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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