Bharatan R. Patel Executive Employment Agreement

EXECUTIVE EMPLOYMENT AGREEMENT


This EXECUTIVE AGREEMENT (this "Agreement") is made as of July 1, 2000, by and between Aavid Thermal Technologies, Inc., a Delaware corporation (the "Company"), Fluent Holdings, Inc., a Delaware corporation ("Fluent"), and Aavid Thermalloy, LLC, a Delaware limited liability company ("AT"), and Bharatan R. Patel ("Executive"). Fluent and AT are subsidiaries of the Company and are individually referred to as a "Subsidiary" and collectively referred to as the "Subsidiaries." Certain other definitions are set forth in Section 9 of this Agreement.


Executive desires to be employed by the Company and the Subsidiaries, and the Company and the Subsidiaries desire to employ Executive and to be assured of their right to have the benefit of Executive's services on the terms and subject to the conditions set forth in this Agreement. Executive is also purchasing certain shares of stock of the Company's affiliates pursuant to a Coinvest Securities Purchase Agreement dated as of the date of this Agreement and a Vesting Securities Purchase Agreement dated as of the date of this Agreement (the "Securities Purchase Agreements"), and is entering into certain other agreements in connection with such securities purchases. The Company, Subsidiaries and Executive desire to enter into this Agreement (i) setting forth the terms and conditions of Executive's employment with the Company and the Subsidiaries; and (ii) setting forth the obligation of Executive to refrain from competing with the Company and its Affiliates (as defined below) under certain circumstances as provided herein.


NOW, THEREFORE, the parties hereto agree as follows:


1. Employment. The Company and each Subsidiary shall employ Executive, and Executive by this Agreement accepts employment with the Company and each Subsidiary, upon the terms and conditions set forth in this Agreement for the period beginning on the date hereof and ending as provided in Section 4 hereof (the "Employment Period").


2. Position and Duties.


(a) During the Employment Period, Executive shall serve as the Chief Executive Officer and President of the Company and the Chief Executive Officer of each Subsidiary.


(b) Executive shall report to the Board of Directors of the Company, and Executive shall devote Executive's best efforts and Executive's full business time and attention (except for permitted vacation periods, periods of illness or other incapacity, reasonable time spent with respect to civic and charitable activities (provided that none of such activities shall interfere with Executive's duties to the Company and the Subsidiaries); and other permitted absences for which senior executive employees of the Company are generally eligible from time to time under the Company's policies) to the business and affairs of the Company, the Subsidiaries and the Company's Affiliates. Executive shall perform Executive's duties and responsibilities to the best of Executive's abilities in a diligent, trustworthy, businesslike and efficient manner.
3. Base Salary; Benefits and Bonuses.


(a) During the Employment Period, Executive's base salary shall be $350,000 per annum, or such higher rate as the Board of the Company may designate from time to time (the "Base Salary"), which salary shall be payable in regular installments in accordance with the Company's general payroll practices and shall be subject to customary withholding.


(b) In addition to the Base Salary, during the Employment Period, Executive shall be eligible to receive an annual bonus (the "Bonus") determined by the following formula: "% times % times T", where "%" is the percentage of the Company's target EBITDA actually achieved by the Company during a particular fiscal year and "T" is 50% of Executive's Base Salary during such fiscal year. For purposes of this Agreement, the Company's target EBITDA shall be determined prior to the beginning of each fiscal year by the Company's Board of Directors in good faith, providing Executive with a reasonable opportunity to earn the Bonus; provided that the Company's target EBITDA for 2000 shall be $50.238 million. Any such Bonus, if determined by the Company to be payable, shall be payable within 90 days following the end of each fiscal year (provided that the first fiscal year for which the Bonus will be paid will be the year beginning January 1, 2000) during the Employment Period. Notwithstanding the forgoing, no Bonus shall be due or payable unless the EBTIDA actually achieved by the Company during a particular fiscal year is at least 90% of the target EBITDA for such year.


(c) During the Employment Period, Executive shall be entitled to participate in all of the Company's and each Subsidiary's employee benefit plans and programs for which senior executive employees of the Company and each Subsidiary are generally eligible (without duplication), which shall include, but shall not be limited to, health insurance, dental insurance, life insurance, disability insurance and participation in the Company's 401(k) plan. Executive's right to participate in any employee benefit plans or programs of the Company and each Subsidiary shall be subject to the right of the Company and each Subsidiary to amend, modify or terminate any such plan or program in accordance with its terms and applicable law and subject in each case to any applicable waiting periods or other restrictions contained in such benefit plans or programs. During the Employment Period, Executive shall be eligible for five weeks per year of paid vacation in accordance with the policies of the Company. The maximum amount of vacation time that Executive shall be permitted to carry over from one year to the next shall be equal to ten weeks.


(d) The Company or a Subsidiary shall reimburse Executive for all reasonable business expenses incurred by Executive in the course of performing Executive's duties under this Agreement which are consistent with the Company's policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to the Company's requirements with respect to reporting and documentation of such expenses.


4. Term; Termination; Severance.


(a) The Employment Period shall be for a period of five years from the date hereof; provided that (i) the Employment Period shall terminate prior to such date upon Executive's death or Incapacity; (ii) the Employment Period may be terminated by the Company at any time prior to such date with Cause or without Cause; and (iii) the Employment Period may be terminated by Executive at any time for any reason


- 2 - (a "Voluntary Termination"). Any termination of the Executive's employment with the Company shall be a "Termination." The date of any termination of Executive's employment with the Company shall be the "Termination Date."


(b) Upon any Termination, Executive shall be entitled to receive Executive's Base Salary earned through Executive's Termination Date, prorated on a daily basis together with all accrued but unpaid vacation time earned by Executive during the fiscal year in which such Termination occurs. Except as set forth in Section 4(d), Executive shall not be entitled to receive Executive's Base Salary or any bonuses or other benefits from the Company or any Subsidiary for any period after the Termination Date.


(c) In the event Executive's employment is terminated by the Company with Cause, upon a Voluntary Termination other than for Good Reason or upon Executive's death or Incapacity, the Company and the Subsidiaries shall have no obligation to make any severance or other similar payment to or on behalf of Executive.


(d) In the event that Executive's employment is terminated by the Company without Cause or by Executive for Good Reason, following such Termination and upon execution by Executive of a general release on employment matters in favor of the Company, each Subsidiary and their Affiliates, in form satisfactory to the Company, releasing any and all claims, including claims for payments (other than those payments due under this Section 4), due to Executive arising under or pursuant to this Agreement against the Company, each Subsidiary and their Affiliates as of the Termination Date, the Company shall pay Executive his annual Base Salary (as in effect on the Termination Date) and provide benefits equivalent to those provided at the Termination Date until the earlier of (i) the two-year anniversary of the Termination Date and (ii) the five-year anniversary of the date of this Agreement. Each severance payment under this Agreement shall be payable in accordance with the Company's normal payroll procedures and cycles and shall be subject to withholding of applicable taxes and governmental charges in accordance with federal and state law. After payment of the severance amounts described in this Section 4(d), the Company and each Subsidiary shall have no obligation to make any further severance or other payment to or on behalf of Executive except as otherwise expressly contemplated by this Agreement. Notwithstanding the foregoing, in the event that Executive shall breach any of Executive's obligations under Sections 5, 6 or 7 of this Agreement, then, in addition to any other rights that the Company or each Subsidiary may have under this Agreement or otherwise, the Company and each Subsidiary shall be relieved from and shall have no further obligation to pay Executive any amounts to which Executive would otherwise be entitled pursuant to this Section 4.


5. Confidential Information. Executive acknowledges that by reason of Executive's duties to and association with the Company, each Subsidiary and their Affiliates, Executive has had and will have access to and has and will become informed of Confidential Information (as defined in Section 9 below) which is a competitive asset of the Company, each Subsidiary and/or their Affiliates. Executive agrees to keep in strict confidence and not, directly or indirectly, make known, disclose, furnish, make available or use, any Confidential Information, except for use in Executive's regular authorized duties on behalf of the Company, each Subsidiary and their Affiliates (including their predecessors). Executive acknowledges that all documents and other property including or reflecting Confidential Information furnished to Executive by the Company, each Subsidiary or any of their Affiliates or otherwise acquired or developed by the Company, each Subsidiary or any of their Affiliates or Executive or known by Executive shall at all times be the property of the Company, the Subsidiaries and their Affiliates. Executive shall take all necessary and


- 3 - appropriate steps to safeguard Confidential Information and protect it against disclosure, misappropriation, misuse, loss and theft. Executive shall deliver to the Company at the termination of the Employment Period, or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer tapes, printouts and software and other documents and data (and copies thereof) relating to the Confidential Information, Work Product (as defined in Section 9 below) or the business of the Company, each Subsidiary or any of their Affiliates which Executive may then possess or have under Executive's control.


6. Inventions and Patents.


(a) Executive acknowledges that all Work Product (as defined in Section 9 below) is the exclusive property of the Company. Executive by this Agreement assigns all right, title and interest in and to all Work Product to the Company. Any copyrightable works that fall within the Work Product will be deemed "works made for hire" under Section 201(b) of the 1976 Copyright Act, and the Company shall own all of the rights comprised in the copyright therein; provided, however, that to the extent such works may not, by operation of law, constitute "works made for hire," Executive by this Agreement assigns to the Company all right, title and interest therein.


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