Document:

v136496_10-1.htm

     

    EXHIBIT
10.1

    
      

      Separation
Agreement between C. David Bowers and Nu Horizons Electronics Corp.

      dated
as of December 5, 2008.

      

      December
5, 2008

      

      

      

      Charles
David Bowers

      1760 Dean
Street

      Brooklyn,
NY  11233

      

      Dear
David:

      

      This will
confirm our discussion about your separation from employment with Nu Horizons
Electronic Corp. (the "Company") on mutually agreeable terms as set forth below.
You and the Company agree that this Agreement represents the full and complete
agreement concerning your separation from employment with the
Company.

      

      1.      Last Day
of Work.  You hereby resign as an executive officer of the
Company effective as of the date you sign this Agreement. You will continue to
serve as an employee of the Company through and including your last day of
work  on April 3, 2009.  At that time, you must return any
and all Company property including, but not limited to, documents, electronic
files, cell phones, blackberries, credit cards, keys, etc.   You
agree that you will not keep copies of the Company's property, its documents or
any of its confidential or proprietary information and if you have any of the
foregoing as of your last day of work, you will return the same to the
Company.

      

      2.      Transition.  You
agree that between December 8, 2008 and April 3, 2009, you will be available,
upon no more than two (2) business days’ notice, to respond to questions and to
provide assistance to the Company, whether by telephone or in person, concerning
all matters you worked on during your employment.  During that period,
you will receive salary of an aggregate $135,217.75.  Initially, you
will receive a lump sum payment of $27,661.52 on the eighth (8th) day after you
originally signed the Agreement providing you have not revoked the
Agreement.  Then, providing you have not revoked the Agreement,
effective for the week of December 12, 2008 and ending on April 3, 2009, you
will receive payments in accordance with Nu Horizon’s regular payroll practices
for executive employees at a rate of pay of $6,326.84 per week; however, the
first weekly payment shall be payable at the same time as the lump sum payment
described in the preceding sentence.

      

      3.      Severance.  Providing
this Agreement becomes effective and you abide by its terms, you will receive
$189,805.20, representing thirty (30) weeks of salary at a rate of pay of
$6,326.84 per week (the “Severance Payments”).  The Severance Payments
shall be made in accordance with Nu Horizon’s regular payroll practices for
executive employees.

      

      4.      Withholding
on Payments.  Taxes and other withholding amounts, as required
by law, will be deducted from all payments to you.

      

      5.      Benefits.  Your
employee benefits (including medical, dental, vision, group life insurance,
short and/or long term disability insurance, 40IK, and life insurance) shall end
on March 31, 2009; however, to the extent that you own any then-exercisable
options to purchase shares of the Company’s common stock, you may still exercise
them to the extent permitted by the terms of such options and the stock
incentive plan(s) under which they were granted.  After your
Company-provided benefits end, you may continue medical, dental and
hospitalization insurance coverage at your own expense pursuant to a federal law
known as COBRA.   Information on COBRA has been mailed to
you.  Provided that you sign this Agreement, the Company will pay your
medical, dental and hospitalization insurance coverage through COBRA through and
including October 31, 2009.  At that time you will be able to continue
your coverage at your own expense for an additional twelve (12)
months.  To be eligible for such coverage, you must complete the COBRA
enrollment forms and return them as soon as possible.

      

      6.      Acknowledgments.  You
understand and agree that without this agreement, you would not otherwise be
entitled to the payments and benefits specified in paragraphs 3 and
5.   Further, by signing this Agreement, you agree that you are
not entitled to any other payments and/or benefits that are not specifically
listed in this Agreement.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      7.      General
Release of All Claims.  In exchange for the payments and
benefits outlined above and the Company's promises set forth in this Agreement,
on behalf of yourself (and your heirs, successors and assigns), you hereby
release the Company, and any and all of its respective subsidiaries, affiliates,
divisions and each of its respective officers, managers, owners, attorneys,
employees, agents, successors and assigns, including, but not limited to, Arthur
Nadata and Richard Schuster, as well as their respective  heirs,
successors and  assigns (hereinafter collectively
"Releasees"),  from any and  all  legal, equitable
or other claims, counterclaims, demands, setoffs, defenses, contracts, accounts,
suits, debts, agreements, actions, causes of action, sums of money, reckonings,
bonds, bills, specialties, covenants, promises, variances, trespasses, damages,
extents, executions, judgments, findings, controversies and disputes, and any
past, present or future duties, responsibilities, or obligations, existing from
the beginning of the world through the date hereof, which are now known or
unknown, including but not limited to the following:

      

      
        	
                 
      

              	
                a.

              	
                any
      and all  such claims or counterclaims alleging or sounding in
      discrimination, harassment, retaliation, failure to accommodate, breach of
      contract, breach of any implied covenant of good faith, piercing the
      corporate veil, whistleblowing, corporate fraud, accounting, tort,
      defamation, libel, slander, injurious falsehood, public policy, assault,
      battery, intentional or negligent infliction of emotional distress,
      attorneys' fees, indemnification, and all claims for compensatory,
      punitive, and liquidated damages;
and

              

      

      

      
        	
                 
      

              	
                b.

              	
                any
      and all claims under any and all federal, state or local laws including,
      but not limited to claims under the fair employment practice laws or other
      employment related laws of the United States, New York and all
      jurisdictions, states, municipalities and localities, including, but not
      limited to Title VII of the Civil Rights Act of 1964, as amended, 42
      U.S.C. §§2000e et  seq., the Civil Rights Act of 1991; the Age
      Discrimination in Employment Act, 29 U.S.C. §§621-634; the Americans with
      Disabilities Act of 1990, 42 U.S.C. §§ 12101 et seq., and the Family and
      Medical Leave Act of 1993, 29 U.S.C. §§ 2601 ct seq., the Civil Rights Act
      of 1866. 42 U.S.C.  §§ 1981, the Worker Adjustment and
      Retraining Notification Act, 29 U.S.C. §§ 2101 et seq., the Sarbanes Oxley
      Act of 2002, the National Labor Relations Act, 29 U.S.C.  § 151,
      et seq., the Fair Labor Standards Act, 29 U.S.C. §§201, et seq., the
      Employee Retirement Income Security Act of 1974, 29 U.S.C. §§1001-1461,
      New York Labor Law, the New York State Human Rights Law, the New York
      Executive Law §290 et seq., and the New York Worker's Compensation Law;
      and

              

      

      

      
        	
                 
      

              	
                d.

              	
                any
      and all claims under all other employee relations, labor, corporate and
      commercial statutes, executive orders, laws, rules and/or regulations;
      and

              

      

      

      
        	
                 
      

              	
                e.

              	
                any
      and all claims for wages, bonuses, commissions, vacation pay, employee
      fringe benefits, reimbursement of expenses, monetary and/or equitable
      relief, punitive and compensatory relief, and/or attorneys' fees and/or
      costs.

              

      

      

      8.      Confidential
Information.  You agree that you shall not publish, use or
disclose Confidential Information to any entity, organization or
person.  "Confidential Information" means any and all information,
whether written or verbal, (other than information that is public knowledge or
readily available to the public), which relates to the business operations,
products, computer software data, documentation, processes, business plans,
purchasing, marketing, customers, prospective customers, trade secrets, finances
or suppliers of the Company, including, but not limited to the following (a)
financial information and data; (b) information pertaining to personnel and
compensation; (c) marketing plans and related information; (d) the names,
addresses, contact information and practices of customers, prospective
customers, vendors and suppliers; (e) business methods, techniques, plans,
computer programs and files, know-how, improvements, trade secrets, concepts or
writings; (f) any data relating to business contacts, vendor lists or supplier
matters; (g) any technical data, marketing and business data, pricing and cost
information, business and marketing plans; (h) any information that the Company
has received from a third party and is obligated to treat as confidential; (i)
all other confidential information of, about, or concerning the Company and (j)
all analyses, compilations, forecasts, studies and other documents by whomsoever
prepared which contain any of the foregoing information or data.

      

      9.      Restrictive
Covenants.  Through and including October 31, 2009, you agree
that you shall not directly or indirectly (a) have an ownership interest in,
manage, operate, control, solicit business or otherwise be involved the
management, operation, or control of any Competitive Business; (b) perform any
work or services (either as an employee, independent contractor or consultant)
for any Competitive Business; (c) solicit or accept business from or perform any
work or services for (either as an employee, independent contractor or
consultant), any Customer, Supplier, Potential Customer or Potential Supplier;
(d) solicit, induce, or attempt to induce any Customer, Potential Customer,
Supplier or Potential Supplier  to do business with any Competitive
Business; or (e) solicit, encourage, induce or attempt to induce any employee of
the Company to leave his or her employment.

      

      For
purposes of this Agreement, (a) “Competitive
Business” means any business entity that (i) distributes advanced
technology semiconductor, display, illumination, power and system solutions to
commercial original equipment manufacturers (OEMs) and electronic manufacturing
services providers (EMS); and (ii) designs, manufactures and sells passive
components; (b) “Customer” means a
person or entity to whom the Company has sold product or performed services
during the two-year period prior to your last day of work; (c)
“Supplier”  means a person or entity from whom the Company has sold or
purchased product or services during the two-year period prior to your last day
of work and (d) “Potential Customer ”
or “Potential Supplier” means a person or entity to whom the Company submitted a
proposal for the sale or purchase of products or services, as the case may be,
during said two year period.

       

      
        
          
          

        

        
          - 2
-

          
            

          

        

        
          
          

        

      

      

      10.   
Claims/Potential
Litigation.  At the Company’s request, you agree to cooperate
fully with the Company in any litigation, administrative proceeding,
investigation or inquiry that involves the Company about which you may have
knowledge or information, including, but not limited to, the U.S. Securities and
Exchange Commission's ("SEC") investigation entitled "In the Matter of Vitesse
Semiconductor" and the related internal investigation being conducted at the
direction of the Company's Audit Committee.  This cooperation will
include, but not be limited to, the following:  (1) if you are asked
to appear for an interview, you will do so within five (5) business days of the
request; (2) you will answer all questions truthfully concerning the Company and
your work for the Company; (3) you will produce all non-privileged documents you
are asked to produce; (4) you will appear for depositions and/or at trial
related to any claim, action or litigation in which the Company is, or may
become, a party; and (5) you will meet with representatives of the Company
and/or its counsel to assist in preparation for such depositions and/or
trials.  If you are participating at the Company’s request and legal
counsel is required, the Company will provide such legal counsel pursuant to the
April 28, 2008 letter signed on November 19, 2008 with effective date as of
April 28, 2008 regarding counsel fees, and then, only to the extent permissible
by law.

      

      You
hereby represent and agree that you will fully cooperate with, and provide
truthful testimony in, any governmental investigation involving the Company or
your employment with the Company.  Furthermore, nothing in this
Agreement shall prohibit you from responding to a valid subpoena or court order
provided that you notify the Company of such subpoena or court order within two
(2) business days of receipt in order to allow the Company an opportunity to
seek a protective order or other relief limiting or barring such
disclosure.

      

      11.   
Subsequent
Discoveries.  As part of this Agreement, you represent and
warrant that you have not knowingly participated in any violation of law or
regulation in the course of performing services for the Company.  In
the event that the Company discovers that, in the course of your performance of
services for the Company, you knowingly committed or knowingly participated in
any violation of law or regulation, you agree and undertake to repay to the
Company all monies paid to you pursuant to paragraph 3 of this Agreement, and
you further waive and forfeit any claim for any monies still due and payable to
you pursuant to paragraph 3.  In the event that the SEC or any other
United States or foreign criminal or regulatory authority files criminal, civil,
administrative or other regulatory proceedings against you for any reason
related to your performance of services for the Company, you acknowledge and
agree that such action will suspend and toll any further obligations that the
Company may have under this Agreement.  Such suspension or tolling
shall remain in effect pending final resolution, including final exhaustion of
any appellate remedies in such proceedings.  In the event that you are
convicted of or plead nolo contendere to a crime or subject to a finding by a
regulatory authority (including, but not limited to, the SEC) that you violated
U.S. laws or regulations or the laws or regulations of a foreign country in the
course of your performance of services for the Company, then: (1) the Company
shall be relieved of all of its obligations under this Agreement; (2) you agree
and undertake to repay to the Company all monies paid pursuant to Paragraph 3
herein, excluding any monies previously repaid; and (3) you further waive and
forfeit any claim for any monies still due and payable and any benefits to be
provided under this Agreement.

      

      12.   
Non-admission
of Wrongdoing.  By entering into this Agreement, neither you
nor the Company, its owners, parents, subsidiaries, affiliates, officers,
managers, employees or agents, admit any wrongdoing or violation of
law.

      

      13.   
Changes
to the Agreement. This Agreement may not be changed unless the changes
are in writing and signed by you and an authorized representative of the
Company.

      

      14.   
Jurisdiction
and Applicable Law.  This Agreement arises out of employment
within the State of New York and it shall in all respects be interpreted,
enforced and governed under the laws of the State of New York.

      

      15.   
Entire
Agreement.  This Agreement contains the entire agreement
between you and the Company relating to your employment and termination of your
employment and replaces any prior agreements or understandings between you and
the Company relating to your employment or separation.

      

      16.   
Waiver.
By signing this Agreement, you acknowledge that:

       

      
        
          	 	      
                  a)

                	      
                  You
      have carefully read, and understand, this
  Agreement;

                
	 	 	 
	
                   
      

                	
                  b)

                	
                  You
      have been given at least 21 days to consider your rights and obligations
      under this Agreement and to consult with an
  attorney;

                

        

      

       

       

      
        
          
          

        

        
          - 3
-

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                c)

              	
                You
      have been advised to consult with an attorney and/or any other advisors of
      your choice before signing this
Agreement;

              

      

      

      
        	
                 
      

              	
                d)

              	
                You
      understand that this Agreement is LEGALLY BINDING and by signing it you
      give up certain rights;

              

      

      

      
        	
                 
      

              	
                e)

              	
                You
      have voluntarily chosen to enter into this Agreement and have not been
      forced or pressured in any way to sign
it;

              

      

      

      
        	
                 
      

              	
                f)

              	
                You
      knowingly and voluntarily release the Company and its parents,
      subsidiaries, affiliates, officers, directors, agents, or employees from
      any and all claims you may have, known or unknown, in exchange for the
      payments and benefits you have obtained by signing, and that these
      payments and benefits are in addition to any benefit you would have
      otherwise received if you did not sign this
  Agreement;

              

      

      

      
        	
                 
      

              	
                g)

              	
                The
      General Release in this Agreement includes a WAIVER OF ALL RIGHTS AND
      CLAIMS you may have under the Age Discrimination In Employment Act of 1967
      (29 LJ.S.C. §621 et seq.); and

              

      

      

      
        	
                 
      

              	
                h)

              	
                This
      Agreement does not waive any rights or claims that may arise after this
      Agreement is signed and becomes
effective.

              

      

      

      17.   
Return Of
Signed Agreement.  You should return the signed Agreement to
Nancy Lieberman, Esq., at Farrell Fritz, P.C., 1320 RexCorp Plaza, Uniondale,
New York no later than December 12, 2008.

      

      18.    Effective
Date. You have seven (7) days from the date you sign this Agreement to
change your mind. If you change your mind, you must send written notice of your
decision to me at 70 Maxess Road, Melville, New York 11747, so that I RECEIVE your revocation no
later than the eighth (8th) day after you originally signed the Agreement. You
should understand that the Company will not be required to provide the payments
and benefits set forth in paragraphs 3 and 6 unless this Agreement becomes
effective.

       

      
        
          	 
      	 	
                  Very
      truly yours,

                
	 
      	 	 
      
	 
      	 	/s/
      Arthur
      Nadata                                            
      
	 
      	 	
                  Arthur
      Nadata, Chairman & CEO

                
	 
      	 	 
      
	
                  Agreed
      and Accepted:

                	 	 
      
	 
      	 	 
      
	 
      	 	 
      
	
                        
                    /s/
      C. David
      Bowers                                        
      

                  

                	 	
                                    
      12 - 5 -
      08                              
              

                
	
                  Charles
      David Bowers

                	 	
                  Date

                
	 
      	 	 
      
	 
      	 	 
      
	
                  STATE
      OF    New
      York                                  
      

                	

                  )

                	
                
	 
      	

                  :
      ss.:

                	
                
	
                  COUNTY
      OF  Suffolk                                     
      

                	

                  )

                	
                   

                

        

         

      

      On the
5th day of December, 2008 before me personally came Charles David Bowers, to me
known and known to me to be the individual described in, and who executed, the
above Agreement, and duly acknowledged to me that he executed the
same.

       

       

      /s/
Julie A.
Augustine                                 

              Notary
Public

       

       

      - 4
-v136496_10-2.htm

     

    EXHIBIT
10.2

    

    Compensation
of Outside Directors

    

    In
connection with a reduction in compensation payable to certain of the Company’s
employees, including its executive officers, at a meeting held on January 7,
2009, the Board of Directors of the Company approved a reduction of 10% to the
cash compensation of its non-employee directors effective as of January 19,
2009. Consequently, effective January 19, 2009 until the elimination of the
salary reduction for employees, the cash compensation payable to the outside
directors will be as follows:

    

    	
        the
  amount of the per meeting fee for in-person Board of Directors meetings will
  be $1,440;

      
	
        the
  amount of the per meeting fee for in-person Committee meetings will be
  $1,080;

      
	
        the
  amount of the per meeting fee payable for telephonic meetings of the Board of
  Directors or a Committee lasting one hour or less is fixed at 50% of the per
  meeting for a Board of Directors or Committee meeting, as applicable;
  and

      
	
        the
  amount of the compensation payable to the members of any Special Committee, if
  and when such a Committee is needed, will be $4,500 per month for the Special
  Committee Chairman, $2,250 per month for the Special Committee Vice-Chairman,
  and $1,800 per meeting for all members of the Special Committee. The
  additional compensation will be discontinued when any Special Committee
  project is suspended or concluded.

      

    In
addition, in the event that the compensation reduction is still in effect on
March 1, 2009, which is the commencement of the Company’s fiscal 2010 and the
time at which the annual cash retainers are paid to the non-employee directors,
the annual cash retainers will similarly be decreased, as follows:

    

    	
        the
  annual cash retainer payable for Company Board-level (as opposed to
  Committee-level) service will be $27,000;

      
	
        the
  annual cash retainer payable to the chairman of the Audit Committee will be
  $10,800; and

      
	
        the
  annual cash retainer payable to the chairman of the Compensation Committee
  will be $9,000.

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