Document:

Exhibit

10.2

 

SEVERANCE

AGREEMENT

AND

GENERAL

AND SPECIAL RELEASE

 

This Severance Agreement and General and Special

Release (this “Agreement”),

is effective as of August 26, 2002 (the “Effective Date”), by and between Elgar Electronics

Corporation, a California corporation (“Employer”),

and Kenneth R. Kilpatrick (“Employee”).

RECITALS

WHEREAS, Employer

and Employee are party to that certain Employment Agreement, dated as of

February 3, 1998, as amended by Amendment No. 1 thereto, dated as of

March 7, 2002 (the “Employment

Agreement”);

WHEREAS, Employee

has resigned as the President and Chief Executive Officer of Employer,

effective as of the Effective Date, and has been appointed Vice Chairman of the

Board of Directors of each of Employer and its parent corporation, Elgar

Holdings, Inc., a Delaware corporation (“Parent”);

and

WHEREAS, the

parties desire to finally and forever amicably settle and resolve all matters

among them and all matters arising from Employee’s employment with Employer and

Parent arising on or prior to Effective Date.

NOW THEREFORE, in

consideration of the premises and the mutual agreements hereinafter set forth,

the parties hereto hereby agree as follows:

AGREEMENT

1.             Severance Compensation.  Notwithstanding anything contained in

Section 4 of the Employment Agreement to the contrary, in connection with

Employee’s resignation as the President and Chief Executive Officer of

Employer, effective as of the Effective Date, Employee shall be entitled to the

continuation of payments of his annual base salary (in the amount of $225,000)

in the same periodic installments provided for in Section 5.1 of the

Employment Agreement through December 31, 2003 (the period from the

Effective Date through December 31, 2003 shall be known as the “Severance Period” for purposes of the

Employment Agreement).  In addition,

during the Severance Period, Employer shall continue to pay the automobile

allowance set forth in Section 5.5 of the Employment Agreement and

Employer shall continue to make all Employer contributions to medical and

dental and life insurance premiums for all Employer maintained plans under

which Employee is an insured or covered as of the commencement of the Severance

Period, to the extent Employee is eligible to participate in such plans.

2.             Bonuses.  On or before December 20, 2002, Employee shall be paid the

refinancing bonus to which he is entitled in the amount of $78,170.  This bonus relates to the refinancing Employer

and Parent concluded on June 26, 2002. 

In the event operating bonuses are paid with respect to the year 2002 to

Employer’s executive officers, Employee shall be entitled to a pro rata portion

of the operating bonus allocable to him based upon the number of days Employee

worked in 2002.

 

 

3.             Sole

Entitlement.  Employee

agrees that his sole entitlement to compensation, including base salary and any

bonus or other payments of any kind, monetary or nonmonetary benefits or

perquisites, with respect to his employment with or his services rendered to

Employer or Parent, and all other matters among Employee, Employer and Parent,

including but not limited to, any and all rights or claims arising from or

relating to the Employment Agreement, is as expressly set forth in this

Agreement, or as otherwise may be provided to Employee in his capacity as a

director of Employer or Parent, as described in Section 4 below.

4.             Non-Executive Benefits.  In addition to the compensation provided in Sections 1

and 2 above, Employee shall be provided with the benefits described herein in

consideration of Employee’s service as Vice Chairman of the Board of Directors

of each of Employer and Parent.

(a)           During Employee’s term as Vice

Chairman of the Board of Directors of each of Employer and Parent (the “VC Term”), Employee shall be provided

directors’ and officers’ liability insurance comparable to the standard

directors’ and officers’ liability insurance coverage afforded other members of

the Board of Directors of each of Employer and Parent.

(b)           During the VC Term, Employee shall be

paid an annual retainer in the aggregate amount of $15,000, payable in the same

manner as paid to other members of Employer’s and Parent’s board of directors; provided that the annual retainer of

$15,000 shall be the amount for service on the boards of directors of both

Employer and Parent (for the sake of clarity, the total amount of such annual

retainer shall be $15,000, not $30,000).

(c)           During the VC Term, Employee shall be

paid $1,500 for each meeting of the Board of Directors of Employer and Parent

attended by Employee; provided

that if meetings of the Boards of Directors of Parent and Employer are held

simultaneously, Employee shall be paid a single attendance fee of $1,500 for

attending such meetings.

(d)           During the VC Term, upon submission

of appropriate receipts and other documents, Employee shall be reimbursed for

the reasonable out-of-pocket business expenses incurred by Employee in

fulfilling his duties as Vice Chairman of the Board of Directors of each of

Employer and Parent.

5.             Release by Employee.

(a)           Employee (for himself, his agents,

heirs, executors and administrators) does hereby and forever release and

discharge Employer and any and all past and present parent, subsidiaries and

otherwise affiliated corporations and divisions of Employer, as well as the

successors, stockholders, officers, directors, predecessors, assigns, agents,

employees, attorneys and representatives of each of them, past or present, from

any and all causes of action or claims of whatsoever kind or character whether

or not heretofore brought before any state or federal court or before any state

or federal agency or other governmental entity, which Employee has or may have

by reason of any and all acts, omissions, events or facts occurring or existing

on or prior to the Effective Date attributable to or arising from the

employment of Employee by Employer or Parent (whether pursuant to the

Employment Agreement or otherwise) or the termination thereof, whether arising

under any federal, state or other governmental statute, regulation or ordinance

or common law or equity on any theory of pleading or proof, such as, for

2

 

example and without limitation, Title VII of the Civil

Rights Act of 1964, as amended, which prohibits discrimination on the basis of

race, religion, color, sex and national origin, the Civil Rights Act of 1866,

the Age Discrimination in Employment Act, as amended, which prohibits

discrimination on the basis of age 40 and over, and any wrongful termination

claims.  The foregoing will not be deemed

to release any claim by Employee to enforce this Agreement or to enforce

Employee’s rights as a shareholder of Parent.

(b)           Other than for claims specified in

the last sentence of Section 5(a) above, Employee hereby waives his right

to file any charge or complaint arising out of his employment with or

separation from Employer or Parent before any federal, state or local court or

any state or local administrative agency, except where such waivers are

prohibited by law.  This statement of

general release and waiver shall include, but not be limited to, all claims or

actions arising out of, or relating in any way to, Employee’s employment and

severance of Employee’s employment with Employer and/or Parent.

(c)           Employee understands that if this

Agreement is not signed, Employee would have the right to voluntarily assist

other individuals or entities in bringing claims against Employer (or any of

Employer’s officers, directors, stockholders, affiliates and agents).  Employee further understands and agrees

hereby that Employee waives such right and will not provide any such assistance

other than assistance in an investigation or proceeding conducted by the United

States Equal Employment Opportunity Commission, the National Labor Relations

Board or other government agency. 

Employer and Employee further agree that Employee may provide

information pursuant to any valid subpoena or other compulsory process.  To the extent the law allows any government

agency to file such charges on Employee’s behalf and the Employment Agreement,

as amended hereby, does not prohibit Employee’s cooperation with such agency,

Employee agrees the Employment Agreement, as amended hereby, will nonetheless

act as a waiver of any recovery by Employee in such government-instituted

action.

(d)           If Employee violates this Agreement

by suing Employer, its subsidiaries or affiliates (including its officers,

directors and stockholders) or those associated with Employer, for any claim

that he has released under this Agreement, Employee agrees that Employee will

pay all costs and expenses of defending against that suit incurred by Employer

or its parent, affiliates (including its officers, directors and stockholders)

or those associated with Employer, including reasonable attorneys’ fees.

6.             Release

by Employer.  Employer

does hereby and forever release and discharge Employee (and his agents, heirs,

executors and administrators) from any and all causes of action or claims of

whatsoever kind or character whether or not heretofore brought before any state

or federal court or before any state or federal agency or other governmental

entity, which Employer has or may have by reason of any and all acts,

omissions, events or facts occurring or existing on or prior to the Effective

Date attributable to or arising from the employment of Employee by Employer

(whether pursuant to the Employment Agreement or otherwise) or the termination

thereof, whether arising under any federal, state or other governmental

statute, regulation or ordinance or common law or equity on any theory of

pleading or proof.  The foregoing will

not be deemed to release any claim by Employer (1) to enforce the

Employment Agreement or this Agreement or (2) for any acts of fraud,

willful misconduct or gross negligence engaged in by Employee while serving as

an executive officer of the Company.

3

 

7.             Waiver of

Unknown Claims.  There is

a risk that after the execution of this Agreement either party will incur or

suffer losses, damages or injuries which are in some way caused by, arising out

of, or result from the former employment relationship between Employee and

Employer but which are unknown or unanticipated at the time this Agreement is

signed.  Each party assumes the risks

and understands that the releases by Employee and Employer in Sections 5

and 6 of this Agreement, respectively, shall apply to all unknown or

unanticipated results of the transactions and occurrences, as well as those

known or anticipated, and upon advice of legal counsel, all parties do waive

any and all rights under California Code section 1542, which section has

been duly explained and reads as follows:

“A general release does not extend to claims which the creditor does

not know or suspect to exist in his favor at the time cuting the release, which

if known by him must have materially affected his settlement with the debtor.”

Each party understands and acknowledges the significance and

consequences of this specific waiver of section 1542.

8.             Older

Workers Benefit Protection Act Waiver.

(a)           Age Discrimination Is Specifically

Intended to Be Included As a Released Dispute.  Employee specifically intends that the disputes he is releasing

herein include the Age Discrimination in Employment Act of 1967, as amended by

the Older Workers’ Benefit Protection Act of 1990 (“ADEA”), except for any allegation that

a violation of the ADEA occurred following his execution of this Agreement.

(b)           Advice To Consult An Attorney.  Employee is hereby advised to consult with

his attorney before signing this Agreement because he is permanently giving up

legal rights.

(c)           Reasonable Time To Consider This

Agreement.  Employee acknowledges

that he has been given a reasonable period of time (up to 21 days, if he so

chooses) to consider this Agreement prior to his signing this Agreement.  Employee understands that he has seven days

following the signing of this Agreement to revoke it.

(d)           Procedure for Revoking ADEA Claim Release.  In order to effectively revoke Employee’s

release of any claim for violation of the ADEA, the parties agree that Employee

must provide notice of such revocation to Employer within seven calendar days

after Employee executes this Agreement in accordance with the notice provisions

contained in the Employment Agreement.

9.             Cessation of Employment.  It is expressly agreed that any and all

express or implied employment agreements among Employee, Employer and Parent

are terminated as of the Effective Date, other than those provisions of the

Employment Agreement that by their terms expressly survive cessation of

Employee’s employment thereunder.

4

 

10.          Governing Law; Jurisdiction.  This Agreement shall be interpreted,

construed, governed and enforced in accordance with the laws of the State of

California.  Any disputes arising out

of, or related to, this Agreement that are adjudicated in the courts shall be

adjudicated exclusively in the state courts of California located in the county

of San Diego, California.  The parties

hereby consent to exclusive personal jurisdiction in such county.

11.          Counterparts.  This Agreement may be executed in one or more counterpart copies,

each of which shall be deemed to be an original and all of which taken together

shall be deemed one and the same instrument.

IN WITNESS

WHEREOF, Employer has caused this Agreement to be executed on its behalf by its

duly authorized officer, and Employee has executed the same as of the day and

year first written above.

ELGAR

ELECTRONICS CORPORATION

 

	

  By:

  	

  /s/ Kenneth R. Kilpatrick

  
	

   

  	

  Name:  Kenneth R. Kilpatrick

  
	

   

  	

  Title:  President and Chief Executive Officer

  

 

	

  /s/ Kenneth R. Kilpatrick

  
	

  Kenneth R. Kilpatrick

  

Acknowledged and

Agreed by:

ELGAR HOLDINGS,

INC.

 

	

  By:

  	

  /s/ Donald Glickman

  
	

   

  	

  Name:  Donald Glickman

  
	

   

  	

  Title:  Vice President

  

 

5Exhibit 10.1

  

 

Consulting Agreement

 

 

Effective September 1, 2002, FCG CSI, Inc. d/b/a

First Consulting Group (“CLIENT”), having an address at 111 W. Ocean Blvd.,

Suite 1000, Long Beach, California 90802, and Nichol Clinical Technologies Corp

(“NCTC”) having an address at 247 B Forest Avenue, Laguna Beach, California

92651 agree to the following terms and conditions under which NCTC has agreed

to provide CLIENT with services as described below.

 

1.              Scope of Work.

The services performed by NCTC for CLIENT’s Life

Sciences business unit pursuant to this Agreement shall generally be in the

field of Strategic Sales Services as may be more specifically defined by mutual

agreement of the parties from time to time (the “SERVICES”).

 

2.              Compensation

It is further understood and agreed that CLIENT

shall pay NCTC for SERVICES actually requested by and provide to CLIENT at the

rate of $2,500 per day (RATE) for a minimum of 4 days per month (RETAINER),

billed in 1⁄2 day increments (minimum of 4 hours per 1⁄2 day).  In addition, administrative overhead will be

paid at the rate of 17.5% ($1750 per month based on the minimum of 4 days per

month) of the base retainer.  If the

CLIENT requests fewer hours than covered in the RETAINER, the RETAINER will not

be refundable or credited to CLIENT’s account unless expressly agreed to by

both parties.

 

When necessary NCTC may provide SERVICES at a

location away from the metropolitan area of NCTC’s regular place of

business.  CLIENT will reimburse at

actual cost (as supported by receipts) NCTC for reasonable travel and living

expenses incurred by NCTC.

 

Payment of fees and expense to NCTC shall be due

and payable on the 15th of each month in following a billable month.  NCTC shall provide invoices for monthly fees

and any reimbursable expenses within 5 business days following month end.

 

3.              Manner of Performance

NCTC represents that it has the requisite

expertise, ability and legal right to render the SERVICES, and will perform the

SERVICES in an efficient manner and in accordance with the terms of this

Agreement.  NCTC will abide by all laws,

rules and regulations that apply to the performance of the SERVICES.  NCTC is an independent contractor, and shall

not be considered an employee of CLIENT.

 

4.              Mutual Non-disclosure of Confidential Information

The disclosing party

agrees to mark all written information deemed confidential and proprietary as

“Confidential Information”, and to provide a written representation of any

orally or visually presented confidential and proprietary information, properly

marked as being “Confidential Information”, within thirty (30) days of

disclosure of such information to the other party.

 

The Receiving Party

agrees to make reasonable efforts to ensure that neither it nor any of its

subsidiaries, divisions, employees, agents, independent contractors, or other

persons or organizations over which it has control, will directly or indirectly

use any Confidential Information which is marked “Confidential Information” for

any purpose not associated with its evaluation, or disseminate or disclose any

of the “Confidential Information” to any person or persons who are not

employees or consultants of the Receiving Party, or to any persons who do not

need to have knowledge of such information in the course of their employment with

the Receiving Party, without the express written consent of the Disclosing

Party, for a period of three (3) years from receipt thereof.

 

 

247B Forest

Ave

Laguna Beach,

CA 92651

 

Phone:    949-497-2636

Fax:         949-203-8799

Email:      hatchcyte@yahoo.com

 

The Party’s

obligations under this Agreement shall not apply to any information which:

 

•      Is or becomes publicly known without the

wrongful act or breach of this Agreement by the Receiving Party;

 

•      Is independently developed by the

Receiving Party without the benefit of the disclosed Confidential Information,

or is already known to the Receiving Party at the time of disclosure;

 

•      Is rightfully received by the Receiving

Party from a third party who is not under any obligation of confidentiality to

the Disclosing Party; or

 

•      Is disclosed by the Receiving Party with

the written approval of the Disclosing Party.

 

 

5.              Conflicts of Interest

NCTC represents that it has advised CLIENT prior to

the date of signing this Agreement of any relationship with competitors of CLIENT,

which would present a conflict of interest with the SERVICES, or which would

prevent NCTC from carrying out the terms of this Agreement.  NCTC agrees to advise CLIENT of any such

relationships that arise during the term of this Agreement.

 

6.              Indemnification

NCTC agrees to indemnify and hold CLIENT harmless

for any injury occurring to the property or person of NCTC as a result of

NCTC’s performance of SERVICES under this Agreement, except to the extent that

said injury has occurred because of the gross negligence of CLIENT.

 

7.              Term

The term of this Agreement shall end on March 31,

2003.  Either party may terminate this

Agreement for cause (i.e., NCTC’s nonperformance or CLIENT failure to pay

amounts due and owing under this Agreement) on 15 days advance written notice;

provided that such termination shall only be effective if the cause for

termination in not cured by the defaulting party prior to the expiration of the

15-day notice period.

 

8.              General

This Agreement supersedes all prior agreements and

understandings between the parties. 

This Agreement may not be changed or terminated orally by or on behalf

of either party.  This Agreement shall

be construed according to the laws of California.

 

9.              Severability

If any of the provisions of this Agreement are void

or unenforceable, the remaining provisions shall nevertheless be effective, the

intent being to effectuate this Agreement to the fullest extent possible.

 

AGREED:

 

	

  Nichol Clinical

  Technologies Corp

  	

   

  	

  FCG CSI, Inc. d/b/a First

  Consulting Group

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  By:

  	

  F. Richard Nichol

  	

   

  	

  By:

  	

   Luther Nussbaum

  
	

  Title:

  

  	

  Principal

  	

   

  	

  Title:

  	

  Chairman

  and CEO

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Date: 

  	

   

  	

   

  	

  Date:

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