CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT, dated February 23, 1998, by and between: C-COR ELECTRONICS,
INC., a Pennsylvania corporation (the "Company"),
-AND-
Xxxx X. Xxxxxxxxx (the "Employee").
Recital
A. Employee is an executive of the Company with significant policy-making
and operational responsibilities in the conduct of its business.
B. The Company recognizes that Employee is a valuable resource for the
Company and the Company desires to be assured of the continued service of
Employee.
C. The Company is concerned that upon a possible or threatened change in
control Employee may have concerns about the continuation of his employment
and/or his status and responsibilities and may be approached by others with
employment opportunities, and desires to provide Employee some assurance as to
the continuation of his employment status and responsibilities on basis
consistent with that which he has earned in the event of such possible or
threatened change in control.
D. The Company desires to assure that if a possible change of control
situation should arise and Employee should be involved in deliberations or
negotiations in connection therewith that Employee would be in a secure position
to consider and/or negotiate such transaction as objectively as possible and
without implied threat to his financial well-being.
E. The Company is concerned about the possible effect on Employee of the
uncertainties created by any proposed change in control of the Company.
F. Employee is willing to continue to serve but desires that in the event
of such a change in control he will continue to have the responsibility, status,
income, benefits and perquisites that he received immediately prior to that
event.
Agreements
The parties do hereby agree as follows:
1. Change of Control. The provisions of Section 2 and 3 of this Agreement
shall become operative upon a change in control of the Company, as hereinafter
defined. For purposes of this Agreement, a "change in control" shall be deemed
to have occurred if and when:
(a) Subsequent to the date of this Agreement, any person or group of
persons acting in concert shall have acquired ownership of or the right to vote
or to direct the voting of shares of capital stock of the Company representing
30% or more of the total voting power of the Company, or
(b) The Company shall have merged into or consolidated with another
corporation, or merged another corporation into the Company, on a basis whereby
less than 50% of the total voting power of the surviving corporation is
represented by shares held by former shareholders of the Company prior to such
merger or consolidation, or
(c) The Company shall have sold more than 50% of its assets to another
corporation or other entity or person, or
(d) As the result of, or in connection with, any cash tender or exchange
offer, merger or other business combination, sale of assets or contested
election, the persons who were Directors of the Company before such transaction
cease to constitute a majority of Directors of the Company.
2. Termination Within Eighteen (18) Months. In the event that the
employment of Employee with the Company is terminated involuntarily within
eighteen (18) months after a change in control occurs:
(a) Employee shall be entitled to receive an amount of cash equal to the
sum of the following amounts:
(i) two (2) times his annual salary at his rate on the date of termination
of employment (but not less than two times Employee's annual salary prior to the
change of Control); and
(ii) two (2) times the Company's annual 401(k) retirement plan contribution
at the Employee's contribution rate on the termination of his employment (but
not less than the amount the company was matching prior to Change of Control)
(subject to applicable limitations of the Internal Revenue Code, which may
dictate that such amount shall not be added to the retirement plan but shall be
paid in cash). The sum of these amounts shall be paid in equal monthly
installments over a period of twenty-four (24) months, the first such
installment to be paid within ten (10) days after Employee's termination of
employment.
(b) Employee shall be entitled to receive an amount of cash equal to two
times the average of the Profit Incentive Plan ("PIP") payments of the last two
years awarded to him under the PIP of the company, pursuant to the terms of such
Plan as in effect immediately prior to such change of control. Such amount will
be paid to the Employee within ten (10) days after termination of employment.
(c) Employee shall continue for a period of 24 months from the date of his
termination to be covered at the expense of the Company by the same or
equivalent health, dental, accident, life and disability insurance coverages as
he was enrolled in immediately prior to termination of his employment; provided,
however, that the Employee may elect to be paid in cash within thirty (30) days
after termination of his employment an amount equal to the Company's cost of
providing such coverages during such period.
(d) If on the date of termination of employment, Employee were a
participant in the Company's Supplemental Retirement Plan, Employee shall become
eligible for the benefits payable under such Plan and such benefits shall be
paid to Employee, or, if applicable, Employee's beneficiary, in the same manner,
amounts and intervals as if Employee had, on the date of his termination of
employment following a change of control, retired from employment with the
Company. If Employee has not attained age fifty-five (55) on the date of his
termination of employment due to a change of control, Employee shall be deemed
to have attained age fifty-five (55) for the purpose of determining his
eligibility for benefits under the Supplemental Retirement Plan, and only for
this purpose.
(e) All outstanding options held by Employee, both exercisable and
nonexercisable, shall be immediately exercisable regardless of the time the
option has been held by Employee and shall remain exercisable until their
original expiration date, subject to applicable requirements of the Internal
Revenue Code.
3. Other Events. If Employee resigns from the Company within eighteen (18)
months of a change of control, Employee shall be entitled to receive all
payments and enjoy all of the benefits specified in Section 2 hereof should one
or more of the following events occur within eighteen (18) months following a
change in control:
(a) If Employee determines that there has been a significant change in his
responsibilities or duties with the Company and, for that reason, Employee
resigns from the Company; or
(b) If the base salary paid by the Company to Employee is reduced by more
than ten (10%) percent from his salary immediately prior to the change in
control; or
(c) If the Company requires Employee to relocate his principal place of
work to a location more than forty (40) miles from the Employee's former place
of work.
4. Agreements Not Exclusive. The specific agreements referred to herein are
not intended to exclude Employee's participation in other benefits available to
executive personnel generally or to preclude other compensation benefits as may
be authorized by the Board of Directors of the Company at any time, and shall be
in addition to the provisions of any other employment or similar agreements.
5. Enforcement Costs. The Company is aware that upon the occurrence of a
change in control the Board of Directors or a shareholder of the Company may
then cause or attempt to cause the Company to refuse to comply with its
obligations under this Agreement, or may cause or attempt to cause the Company
to institute, or may institute, litigation seeking to have this Agreement
declared unenforceable, or may take, or attempt to take, other action to deny
Employee the benefits intended under this Agreement. In these circumstances, the
purpose of this Agreement could be frustrated. It is the intent of the company
that Employee not be required to incur the expenses associated with the
enforcement of his rights under this agreement by litigation or other legal
action because the cost and expense thereof would substantially detract from the
benefits extended to Employee hereunder, nor be bound to negotiate any
settlement of his rights hereunder under threat of incurring such expenses.
Accordingly, if following a change of control, it should appear to Employee that
the Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes any action
to declare this Agreement void or unenforceable, or institutes any litigation or
other legal action designed to deny, diminish or to recover from Employee the
benefits intended to be provided to Employee hereunder and that Employee has
complied with all reasonable obligations related to Employee's employment with
the Company, the Company irrevocably authorizes Employee from time to time to
retain counsel of his choice at the direct expense and liability of the company
as provided in this Section 5, to represent Employee in connection with the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any director, officer, shareholder or other person
affiliated with the Company, in any jurisdiction. Notwithstanding any existing
or prior attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to Employee entering into an attorney-client
relationship with such counsel, and in that connection the Company and Employee
agree that a confidential relationship shall exist between Employee and such
counsel. The reasonable fees and expenses of counsel selected from time to time
by Employee as hereinabove provided shall be paid or reimbursed to Employee by
the Company on a regular, periodic basis upon presentation by Employee of a
statement or statements prepared by such counsel in accordance with its
customary practices up to a maximum aggregate amount of $500,000, said amount to
be "grossed up", to cover federal and state income taxes. The amount of the
gross up shall be calculated in accordance with the following formula: A/ (1-R),
where A is the amount of legal fees and R is the combined highest marginal tax
rate applicable to employee in the tax year that the payment is made.
6. No Set-off. The Company shall not be entitled to set-off against the
amount payable to Employee any amounts earned by Employee in other employment
after termination of his employment with the Company, or any amounts which might
have been earned by Employee in other employment had he sought other employment.
The amounts payable to Employee under this Agreement shall not be treated as
damages but as severance compensation to which Employee is entitled by reason of
termination of his employment in the circumstances contemplated by this
Agreement. However, a set-off may be taken by the Company against the amounts
payable to Employee for expenses covering the same or equivalent hospital,
medical, accident, and disability insurance coverages as set forth in Section
2(c) of this Agreement if such benefit is paid for the Employee by the Employer
to which the Employee may join after termination by the Company or after
resignation as defined in Section 3 of this Agreement.
7. Termination. This Agreement has no specific term, but shall terminate
if, prior to a change in control of the Company, the employment of Employee with
the Company shall terminate, so long as such termination was not in anticipation
of or related to Change of Control.
8. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Company and its successors and assigns, and shall be
binding upon and inure to the benefit of Employee and his legal representatives,
heirs, and assigns.
9. Severability. In the event that any section, paragraph, clause or other
provision of this Agreement shall be determined to be invalid or unenforceable
in any jurisdiction for any reason, such Section, paragraph, clause or other
provision shall be enforceable in any other jurisdiction in which valid and
enforceable and, in any event, the remaining Sections, paragraphs, clauses and
other provisions of this Agreement shall be unaffected and shall remain in full
force and effect to the fullest extent permitted by law.
10. Governing Law. This Agreement shall be interpreted, construed and
governed by the laws of the Commonwealth of Pennsylvania.
11. Headings. The headings used in this Agreement are for ease of reference
only and are not intended to affect the meaning or interpretation of any of the
terms hereof.
12. Gender and Number. Whenever the context shall require, all words in
this Agreement in the male gender shall be deemed to include the female or
neuter gender, all singular words shall include the plural, and all plural words
shall include the singular.
IN WITNESS WHEREOF, this Agreement has been executed the date and year
first above written.
ATTEST:
C-COR ELECTRONICS, INC.
Xxxxx X. Childs By: Xxxxx X. Xxxxxxxx
President and CEO
X. X. XXXXXXXXX 2/23/98
Employee
