeking an adjudication or award in arbitration pursuant to this Agreement. Such
statement or statements shall reasonably evidence the expenses and costs
incurred by him in connection therewith and shall include or be accompanied by
an undertaking by or on behalf of the Indemnitee to repay such amount if it is
ultimately determined that the Indemnitee is not entitled to be indemnified
against such expenses and costs by the Company as provided by this Agreement or
otherwise.
SECTION 9. REMEDIES OF THE INDEMNITEE IN CASES OF DETERMINATION NOT TO
INDEMNIFY OR TO ADVANCE EXPENSES. In the event that a determination is made that
the Indemnitee is not entitled to indemnification hereunder or if payment has
not been timely made following a determination of entitlement to indemnification
pursuant to Sections 6 and 7, or if expenses are not advanced pursuant to
Section 8, the Indemnitee shall be entitled to a final adjudication in an
appropriate court of the State of Delaware or any other court of competent
jurisdiction of his entitlement to such indemnification or advance.
Alternatively, the Indemnitee at his option may seek an aware in arbitration to
be conducted by a single arbitrator pursuant to the rules of the American
Arbitration Association, such aware to be made within sixty days following the
filing of the demand for arbitration. The Company shall not oppose the
Indemnitee's right to seek any such adjudication or award in arbitration or any
other claim. Such judicial proceeding or arbitration shall be made de novo and
the Indemnitee shall not be prejudiced by reason of a determination (if so made)
that he is not entitled to indemnification. If a determination is made or deemed
to have been made pursuant to the terms of Section 6 or Section 7 hereof that
the Indemnitee is entitled to indemnification, the Company shall be bound by
such determination and is precluded from asserting that such determination has
not been made or that the procedure by which such determination was made is not
valid, binding and enforceable. The Company further agrees to stipulate in any
such court or before any such arbitrator that the Company is bound by all the
provisions of this Agreement and is precluded from making any assertions to the
contrary. If the court or arbitrator shall determine that the Indemnitee is
entitled to any indemnification hereunder, the Company shall pay all reasonable
expenses (including attorneys' fees) and costs actually incurred by the
Indemnitee in connection with such adjudication or award in arbitration
(including, but not limited to, any appellant proceedings).
SECTION 10. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by
the Indemnitee of notice of the commencement of any action, suit or proceeding,
the Indemnitee will, if a claim in respect thereof is to be made against the
Company under this Agreement, notify the Company in writing of the commencement
thereof; but the omission to so notify the Company will not relieve it from any
liability that it may have to the Indemnitee otherwise than under this
Agreement. Notwithstanding any other provision of this Agreement, with respect
to any such action, suit or proceeding as to which the Indemnitee notified the
Company of the commencement thereof:
(a) The Company will be entitled to participate therein at its own
expense; and
(b) Except as otherwise provided in this Section 10(b), to the extent
that it may wish, the Company, jointly with any other indemnifying party
similarly notified, shall be entitled to assume the defense thereof, with
counsel satisfactory to the Indemnitee. After notice from the Company to the
Indemnitee of its election to so assume the defense thereof, the Company shall
not be liable to the Indemnitee under this Agreement for any legal or other
expenses subsequently incurred by the Indemnitee in connection with the defense
thereof other than reasonable costs of investigation or as otherwise provided
below. The Indemnitee shall
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<PAGE> 5
have the right to employ his own counsel in such action, suit proceeding, but
the fees and expenses of such counsel incurred after notice from the Company of
its assumption of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been authorized by
the Company, (ii) the Indemnitee shall have reasonably concluded that there may
be a conflict of interest between the Company and the Indemnitee in the conduct
of the defense of such action, or (iii) the Company shall not in fact have
employed counsel to assume the defense of the action, in each of which cases the
fees and expenses of counsel shall be at the expense of the Company. The Company
shall not be entitled to assume the defense of any action, suit or proceeding
brought by or on behalf of the Company or as to which the Indemnitee shall have
made the conclusion provided for in (ii) above.
(c) The Company shall not be liable to indemnify the Indemnitee under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any action or
claim in any manner that would impose any penalty or limitation on the
Indemnitee without the Indemnitee's written consent. Neither the Company nor the
Indemnitee will unreasonably withhold their consent to any proposed settlement.
SECTION 11. OTHER RIGHTS TO INDEMNIFICATION. The indemnification and
advancement of expenses (including attorneys' fees) and costs provided by this
Agreement shall not be deemed exclusive of any other rights to which the
Indemnitee may now or in the future be entitled under any provision of the
By-Laws, agreement, provision of the Certificate of Incorporation of the
Company, vote of stock-holders or Disinterested Directors, provision of law or
otherwise.
SECTION 12. CERTAIN AGREEMENTS OF INDEMNITEE. (i) Indemnitee agrees to do
all things reason-ably requested by the Board of Directors to enable the Company
to coordinate Indemnitee's defense with, if applicable, the Company's defense,
provided, however, that Indemnitee shall not be required to take any action that
would in any way prejudice his or her defense or waive any defense or position
available to him or her in connection with any action; and (ii) Indemnitee
agrees to cooperate with the Company and its counsel and to maintain any
confidences revealed to him or her by the Company in connection with the
Company's defense of any action. The Company agrees to cooperate with Indemnitee
and his or her counsel and to maintain any confidence revealed to it by
Indemnitee in connection with Indemnitee's defense of any action.
SECTION 13. ATTORNEYS' FEES AND OTHER EXPENSES TO ENFORCE AGREEMENT. In the
event that the Indemnitee is subject to or intervenes in any proceeding in which
the validity or enforceability of this Agreement is at issue or seeks an
adjudication or award in arbitration to enforce his rights under, or to recover
damages for breach of, this Agreement, the Indemnitee, if he prevails in whole
or in part in such action, shall be entitled to recover from the Company and
shall be indemnified by the Company against any actual expenses for attorneys'
fees and disbursement reasonably incurred by him.
SECTION 14. DURATION OF AGREEMENT. This Agreement shall continue until and
terminate upon the later of: (a) ten years after the Indemnitee has ceased to
occupy any of the positions or have any relationships described in Section 2 and
3 of this Agreement; and (b) the final termination of all pending or threatened
actions, suits, proceedings or investigations to which the Indemnitee may be
subject by reason of the fact that he is or was a director, officer, employee,
agent or fiduciary of the Company or is or was serving at the request of the
Company as a director, officer, employee, agent or fiduciary of any other
entity, including, but not limited to, another corporation, partnership, joint
venture, trust or other enterprise, or by reason of anything done or not done by
him in any such capacity. The indemnification provided under this Agreement
shall continue as to the Indemnitee even though he may have ceased to be a
director or officer of the Company. This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of the
Indemnitee and his spouse,
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<PAGE> 6
assigns, heirs, devises, executors, administrators or other legal
representatives. Nothing in this Agreement shall confer upon the Indemnitee the
right to continue in the employ of the Company or affect the rights of the
Company to terminate the Indemnitee's employment at any time in the sole
discretion of the Company, with or without cause.
SECTION 15. SEVERABILITY. If any provision or provisions of this Agreement
shall be held invalid, illegal or unenforceable for any reason whatsoever, (a)
the validity, legality and enforceability of the remaining provisions of this
Agreement (including, without limitation, all portions of any paragraph of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (b) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifest by the provision held invalid, illegal or unenforceable.
SECTION 16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
SECTION 17. HEADINGS. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
SECTION 18. DEFINITIONS. For purposes of this Agreement:
(a) A "Change in control of the Company" shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended), who is not currently a
stockholder of the Company, other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a corporation owned
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 20% or more of the total
voting power of the then outstanding shares of capital stock of the Company
entitled to vote generally in the election of directors (the "Voting Stock"), or
(ii) during any period of two consecutive years, individuals, who at the
beginning of such period constitute the Board of Directors of the Company, and
any new director, whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof,
or (iii) the stockholders of the Company approved a merger or consolidation with
any other corporation, other than a merger or consolidation which would result
in the Voting Stock outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80% of the total voting power
represented by the Voting Stock or the voting securities of such surviving
entity outstanding immediately after such merger or consolidation, or the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(b) "Disinterested Director" shall mean a director of the Company who
is not or was not a party to the action, suit, investigation or proceeding in
respect of which indemnification is being sought by the Indemnitee.
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<PAGE> 7
(c) "Independent Counsel" shall mean a law firm or a member of a law
firm that neither is presently nor in the past five years has been retained to
represent: (i) the Company or the Indemnitee in any matter material to either
such party, or (ii) any other party to the action, suit, investigation or
proceeding giving rise to a claim for indemnification hereunder. Notwithstanding
the foregoing, the term "Independent Counsel" shall not include any person who,
under the applicable standard of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or the Indemnitee
in an action to determine the Indemnitee's right to indemnification under this
Agreement.
SECTION 19. MODIFICATION AND WAIVER. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
SECTION 20. NOTICES. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand or by courier, on the date of delivery, or (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to the Indemnitee, to:
Frank J. Pipp
One Evans Lane
Pinehurst, NC 28374
(b) If to the Company, to:
Aavid Thermal Technologies, Inc.
One Eagle Square, Suite 509
Concord, NH 03301
Attention: President
With a copy to:
Paul Jacobs, Esq.
Fulbright & Jaworski, LLP
666 Fifth Avenue
New York, NY 10103
Or to such other address as may be furnished to the Indemnitee by the Company or
to the Company by the Indemnitee, as the case may be.
SECTION 21. GOVERNING LAW. The parties hereto agree that this Agreement
shall be governed by, construed and enforced in accordance with, the laws of the
State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
AAVID THERMAL TECHNOLOGIES, INC.
s/s Frank J. Pipp By s/s Bharatan R. Patel
- ---------------------------------- ---------------------------------
(Indemnitee)
President AND COO
-----------------------------------
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Page 1 of 3
EXHIBIT 10.10
APPENDIX A
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This First amendment to Employment Agreement (the "First Amendment") is
made as of the first day of January 1998, by and between Aavid Thermal
Technologies, Inc., a Delaware Corporation with its headquarters in Concord, New
Hampshire (the "Company"), and Ronald F. Borelli of Bedford, New Hampshire (the
"Executive").
BACKGROUND
The Company entered into the employment Agreement with Executive by written
contract dated as of October 1, 1996 (the "Agreement"). For good and valuable
consideration, the Company and Executive desire to amend the Agreement to,
among other things, extend the Term, increase the base salary, revise the bonus
structure, and provide for additional stock options. All capitalized terms used
herein shall have the same meaning as set forth in the Agreement.
Accordingly, the company and Executive wish to set forth the terms of the
amendment to the Agreement as follows:
1. AMENDMENTS TO THE AGREEMENT
(a) Paragraphs 1, 2 and 3 of the Agreement are amended in their entirety
to read as follows:
"1. EMPLOYMENT. The Company offers and the Executive accepts full
time employment as CEO of the company and of Aavid Thermal
Products, Inc. ("ATP"). Executive shall also serve as the
Chairman of the Board of the Company, ATP, and fluent, Inc. The
Executive shall report to the Board of directors of the Company,
and shall have all powers and duties as would normally be
associated with the positions of chairman of the board and CEO of
a publicly traded company, with the purpose of carrying out the
mission of the company as set forth in the Background paragraph
of the Agreement. The Executive shall also perform such other
duties as may reasonably be requested from time to time by the
board of directors of the company. The Executive shall work at
the company's headquarters in Concord, New Hampshire, or at such
other place or places as the company may reasonably request."
"2. TERM. The term of employment under the Agreement shall begin on
October 15, 1996, and shall continue until Midnight on December
31, 1999 (the "Term"), subject to prior termination in accordance
with the terms hereof."
"3. COMPENSATION.
3.1 BASE SALARY. During the Term, the Executive will receive an
annual base salary payable in accordance with the company's
payroll procedures for its executives, as follows:
3.1.1 From October 1, 1996 to December 31, 1997: $250,000.
3.1.2 From January 1, 1998 to December 31, 1998: $300,000.
3.1.2 From January 1, 1999 to December 31, 1999: $350,000.
-1-
<PAGE> 2
Page 2 of 3
3.2 ANNUAL INCENTIVE. The Executive shall have the opportunity
to earn an individual annual incentive bonus of up to
$150,000 for 1997, as set forth in Exhibit A. For 1998 and
1999, Executive shall have the opportunity to earn a bonus
based on achievement of the Board of Directors approved
incentive bonus plan performance targets for each year with
a base target of $150,000, as set forth in Exhibit A1. For
1998 and 1999, Executive shall have the opportunity to earn
a bonus based on achievement of the Board of Directors
approved incentive bonus plan performance targets for each
year with a base target of $150,000, as set forth in Exhibit
A1.
3.4 BENEFITS. The Executive shall receive medical and other
benefits as provided to other executives from time to time.
The executive shall be entitled to four weeks of vacation
per year.
3.5 EXPENSES AND FACILITIES. The Company shall reimburse the
Executive for reasonable out-of-pocket expenses incurred in
fulfilling his duties. The Company shall provide the
Executive with suitable office facilities, equipment,
supplies, and staff.
3.6 OUTSIDE DIRECTORSHIPS. The Company shall provide Executive
with sufficient time to serve as a director of other
companies, so long as such directorships do not unreasonably
interfere with Executive's duties with the Company."
(b) A new Paragraph 4A shall be inserted after Paragraph 4 of
the Agreement to read as follows:
"4A. STOCK OPTIONS 1998. The company shall grant to
executive options for 100,000 shares of Aavid Thermal
Technologies, Inc. common stock, par value $0.01 per share,
as follows:
4A1. JANUARY GRANT. As of January 1, 1998, a grant of stock
options for 50,000 shares at an exercise price of the fair
market value of the underlying stock on January 1, 1998
vesting over two (2) years with options for 25,000 shares
vesting on each of the following two anniversaries of the
grant such that all of these options to the extent not
previously exercised, shall be vested on January 1, 2000.
4A2. JULY GRANT. As of July 1, 1998, a grant of stock
options for 50,000 shares at an exercise price the higher of
(i) the fair market value of the underlying stock on July 1,
1998, or (ii) $27.50 per share; vesting over two (2) years
with options for 25,000 shares vesting on each of the
following two anniversaries of the grant such that all of
the options, to the extent not previously exercised, shall
be vesting on July 1, 2000."
2. LIMITATION ON AMENDMENT. Except as expressly amended in this
First Amendment, that Agreement shall remain in full force
and effect. To the extent that a conflict arises between the
terms of the Agreement and the first Amendment, the terms of
the Agreement shall govern.
3. EXECUTION IN COUNTERPARTS. This First Amendment may be
executed in any number of counterparts, each of which when
so executed and delivered shall be
-2-
<PAGE> 3
Page 3 of 3
deemed to be an original, and all of which when taken
together shall constitute but one and the same instrument.
4. SEPARATE COUNSEL. The parties acknowledge that the Company
has been represented in this transaction by its General
counsel, that the Executive has not been represented in this
transaction by the company's attorneys, and the Executive
has been advised that it is important for him to seek
separate legal advice and representation in this matter.
Date: _______________________________
AAVID THERMAL TECHNOLOGIES, INC.
A Delaware Corporation
By: John W. Mitchell s/s Ronald F. Borelli
------------------------------ -----------------------
Ronald F. Borelli
Its: Vice President & General Counsel
-3-
<PAGE> 1
EXHIBIT 10.11
AAVID THERMAL TECHNOLOGIES, INC.
ID: 02-0466826
One Eagle Square, Suite 509
Concord, NH 03301, USA
Telephone: (603) 224-1117
NOTICE OF GRANT OF STOCK OPTIONS
AND OPTION AGREEMENT
RONALD F. BORELLI OPTION NUMBER: 00000927
30 ROSEWELL ROAD PLAN: DIRP
BEDFORD, NH 03110 ID: ###-##-####
================================================================================
Effective 4/1/99, you have been granted a(n) Non-Qualified Stock Option to buy
50,000 shares of Aavid Thermal Technologies, Inc. (the Company) stock at
$13.0000 per share.
The total option price of the shares granted is $650,000.00.
Shares in each period will become fully vested on the date shown.
Shares Vest Type Full Vest Expiration
25,000 On Vest Date 4/1/00 4/1/09
25,000 On Vest Date 4/1/01 4/1/09
The terms of the Plan and any rules and regulations of the committee of the
Board of Directors of the Company that administers the Plan are incorporated in
this Agreement as if fully set forth in it. On the reverse side of this
Agreement are some additional terms of this Option and a brief description of
some of the provisions of the Plan. In the case of any ambiguity or any conflict
between the terms on the reverse side and the Plan, the provisions of the plan
shall govern.
- --------------------------------------------------------------------------------
By your signature and the Company's signature below, you and the Company agree
that these options are granted under and governed by the terms and conditions of
the Company's Stock Option Plan as amended and the Option Agreement, all of
which are attached and made a part of this document.
- --------------------------------------------------------------------------------
s/s John W. Mitchell April 09, 1999
- -------------------------------------- -------------------------------
Aavid Thermal Technologies, Inc. Date
s/s Ronald F. Borelli
- --------------------------------------
Ronald F. Borelli Date
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TO SUCH FINANCIAL STATEMENTS.
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