Document:

Exhibit 10.2 

EXECUTION COPY

     AMENDMENT
NO. 1 TO

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

     THIS AMENDMENT NO. 1 (the “Amendment”) dated as of January 27, 2005 TO THE AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the
“Agreement”), dated as of December 23, 2004, by and between The Gillette Company, a Delaware corporation (together with its successors and assigns permitted under the Agreement,
the “Company”), and James M. Kilts (the “Executive”).

W I T N E S S E T H :

     WHEREAS as Executive is employed as CEO and Chairman of the Board of the Company pursuant to the Agreement; and   

     WHEREAS the Company will enter into the Merger Agreement; and

       WHEREAS, the Company and The Procter & Gamble Company 
  (“Parent”) desire that Executive remain employed with Parent for a period of one year following the Effective Time; and 
       

     WHEREAS, the Company and the Executive desire to amend the Agreement effective as of the Effective Time to provide for such continued employment, as set forth herein; 
  

     NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, and subject to the
          consummation of the transactions contemplated by the Merger Agreement (such consummation, the “Transaction”), the Company and the Executive (individually a “Party” and together the “Parties”) agree that effective immediately prior to the Effective Time the Agreement shall be amended as
    follows:

       1. Section 1 of the Agreement is hereby amended to include the following definitions: 

     “Acceleration Date” has the meaning set forth in Section 7A hereof.

     “Additional Options” has
  the meaning set forth in Section 7A hereof.

     “Award Date” has the meaning set forth in Section 7A hereof. 

     “Company Common Stock” shall have the meaning ascribed thereto in the Merger Agreement.

       “Company Stock Options” shall have the meaning ascribed thereto in the Merger Agreement.   

     “Employment Termination Date” means the last day of the Term of Employment.

       “Effective Time” shall have the meaning ascribed thereto in the Merger Agreement.

     
  “Initial Awards” has the meaning set forth in Section 7A hereof.   

      “Merger Agreement” means the Agreement and Plan of Merger dated as of January 27, 2005 among The Procter & Gamble Company,
  Acquarium Acquisition Corp. and The Gillette Company.

     
  “New Options” has the meaning set forth in Section 7A hereof.

     
  “Parent Board” has the meaning set forth in Section 1.

 
       “Parent Common Stock” shall have the meaning ascribed thereto in the Merger Agreement.

     
   “RS Award” has the meaning set forth in Section 7A hereof.

 
       2. Section 1(k) of the Agreement is hereby amended by replacing the last sentence thereof with the following :   

      “Notwithstanding the foregoing following the Effective Time, (A) the titles in clause (v) hereof shall be replaced with “Vice-Chairman of Parent”; (B) the word “Board” in
                      clause (vi) hereof will be replaced with the phrase “the Chief Executive Officer of Parent”; and (C) the second portion of clause (vii) beginning with the word “or” shall no longer apply. In addition, it shall constitute Good
                      Reason if the Executive is not appointed or elected to serve as a member of the Parent Board of Directors (“Parent Board”)” as soon as practicable following the Effective Time
  or if Executive is removed as a member of the Parent Board prior to the first anniversary of the Effective Time.

     3. Section
    2 of the Agreement is hereby amended to read as follows:

        “2. Term of
        Employment

        The Term of Employment began
          as of the Commencement Date and shall extend through the first anniversary
          of the Effective Time. Notwithstanding the foregoing, the Term of Employment
          shall end on the 

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    date on which the Executive’s employment is earlier terminated by either Party in accordance with the provisions of Section 14.”

       Section 3(a) of the Agreement is hereby amended
      to read as follows:

       “(a) The Executive
          shall serve as the Vice Chairman – Gillette of Parent and shall be nominated
          as a member of the Parent Board during the Term of Employment. During the
          Term of Employment, the Executive, in carrying  out his duties, shall report
          to Parent’s Chief Executive Officer and shall devote substantially all
          of his business time and attention to the business and affairs of the Company
      and Parent.”

     4. Section
  4 of the Agreement is hereby amended by adding at the end thereof the following:

  
          “The Company and the Executive acknowledge
            and confirm that on April 1, 2004, the Executive’s Base Salary was increased
    to $1,500,000.”

     5. Section
        5 of the Agreement is hereby amended by deleting the last paragraph thereof
  and replacing it with the following:

  
          “Notwithstanding the foregoing, the Parties
              agree that the annual bonus payable to the Executive for the twelve-month period
              of employment beginning on the Effective Time shall equal the product of Executive’s
              then  target bonus multiplied by the same performance factor by which the target
              bonus of Parent’s Chief Executive Officer’s is multiplied in determining
              the annual bonus to be paid to Parent’s Chief Executive Officer’s
    for such  period.”

     6. Section
            7(c) is hereby amended inserting the following at the beginning of the first
  sentence thereof:

  
         “Except
    as otherwise provided in Section 1.09 of the Merger Agreement,”   

     7. A
  new Section 7A is hereby inserted into the Agreement providing as follows:

       “7A. New Stock Options and Restricted Shares;
        Lock Up.

  
         In consideration
                      of the Executive’s agreement (i) to defer the exercise
                      of all of his Company Stock Options and the sale of Company
                      Common Stock held by him pursuant to this Section 7A; (ii)
                      to continue his employment with the Company and to serve as
                      Vice Chairman of Parent, reporting to Parent’s Chief Executive
                      Officer, for one year following the Effective Time, pursuant
                    to 

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    Section 3(a) hereof; and (iii) to extend pursuant to Section 17(c) hereof his non-competition covenant to a period of three years commencing on the Employment Termination Date; the Company and Executive agree as follows:

  
    
           (a) Effective
        as of the Effective Time, Parent shall cause the Executive to be granted options
        to purchase 1,000,000 shares of Common Stock of  Parent (the “New
        Options”) pursuant to the Company 2004 Long-Term
        Incentive Plan, as amended pursuant to the Merger Agreement (the “Amended
         Plan”). The New Options shall have a per share exercise price equal
         to the Fair Market Value of a share of Parent Common Stock on the date of
         grant, and, subject to the Executive’s compliance with the material
        provisions of Section 17(c) hereof, shall vest and become exercisable and non-forfeitable
         in two equal installments on each of the first two anniversaries of the Effective
         Time unless prior to the first anniversary of the Effective Time the  Executive’s
         employment is terminated for Cause or he terminates his employment without
         Good Reason. Except as provided in this Amendment, the New Options shall be
        controlled by the terms and conditions of the Amended Plan.

         (b) Unless
           prior to the first anniversary of the Effective Time the Executive’s
           employment is terminated for Cause or he terminates his  employment without
           Good Reason, effective as of the last business day of the Term of Employment
           (the “Award Date”), Parent shall cause the Executive to be granted
           150,000 restricted shares of Parent Common Stock pursuant to the Amended
           Plan (the “RS Award”).
           The RS Award shall vest and become nonforfeitable in its entirety on the third
           anniversary of the Award Date, subject to the Executive’s compliance
          with  the material provisions of Section 17(c) hereof.

    
           (c) In
            addition to any other rights and remedies that Parent or the Company may have,
            in the event of Executive’s failure to comply with
            the material provisions of Sections 17(c) hereof or upon a termination of Executive’s
            employment for Cause or his voluntary termination without Good Reason prior
            to the first anniversary of the Effective Time, all unvested New Options shall
             immediately terminate and all unvested shares subject to the RS Award shall
            be forfeited.

         (d) Notwithstanding
              the provisions of Section 7A(a)-(c) above, but subject to the provisions of
              Section 7A(d) hereof, the New Options shall  become 100% vested, exercisable
              and nonforfeitable and the RS Award shall continue to vest in accordance with
              its terms: (w) upon the Executive’s termination of employment for Good
              Reason; (x) upon termination of Executive’s employment by
              the Company without Cause; or (y) upon the Executive’s death or Disability
              (the first to occur, the “Acceleration
              Date”). The New Options shall be exercisable
              in 

  

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      accordance with the terms of the Amended Plan. The termination of the Executive’s employment hereunder for any reason, other than by the Company for Cause or by the Executive without Good Reason prior to the first anniversary
      of the Effective Time, shall constitute a Retirement for purposes of all Company Stock Options and the New Options.

    
           (e) Executive agrees that from the date of the Merger 
      Agreement until the eighteen month anniversary of the Effective Time, or until the Acceleration Date if sooner, he will not dispose of any shares of Company Common Stock nor exercise any Company Stock Options held by him from and
      after the date of the Merger Agreement, including following the conversion thereof into Parent Common Stock and options to purchase Parent Common Stock.

    
           (f) Notwithstanding any provisions of this Agreement to the contrary, the awards set forth in this Section 7A shall constitute the Company sole
          obligation with respect to long term incentive and equity grants to be made to the Executive from and after the Effective Time.”

  

     8. A new section 7(e) is hereby added to the Agreement as follows:

       (e) During
  the one-year period beginning on the Effective Time, the Executive shall be
  entitled to participate in Parent’s BGP, which is a long term incentive
  plan with a three year cycle ending  on June 30, 2007. Such participation shall
  be on the same basis as that of the Chief Executive Officer of Parent, i.e.
  a target of 2 times Base salary per year of BGP participation. This will provide
  the Executive with a target payout opportunity of  two times Executive’s
  Base Salary. The actual payout shall be determined based on performance relative
  to the BGP parameters at the end of the three-year cycle in June of 2007 and
  shall be paid in a cash lump sum promptly following such  determination.

       9. Section 14(k) of the Agreement is hereby amended to read as follows:

  
         “(k) Cooperation. For a period of two years following the termination of his employment, upon the reasonable request by the Company, the Executive shall cooperate in any litigation, other dispute
                or matter relating to the business of the Company in which he was involved during his employment with the Company; provided, that the Executive shall not be obligated to spend time and/or travel in connection with such cooperation to the extent it
                would interfere with his other commitments and obligations. The Company shall reimburse the Executive for all expenses he reasonably incurs in so cooperating, and shall pay the Executive a mutually agreed fee for his time spent in such cooperation
    (including without limitation any travel time); provided, that if the Executive and the Company cannot agree on such fee, they shall mutually 

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    select an independent expert to determine the appropriate amount of such fee based upon prevailing market practices. The determination of any such independent expert shall be final and binding, and the fees and expenses of such
    expert in making such determination shall be paid by the Company.”

     10. A new Section 14(l) is hereby inserted to the Agreement as follows:

     “(l)
  Termination After the Effective Time.

       Notwithstanding
    any provision of this Agreement to the contrary, in the event of the Termination
    of the Executive’s employment from and after the Effective Time and prior
    to the Employment  Termination Date, the Executive shall only be entitled to
    (i) the payments and benefits provided for under Section 15(e) to the extent
    not previously paid; (ii) his entitlements under Section 7A hereof and (iii)
    the payments, benefits, rights and  limitations provided for under clauses
    (i) and (ii) of Sections 14(a), (b), (c) and (e); clause (iii) of Section 14(b);
    clause (i) of section 14(d); and clauses (iii) and (iv) of Section 14(g), as
    applicable. In addition, in the event of termination  of Executive’s employment
    under Section 14(d), Executive will be entitled to a lump sum payment equal
    to the sum of (x) Executive’s unpaid Base Salary through the first anniversary
    of the Effective Time payable promptly following such  termination and (y)
    the Executive’s annual incentive award and BGP award for the year of termination,
    payable following the determination of the amount of such awards at such time(s)
  as payments would be made in the absence of such  termination.”

       11. Section
      15 of the Agreement is hereby amended by adding new subsections (e) and (f)
      as follows:   

       “(e) The
            Executive and the Company hereby agree and confirm that the Transaction constitutes
            a Change of Control and an event of Good Reason and that as a result thereof,
            the Executive shall be  entitled to the compensation and benefits set forth
            on Schedule A hereto. The executive and the Company agree that the Executive
            shall be paid his the amounts payable in cash under Section 15(b) as set forth
            in item 1 of Schedule A hereto  immediately prior to the Effective Time, and
            (ii) the Executive shall receive the remaining benefits required to be paid
            or provided under Section 15 commencing upon the Employment Termination Date.
            Other payments and benefits set forth on Schedule  A shall be due and payable
      in accordance with their terms.”

  
         (f) The Parties
              agree that the provisions of Section 15 and any bonus required to be paid under
              Section 5 with respect to periods prior to the Effective Time shall be fully
              satisfied by compliance  with the terms of Section 15(e) of this Agreement
              and subject to such compliance no additional amounts will be due under Section
    15.” 

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     12. Section 17(c) of the Agreement is hereby amended to read as follows:

  
         “(c) (i) In order to better protect the goodwill of Parent and its subsidiaries and to prevent the disclosure of the Parent's or its subsidiaries' trade secrets and confidential information and
      thereby help insure the long-term success of the business, the Executive, without prior written consent of the Company, will not engage in any activity or provide any services, whether as a partner, shareholder, director, officer, agent, manager,
      supervisor, employee, adviser, consultant or otherwise, to any Competitor during the Term of Employment (other than in the course of performing his duties hereunder) and for a period of three (3) years following the date of the Participant's
    termination of employment with the Parent. “Competitor” shall mean the companies set forth on Schedule B and any successors thereto.

  
          (ii) The Executive shall not be deemed to be in
      violation of this Section 17(c) from (i) his acquiring, solely as an investment,
      up to five percent (5%) of the outstanding equity securities (measured by value)
      of any entity, (ii)  his becoming a consultant, advisor and/or agent to any
      entity providing consulting, investing or other services to any Competitor,
      so long as the Executive does not render services or advice, directly or indirectly,
      to any Competitor or Affiliate of  the Competitor or (iii) his becoming affiliated
      with an entity which is not a Competitor which is subsequently acquired by
      or merged with a Competitor; provided that following such acquisition or merger,
      his duties do not involve any  responsibilities with regard to any Competitive
    Business.

       (iii) The provisions of this Section
        17(c) shall apply to the Executive in lieu of any non-competition provisions
      added to the 2004 Plan pursuant to Section 1.09(a) of the Merger Agreement.”

       13. Section
      31 of the Agreement is hereby redesignated as Section 33 and a new Section
  31 is hereby added to the Agreement as follows:

       “31.
      Section 409A Compliance.

  
         The Executive
              and the Company agree to cooperate to make such amendments to the terms
          of this Agreement as may be necessary to avoid the imposition of penalties
          and additional taxes under Section 409A of the Code; provided however,
      that the Company agrees that any such amendment shall provide the Executive
      with economically equivalent payments and benefits, and the Executive agrees
      that any such amendment that would result in an acceleration of the payment
      of any amounts, or would, individually or in the aggregate, materially increase
      the cost to, or liability of, the Company with respect to any payments will
    be subject to the consent of Parent, which consent shall not be 

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    unreasonably withheld, and in the absence of such consent shall be void ab initio.”

    14. A
    new Section 32 is hereby added to the Agreement as follows:   

       “32. Assumption.

  
         The Company
      shall use its best efforts to cause Parent to assume this Agreement at the
    Effective Time.

       15. Unless
    otherwise specified herein, terms defined in the Agreement shall have the same
    meaning when used in this Amendment.   

     16. Unless
      specifically modified herein, all other terms and conditions of the Agreement
  shall remain in effect.

     This Amendment may be executed in two or more
  counterparts.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date first written above.

  	 THE GILLETTE COMPANY 
	 	 	 
	By:	/s/ Edward E. Guillet
	 	

	 	Name:	Edward E. Guillet
	 	Title:	Senior Vice President
	 	 	Human Resources 
	 	 	 
      

	By:	/s/ James
      M. Kilts
	 	

	 	James M. Kilts

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    Schedule A

  

    Post-Employment Arrangements

     1. Cash Payments. Amounts payable immediately prior to Effective Time, unless otherwise noted, consisting of: 

	
Incentive Bonus for year in which the Effective Time occurs - highest actual bonus % pre-Effective Time (i.e., 200%), prorated based on the number of days in such year ending on
the Effective Time (xx/365)
	Unused accrued vacation pay through the Effective
  Time
	Lump sum equal to three times (3x) sum of Executive
    Base Salary at the Effective Time and Highest Annual Bonus (i.e., 200%) in three years prior to the Effective Time
	Lump sum payment for Supplemental Pension credit
    as per Executive’s prior election equal to the actuarial equivalent of 3 years of service computed as described in item 5
      below.
	108,480.1762 stock units, plus accrued dividend
    equivalents, payable in cash at fair market value upon the Effective Time.
	
Estimated Excise Tax Gross-Up in respect of the foregoing and the acceleration of options prior to Effective Time.

     2. Post-Termination Benefits: 

	
Participation for three years following termination of employment in Company welfare benefit plans, programs and arrangements on same terms as the Executive was participating
immediately prior to the Effective Time, including residential security systems
	Outplacement services per Employment Agreement
	Any Excise Tax Gross-Up due per Employment Agreement
	
Continued use of current Rye office and administrative support until Executive attains age 65

     3. Stock Options 

	
All stock options granted prior to the date hereof (which shall have vested upon the Effective Time) shall continue in effect as reflected in Schedule A-1.

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     4. Deferred Compensation
	
All compensation previously deferred under the Company’s Supplemental Savings Plan, Incentive Bonus Plan, Deferred Compensation Plan or any other plan (together with any
accrued interest or earnings thereon) as previously elected.

     5. Supplemental Pension Plan Pursuant to the Terms of Section 10 of the 
Agreement 

	
5% of Average Final Annual Compensation (equal to 36-month Severance Lump Sum amount divided by 3) multiplied by the Executive’s full and partial years of service with the
Company, excluding the 3 years of credited service paid out in a lump sum under item 1, up to a maximum of seven years.
	
Illustrative example

Service: Assume a Transaction date of October 1, 2005: credited service of 4.75 years, plus 1 year further employment with Parent. Total 5.75 years of service

    Pension
    credit: 5.75 x 5% = 28.75%

    Compensation: Assume Average Final Annual Compensation of $4.5 million

  Annual Pension: $4.5 million x 28.75% = $1,293,750.

     6. Supplemental Savings Plan 

	
Payment of account in accordance with plan terms

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Schedule A-1 

J. Kilts Stock Option Awards 

  	 Award
                Date 	 Strike
                Price 	 Options
                Outstanding 	  Duration
      Post-

      termination 
	 	 	 	 
	 19-Jan-01 	 $ 34.16  	2,000,000   	 January 18, 2011 
	 	 $28.26 	639,386	 5 years but not after 
	 21-Jun-01 	 	 	 June 20, 2011 
	 20-Jun-02 	 $35.58 	 700,000 	 June 19, 2012 
	 19-Jun-03 	 $32.38 	 1,000,000  	 June 18, 2013 
	 2-Jan-04 	 $36.32 	 1,000,000  	 January 1, 2014 
	 17-Jun-04 	 $43.10 	 1,000,000  	 June 16, 2014 

  

12exv10w33

 

EXHIBIT 10.33

SEVERANCE AGREEMENT AND GENERAL RELEASE

     This Severance Agreement and Release of All Claims (hereinafter “Agreement”) is made
and entered into by and between THREE-FIVE SYSTEMS, INC., a Delaware corporation (hereinafter
referred to as “Employer”), and JEFFREY D. BUCHANAN (hereinafter referred to as
“Employee”).

RECITALS

     WHEREAS, Employee has been employed by Employer as its Executive Vice President, Chief
Financial Officer, Secretary, and Treasurer, and has served as a Director of Employer’s Board of
Directors.

     WHEREAS, Employee has executed the resignation letter attached hereto as Exhibit A,
indicating Employee’s employment and any other duties with Employer and its subsidiaries have
terminated effective February 1, 2005 (“Cessation Date”); and

     WHEREAS, the parties, in order to settle and compromise fully and finally any and all claims
and potential claims arising out of Employee’s employment and the cessation thereof, have agreed to
resolve these matters on the terms and conditions set forth herein.

AGREEMENT

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

     1. Recitals. The recitals set forth above are true, accurate, and correct, and are
incorporated in this Agreement by this reference and made a material part of this Agreement.

     2. Consideration.

          A. Severance Payments. In consideration for Employee’s execution of and compliance with this
Agreement, Employer agrees tender to Employee severance in the amount of One Hundred and Sixty-Five
Thousand Dollars and 00/100 ($165,000.00) (“Severance Pay”), which represents nine months
of (gross) base pay. Said Severance Pay shall be payable to Employee in nine equal installments of
$18,333.33, minus statutory deductions, payable on the first day of each month during the Severance
Period. The period commencing on Cessation Date and ending on October 1, 2005 shall be referred to
as the “Severance Period”. The parties agree that the first installment shall be tendered
to Employee on February 1, 2005 provided that Employee has executed and delivered this Agreement,
and provided Employee has not revoked this Agreement under Section 11 hereto.

          B. Stock Options. The parties hereto acknowledge that, as of the date of this Agreement,
Employee holds the options to purchase common stock of Employer (the “Options”), as set
forth on Exhibit B-1. The Options set forth on Exhibit B-2 shall be exercised by
Employee within 90 days following the Cessation Date or cancelled pursuant to their terms. As
further and additional consideration for Employee’s execution of and compliance with this
Agreement, and notwithstanding any provision of Employer’s stock option plans or any stock option
agreement with Employee covering such Options to the contrary, Employer shall extend the expiration
date of the Options set forth on Exhibit B-3 to, and Employee shall have the right to
exercise such Options set forth on Exhibit B-3 until, the earlier of (a) February 1, 2010;
or (b) the expiration date of the respective Option pursuant to the stock option agreement covering
such Option. All other Options set forth on Exhibit B-1 that are not set forth on
Exhibits B-2 or B-3 shall be cancelled as of the Cessation Date.

 

 

          C. COBRA Premium Reimbursement. As further and additional consideration for Employee’s
execution of and compliance with this Agreement, Employer shall reimburse the cost of the premium
for continuation of group health insurance coverage for Employee, his spouse and dependents, to the
extent they were plan participants as of Employee’s Cessation Date, should Employee, his spouse and
dependents (collectively referred to as Employee’s Qualified Beneficiaries) elect continuation
coverage under the Consolidated Omnibus Budget Reconciliation Act of 1987, as amended, (COBRA)
until January 31, 2006, or until Employee and Employee’s Qualified Beneficiaries are covered under
another health insurance plan, whichever is earlier. Employee shall be responsible for timely
payment to continue any insurance benefits under this Section 2C. Employer shall reimburse
Employee upon Employee’s submission of proof of payment. Employee understands, acknowledges, and
agrees that in no event shall Employee continue to pay the premium for continued group health
insurance coverage for Employee and/or his Qualified Beneficiaries any time after January 31, 2006
and, thereafter. Commencing with coverage for the month of February 2006, Employee and his
Qualified Beneficiaries shall be fully and solely financially responsible for the payment of
premiums for the continuation of group health insurance coverage for themselves under COBRA.
Further, Employee acknowledges and agrees that, if Employee is eligible for such coverage, he has
received a COBRA notice advising Employee of Employee’s rights to continuation coverage for group
health insurance.

          D. Executive Outplacement Services. Employer shall provide to Employee nine months of
executive outplacement services, commencing on the Cessation Date. The provider of these services
shall be selected by Employer and any changes to the agreed upon services with the provider must be
approved in advance by Employer’s Vice President of Human Resources.

     3. Adequate Consideration. Employee acknowledges and agrees that the consideration to Employee
set forth in Section 2 (including Subparagraphs) of this Agreement is in addition to
anything of value to which Employee is, as a matter of law, otherwise entitled. Employee
represents and agrees that he is not entitled to and shall not receive any further compensation,
including salary, bonuses, vacation pay, or employee benefits after the Cessation Date, provided
Employee is not waiving any rights to vested employee benefits, if any, as provided in applicable
benefit plans.

     4. Release. In consideration of his receipt of the severance package set forth in Section
2 of this Agreement, Employee hereby fully, forever, irrevocably, and unconditionally releases
and discharges Employer, including Employer’s past and present officers, directors, stockholders,
subsidiaries, affiliates, agents, employees, representatives, lawyers, administrators, spouses, and
all persons acting by, through, under, or in concert with them (collectively, the “Released
Parties”), from any and all claims or damages which he may have against them, or any of them,
which could have arisen out of any act or omission occurring from the beginning of time to the
effective date of this Agreement, whether now known or unknown, asserted or unasserted. This
release includes, but is not limited to, any and all claims under Title VII of the Civil Rights Act
of 1964, as amended; the Age Discrimination in Employment Act of 1967, as amended; the Americans
with Disabilities Act; the Fair Labor Standards Act, as amended; the Family Medical Leave Act;
COBRA, ERISA; the Arizona Civil Rights Act; Arizona Employment Protection Act; Arizona Wage Payment
Statute; or under any other provision or theory of law, both in tort and in contract, and whether
statutory or under the common law.

     5. Covenant Not to Sue. Employee warrants that he has no pending complaints, charges, or
claims for relief against the Released Parties with any local, state, or federal court or
administrative agency. Employee understands and agrees that this Agreement may be pled as a
complete bar to any action or suit before any administrative body or court with respect to any
complaint, charge, or claim under federal, state, local, or other law relating to any possible
claim that existed or may have

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existed against the Released Parties arising out of any event occurring from the beginning of
time through the effective date of this Agreement.

     6. Duty to Cooperate. Employee agrees to cooperate with Employer and its attorneys in
connection with any threatened or pending litigation against Employer, and shall make himself
available upon reasonable notice to prepare for and appear at deposition or at trial in connection
with any such matters, provided that Employer and Employee are not adverse parties in any such
litigation. Employer shall reimburse Employee for his reasonable out-of-pocket expenses in
connection with his activities under this Section.

     7. Non-Disparagement. Employer and Employee agree that they will not undertake any
disparaging or harassing conduct or make any disparaging comments, statements, or communications of
any kind, whether written or oral, about or directed at the other, including Employee, on the one
hand, and Employer, its subsidiaries, or affiliates on the other hand.

     8. Preservation of Company Confidential Information. Employee acknowledges that, during the
course of his employment with Employer, he had access to, and became familiar with, information
concerning Employer that Employer deems confidential, in that said information is non-public
information which, if it became or were made public, might be disadvantageous to Employer. Such
information includes, but is not limited to, employee information, business plans, financial
matters, operational matters, corporate strategies, and the like. As a material inducement to
cause Employer to enter into this Agreement, Employee agrees that he will not disclose to any third
party, either directly or indirectly, any such confidential information. The parties acknowledge
that the confidentiality agreement and invention assignment/proprietary rights agreement between
the parties (the “Proprietary Agreements”) executed by Employer and Employee as part of
Employer’s standard policies shall remain in effect.

     9. Return of Company Property. Simultaneously with his tender of this Agreement, bearing his
signature, to Employer, Employee shall return to Employer all Employer property in his actual or
constructive possession. Notwithstanding the foregoing, Employer shall transfer to Employee
ownership of Employer’s laptop computer in Employee’s possession as of the Cessation Date.
Employee hereby confirms that all confidential information related to the Company has been removed
from Employee’s laptop computer.

     10. Consultation with an Attorney. Employee specifically understands and acknowledges that
the Age Discrimination in Employment Act of 1967, as amended, provides Employee the right to bring
a claim against Employer if Employee believes that he has been discriminated against on the basis
of age. Employee understands the rights afforded under this Act and agrees that he will not file
any claim or action against Employer and/or Released Parties and waives any rights to assert a
claim for relief available under this Act against Employer and/or Released Parties, including, but
not limited to, back pay, front pay, attorneys’ fees, damages, reinstatement, or injunctive relief.
Employer has advised Employee to consult with an attorney of his choosing prior to executing this
Agreement. Employee represents and agrees that he has thoroughly discussed all aspects of his
rights and this Agreement, including his waiver of claims under the Age Discrimination in
Employment Act, with an attorney, to the extent he wished to do so. Employee understands and
agrees that Greenberg Traurig, LLP has served as counsel for Employer in the negotiation of this
Agreement.

     11. Review. A draft of this Agreement was delivered to Employee on January 26, 2005.
Employee has been advised that he has twenty-one (21) days from the date he is presented with this
Agreement to consider this Agreement. If Employee executes this Agreement before the expiration of

3

 

twenty-one (21) days, he acknowledges that he has done so for the purpose of expediting the
payment of severance benefits, and that he has expressly waived his right to take twenty-one (21)
days to consider this Agreement.

     12. Revocation. Employee may revoke this Agreement for a period of seven (7) days after he
signs it. Employee agrees that if he elects to revoke this Agreement, he will notify Employer in
writing, via certified mail, addressed to Jack Saltich on or before the expiration of the
revocation period. Receipt of proper and timely notice of revocation by Employer cancels and voids
this Agreement. Provided that Employee does not provide notice of revocation, this Agreement will
become effective upon expiration of the revocation period.

     13. Confidentiality. Employee agrees that he will keep the terms and fact of this Agreement
confidential. He will not disclose the existence of this Agreement or any of its terms to anyone
except his immediate family, attorneys or accountants, unless required by law. Employee
acknowledges that this Agreement may be filed with governmental entities or other regulatory
authorities pursuant to Employer’s reporting and disclosure obligations.

     14. Amendment. This Agreement shall be binding upon the parties and may not be amended,
supplemented, changed, or modified in any manner, orally or otherwise, except by an instrument in
writing of concurrent or subsequent date signed by the parties.

     15. Entire Agreement. This Agreement may be executed in one or more counterparts, each of
which, when executed, will be deemed an original. This Agreement, together with the Proprietary
Agreements and the Indemnity Agreement executed during July 2003 between Employer and Employee,
contains and constitutes the entire understanding and agreement between the parties hereto and
thereto with respect to the subject matter hereof and thereof, and, except as otherwise provided
herein, cancels all prior or contemporaneous oral or written understandings, negotiations,
agreements, commitments, representations, and promises in connection herewith and therewith.

     16. Choice of Law. This Agreement shall be governed by and construed in accordance with the
laws of the state of Arizona.

     17. Severability. Should any provision in this Agreement be declared or determined by any
court to be illegal or invalid, the validity of the remaining parts, terms, or provisions shall not
be affected, and the illegal or invalid part, term, or provision shall be deemed not to be a part
of this Agreement.

     18. Effect of this Agreement. It is expressly understood and agreed that this Agreement shall
not in any way be construed at any time or for any purpose as an admission by the parties that
either of them has acted wrongfully with respect to the other.

     19. Attorneys’ Fees. Should any legal action be commenced arising out of this Agreement, the
prevailing party in any such action shall be entitled to an award of attorneys’ fees incurred
therein.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

4

 

     By signing below, the parties acknowledge that they have carefully read and fully understand
all of the provisions of this Agreement and that they are voluntarily entering into this Agreement.

	 	 	 	 	 
	 	THREE-FIVE SYSTEMS, INC.

 	 
	 	/s/  Jack L. Saltich
 	 
	Dated:  January 26, 2005 	By:   Jack L. Saltich 	 
	 	Its:    President and Chief Executive Officer 	 
	 
	 	 	 
	Dated:  January 26, 2005 	/s/  Jeffrey D. Buchanan
 	 
	 	Jeffrey D. Buchanan 	 
	 	 	 
	 

5

 

EXHIBIT A

RESIGNATION LETTER

 

 

January 27, 2005

Board of Directors of

Three-Five Systems, Inc.

1600 N. Desert Drive

Tempe, AZ 85281

Dear Gentlemen:

     I hereby resign from the positions set forth on Schedule I hereto of Three-Five
Systems, Inc. and its subsidiaries, effective as of February 1, 2005.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	/s/
Jeffrey D. Buchanan	 
	 	Jeffrey D. Buchanan 	 
	 	 	 
	 

Attachment

 

 

SCHEDULE I

	 	 	 	 	 	 
	 
	 	Entity	 	 	Offices and Directorships Held	 
	 	Three-Five Systems, Inc. (Delaware)

	 	 	Director, Chief Financial Officer, Secretary, and
Treasurer, Trustee for 401(k)	 
	 	TFS-DI, Inc. (Arizona)

	 	 	Director, President, and Treasurer	 
	 	TFS Electronic Manufacturing Services,
Inc. (Washington)

	 	 	Director, Executive Vice President, and Treasurer	 
	 	TFS International Ltd. (Bermuda)

	 	 	Director, Executive Vice President, and Treasurer	 
	 	TFS International II Ltd. (Bermuda)

	 	 	Director and President	 
	 	TFS Electronic Manufacturing
Services Sdn. Bhd. (Malaysia)

	 	 	Director,
Legal Representative	 
	 	Three-Five Systems, Pacific, Inc. (Manila)

	 	 	Director,
Officer	 
	 	Three-Five Systems, Beijing, Inc. (China)

	 	 	Director,
Chairman, Legal Representative	 
	 	Three-Five Systems, Ltd (United Kingdom)

	 	 	Director,
Officer	 
	 

 

 

EXHIBIT B-1

OPTIONS HELD

	 	 	 	 	 	 	 	 	 	 	 
	Grant Date	 	Option Price	 	Options Exercisable	 	Date Last Exercise
	5/06/1996

	 	$	5.15	 	 	 	30,001	 	 	5/06/2006
	7/01/1998

	 	$	6.88	 	 	 	25,001	 	 	7/01/2008
	1/27/2000

	 	$	21.18	 	 	 	10,908	 	 	5/01/2005
	1/27/2000

	 	$	21.18	 	 	 	49,092	 	 	5/01/2005
	1/16/2001

	 	$	15.26	 	 	 	5,047	 	 	5/01/2005
	1/16/2001

	 	$	15.26	 	 	 	12,953	 	 	5/01/2005
	8/12/2002

	 	$	4.95	 	 	 	26,999	 	 	8/12/2002
	8/12/2002

	 	$	4.95	 	 	 	1	 	 	5/01/2005
	5/02/2003

	 	$	3.92	 	 	 	1	 	 	5/01/2005
	5/02/2003

	 	$	3.92	 	 	 	19,999	 	 	5/02/2013

Options held for the benefit of Michele Buchanan:

	 	 	 	 	 	 	 	 	 	 	 
	Grant Date 	 	Option Price	 	Options Exercisable	 	Date Last Exercise
	5/06/1996

	 	$	5.15	 	 	 	20,000	 	 	5/06/2006
	7/01/1998

	 	$	6.88	 	 	 	25,000	 	 	7/01/2008

 

 

EXHIBIT B-2

VESTED OPTIONS WITHOUT EXTENDED EXERCISE DATES

	 	 	 	 	 	 	 	 	 	 	 
	Grant Date	 	Option Price	 	Options Exercisable	 	Date Last Exercise
	1/27/2000

	 	$	21.18	 	 	 	10,908	 	 	5/01/2005
	1/27/2000

	 	$	21.18	 	 	 	49,092	 	 	5/01/2005
	1/16/2001

	 	$	15.26	 	 	 	5,047	 	 	5/01/2005
	1/16/2001

	 	$	15.26	 	 	 	12,953	 	 	5/01/2005
	8/12/2002

	 	$	4.95	 	 	 	1	 	 	5/01/2005
	5/02/2003

	 	$	3.92	 	 	 	1	 	 	5/01/2005

 

 

EXHIBIT B-3

VESTED OPTIONS WITH EXTENDED EXERCISE DATES

	 	 	 	 	 	 	 	 	 	 	 
	Grant Date	 	Option Price	 	Options Exercisable	 	Date Last Exercise
	5/06/1996

	 	$	5.15	 	 	 	30,001	 	 	5/06/2006
	7/01/1998

	 	$	6.88	 	 	 	25,001	 	 	7/01/2008
	8/12/2002

	 	$	4.95	 	 	 	26,999	 	 	8/12/2002
	5/02/2003

	 	$	3.92	 	 	 	19,999	 	 	5/02/2013

Options held for the benefit of Michele Buchanan:

	 	 	 	 	 	 	 	 	 	 	 
	Grant Date	 	Option Price	 	Options Exercisable	 	Date Last Exercise
	5/06/1996

	 	$	5.15	 	 	 	20,000	 	 	5/06/2006
	7/01/1998

	 	$	6.88	 	 	 	25,000	 	 	7/01/2008

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00077-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00077-of-00352.parquet"}]]