Exhibit 10.1

 

THIRD AMENDMENT TO EMPLOYMENT AGREEMENT

 

 

                This THIRD AMENDMENT TO EMPLOYMENT AGREEMENT (this “Amendment”)
is made and entered into this 5th day of November, 2007 by and between
Optelecom-NKF, Inc., a Delaware corporation (the “Company”), and Edmund Ludwig,
an individual (“Employee”).  All capitalized terms used and not defined herein
shall have the respective meanings as set forth in the Employment Agreement
between the Company and Employee dated as of November 4, 2002 (the “Employment
Agreement”).

 

                WHEREAS the Company and Employee have entered into the
Employment Agreement setting forth the terms and conditions of Employee’s
employment by the Company; and

 

                WHEREAS the Company and Employee are desirous of amending the
Employment Agreement and this Amendment has been reviewed and approved by the
Compensation Committee of the Board of Directors of the Company.

 

                NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in the Employment Agreement and herein, the parties agree
as follows:

 

1.             Paragraph 4(a) of the Employment Agreement is hereby deleted in
its entirety and replaced with the following:

 

                (a)           Base Salary.  Commencing January 1, 2008, Employee
shall be paid a base salary in the annualized amount of not less than $254,100
payable in substantially equal bi-monthly or other installments in accordance
with the general practice of the Company, subject to any and all customary
payroll deductions for the FICA and any other federal, state and local taxes. 
Commencing January 1, 2009, Employee shall be paid a base salary in the
annualized amount of not less than $266,800, payable in substantially equal
bi-monthly or other installments in accordance with the general practice of the
Company, subject to any and all customary payroll deductions for the FICA and
any other federal, state and local taxes.    Employee’s base salary will be
reviewed annually and subject to adjustment by the Compensation Committee of the
Board of Directors, in its sole discretion.

 

 

2.             Paragraph 4(b) of the Employment Agreement is hereby deleted in
its entirety and replaced with the following:

 

                (b)           Bonus.  Employee shall be eligible for an annual
bonus based upon Employee’s individual performance and specified sales, sales
growth and profitability goals and objectives for the Company to be developed
annually in good faith by the Compensation Committee of the Board of Directors,
in consultation with Employee.  For calendar years 2008 and 2009, Employee shall
be entitled to receive cash and

 

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equity incentives set forth in the Company’s incentive compensation program
approved by the Compensation Committee, in its sole discretion, for such years
upon satisfaction of the criteria set forth in such programs, with a cash
incentive target equal to 55% of the current base salary for that year upon the
achievement of 100% of target performance scalable above and below the target. 
All equity incentives, if any, granted to Employee under the incentive
compensation program shall be in the form of restricted stock awards.

 

 

3.             Paragraph 4(d) of the Employment Agreement is hereby deleted in
its entirety and replaced with the following:

 

                (d)           Additional Cash Payment for Qualifying Service. 
If Employee is engaged in a Qualifying Service (as defined in Section 16) on
December 31, 2007, then he shall be entitled to an additional cash payment of
$60,000, payable in a lump sum on January 2, 2008, subject to any and all
customary payroll deductions for the FICA and any other federal, state and local
taxes.  If Employee is engaged in a Qualifying Service (as defined in Section
16) on December 31, 2008, then he shall be entitled to an additional cash
payment of $63,000, payable in a lump sum on January 2, 2009, subject to any and
all customary payroll deductions for the FICA and any other federal, state and
local taxes.  If Employee is engaged in a Qualifying Service (as defined in
Section 16) on December 31, 2009, then he shall be entitled to an additional
cash payment of $66,145, payable in a lump sum on January 4, 2010, subject to
any and all customary payroll deductions for the FICA and any other federal,
state and local taxes.

 

 

4.             Paragraph 6 of the Employment Agreement is hereby deleted in its
entirety and replaced with the following:

 

                6.             Vacation.  During the Employment Period, Employee
shall be entitled to accrue five (5) weeks paid vacation annually in accordance
with the Company’s regular vacation policies in effect from time to time.

 

 

5.             Paragraph 14(f) of the Employment Agreement is hereby deleted in
its entirety and replaced with the following:

 

(f)                                    If, and only if, the Employee properly
terminates his employment by retirement with notice pursuant to Paragraph
14(a)(v) above, and has not otherwise violated this Agreement, then (i) if
Employee’s retirement is to take effect prior to July 1, 2008, the Company shall
further pay to Employee an amount equivalent to two (2) weeks of the last annual
base salary of Employee times the number of full years that Employee has been
employed by the Company; (ii) if Employee’s retirement is to take effect between
July

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1, 2008 and June 30, 2009, the Company shall further pay to Employee, in 52
equal biweekly payments, the amount of $622,004, or (iii) if Employee’s
retirement is to take effect after June 30, 2009, the Company shall further pay
to Employee, in 52 equal biweekly payments, the amount of $672,293. 
Additionally, Employee shall be eligible to continue to participate in the
employee health plan then in effect through the two (2) year period of such
payments provided in clauses (ii) and (iii) above.

 

 

6.             Except as specifically modified by this Amendment, all other
terms and conditions of the Employment Agreement shall continue in full force
and effect.

 

7.             This Amendment may be executed in two or more counterparts, all
of which together shall constitute one and the same instrument.

 

 

 

[SIGNATURES ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the parties, intending to be legally bound, have executed
this Third Amendment to Employment Agreement as of the date set forth above.

 

 

 

OPTELECOM-NKF, INC.

 

 

 

 

 

By:

 

/s/ David Lipinski

 

 

 

David Lipinski, Chairman

 

 

 

Compensation Committee

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

/s/ Edmund Ludwig

 

Edmund Ludwig

 

 

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