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Exhibit 10.16
CALIFORNIA MICROWAVE, INC.
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT is entered into as of May 18, 1998 (the "Effective
Date"), between CALIFORNIA MICROWAVE, INC., a Delaware corporation ("CMI") and
[Employee Name] (the "Employee").
RECITAL
The Employee serves as CMI's (Job Title). CMI and the Employee desire to set
forth the terms of the Employee's severance compensation if the Employee's
employment is ended as a result of a Change in Control. If a Change in Control
occurs, the Employee and other key employees may be more vulnerable to dismissal
or other negative consequences without regard to the quality of their past or
prospective service. The Board of Directors (the "Board") believes that it is in
the best interest of CMI and its stockholders to ensure fair treatment to CMI's
key employees and to reduce the adverse effects upon their performance that may
be caused by an acquisition or change in control.
The parties agree as follows:
1. Definitions. For purposes of this Agreement, the following terms will have
the meanings set forth below.
1.1 A "Change in Control" will occur if (a) any person, as that term
is used in Section 13(d) and 14(d)(2) of the Securities and
Exchange Act of 1934 (the 'Exchange Act.), other than CMI, is or
becomes the beneficial owner, as defined in Rule 13(d)(3) under
the Exchange Act, directly or indirectly (including by holding
securities which are exercisable for or convertible into shares
of capital stock of CMI), of 30 percent or more of the combined
voting power of the outstanding shares of capital stock of CMI
entitled to vote generally in the election of directors
(calculated as provided in Rule 13(d) under the Exchange Act in
the case of rights to acquire capital stock), whether by means
of a tender offer or exchange offer or open-market purchases or
a combination thereof; (b) a Transaction is consummated; (c)
Continuing Directors cease to constitute at least a majority of
the Board: or (d) a majority of the CMI's Outside Directors
determine that a Change in Control has occurred.
1.2 "Continuing Directors" shall mean the directors of CMI in office
on January 1, 1998 and any successor to any such director whose
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nomination or selection was approved by a majority of the
Continuing Directors in office at the time of the director's
nomination or selection and who is not an "affiliate" or
"associate" (as defined in Regulation 12B under the Securities
Exchange Act of 1934, as amended) of any person who is the
beneficial owner, directly or indirectly, of securities
representing ten percent (10%) or more of the combined voting
power of CMI's outstanding securities then entitled ordinarily
to vote for the election of directors.
1.3 "Disability" means that the Employee has met the qualifications
for CMI's long-term disability benefit.
1.4 "Good Reason" includes any of the following:
(a) the assignment to the Employee of duties inconsistent
with, or a substantial alteration in the nature or status
of, the Employee's responsibilities immediately before a
Change in Control;
(b) a reduction in the Employee's salary or other
benefits as in effect on the date of a Change in
Control;
(c) the Employee's relocation to a work site requiring an
increase in one-way commute from Employee's residence of
more than thirty-five (35) miles; or
(d) a breach by CMI of this Agreement if the breach has not
been cured within 30 days after written notice by the
Employee to CMI setting forth with specificity the nature
of the breach.
1.5 "Outside Director" is a member of CMI's Board of Directors who
is not, and who during the past six months was not, an employee
or officer of CMI.
1.6 "Termination for Cause" is termination of the Employee's
employment as a result of (a) the Employee's willful misconduct
or the Employee's dishonesty towards, fraud upon, crime against
or deliberate or attempted injury or bad faith action with
respect to CMI; or (b) the Employee's conviction for a felony
(whether in connection with CMI's affairs or otherwise).
1.7 "Termination Upon a Change in Control" is (a) termination by
the Employee of his employment for Good Reason within one year
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after the occurrence of a Change in Control; or (b) declination
by the Employee of an offer of employment from the buyer or the
newly created entity for Good Reason at the time of a Change in
Control if the Employee would not have been permitted to remain
in his/her existing position following such declination; or (c)
termination by CMI, the buyer or the newly created entity of
the Employee's employment within one year after the occurrence
of a Change in Control other than a Termination for Cause or a
termination resulting from the Employee's death or Disability.
The one-year period provided for herein shall be six months in
the event a Change in Control arises out of a Transaction
defined in Section 1.8 (c) hereof.
1.8 "Transaction" is (a) a consolidation or merger of CMI if the
shareholders of CMI immediately before the merger or
consolidation do not immediately after the merger or
consolidation own equity securities of the surviving or
acquiring corporation or a parent party possessing 50% or more
of the voting power of the surviving or acquiring corporation
or parent party; (b) a sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of 50
% or more of the assets of CMI; (c) the sale or other
disposition of business units other than the one in which the
Employee works within any 12-month period that contributed for
that 12-month period more than 45% of CMI's revenues; or (d)
the sale or spin-off by CMI of the division or business unit in
which the Employee works provided that, within thirty days
following such sale or spin-off, the Employee has not accepted
an offer to remain employed by CMI. The Transaction
requirements defined in parts (b) and (c) above shall
specifically exclude the sales of the Satellite Transmission
Systems and Microwave Networks divisions and their associated
assets, and the designated percentage thresholds (50% and 45%,
respectively) shall be calculated without including these two
divisions' assets or revenues in the base.
2. Term. If no Change in Control has occurred, this Agreement will expire on
December 31, 1999. If a Change in Control occurs prior to December 31,
1999, this Agreement will continue in effect, and will not terminate,
until either the Employee has received the severance compensation provided
for below or has ceased to be eligible for such compensation by reason of
there not having been a Termination Upon a Change in Control.
3. Termination Upon a Change in Control. If a Termination Upon a Change in
Control occurs, the Employee will immediately be paid all accrued salary,
bonus compensation to the extent earned, vested deferred compensation
(other than pension plan or profit sharing plan benefits, which will be
paid in accordance with the applicable plan), any benefits then due under
any plans of CMI in which the Employee is a participant, accrued vacation
pay
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and any appropriate business expenses incurred by the Employee in
connection with his duties, all to the date of termination ("Accrued
Compensation"). The Employee will also be entitled to the severance
compensation described in Section 4.
4. Severance Compensation. If a Termination Upon a Change in Control occurs,
CMI shall pay monthly severance compensation to the Employee for a period
ending 12 months after termination, or ending six months after termination
if the Termination Upon a Change in Control is by reason of a Transaction
defined in Section 1.8 (c), in an aggregate amount determined by adding
(a) the Employee's monthly base salary at the time of termination, (b) a
proportionate amount of the Employee's targeted bonus, determined by
multiplying the Employee's targeted bonus by the number of complete months
from the start of the then current fiscal year to the Employee's
termination date and dividing the product by 144, and (c) an amount equal
to the monthly `Perk Pot' benefit to which the Employee is entitled as an
officer of the company at the time of termination, and (d) the amount of
$2400.00 in lieu of other employee benefits (including health benefits)
the Employee was receiving from CMI. If the Employee becomes employed
prior to the expiration of the aforesaid twelve month period, or six
months if the Termination Upon a Change in Control is by reason of a
Transaction defined in Section 1.8 (c), the payments provided for in this
Section 4 shall cease as of the date of such employment; Employee agrees
to promptly notify CMI of any such employment and to reimburse CMI for any
payments made by CMI hereunder that cover any period during which the
Employee was employed.
5. Acceleration of Options. If a Termination Upon a Change in Control occurs,
all stock options and restricted stock held by the Employee immediately
before the termination will become fully vested and the stock options will
be exercisable for the periods specified with respect to termination of
employment in the plans covering the options.
6. Other Benefits. Neither this Agreement nor the severance compensation that
it provides for will reduce any amounts otherwise payable, or in any way
diminish the Employee's rights as an employee of CMI, whether existing now
or hereafter, under any benefit, incentive, retirement, stock option,
stock bonus or stock purchase plan or under any employment agreement or
other plan or arrangement, provided, however, that the rights granted to
the Employee and the obligations assumed by CMI under this Agreement will
be in lieu of, and not in addition to, any severance or other termination
payments to which the Employee may be entitled under any employment
agreement or other plan or arrangement that the Employee may now or
hereafter have with CMI.
7. Employment Status. This Agreement does not constitute a contract of
employment. It does not impose on CMI any obligation to retain the
Employee as an employee, to change the status of the Employee's employment
or to change CMI's policies regarding termination of employment.
8. Miscellaneous.
a. Severability. If a court or other body of competent jurisdiction
determines
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that any provision of this Agreement is invalid or unenforceable, that
provision will be adjusted rather than voided, if possible, so that it
is enforceable to the maximum extent possible, and all other
provisions of the Agreement will be deemed valid and enforceable to
the fullest extent possible.
b. Withholding. Compensation and benefits to the Employee under this
Agreement will be reduced by all federal, state, local and other
withholdings or similar taxes as required by applicable law.
c. Arbitration. The parties will submit all controversies, claims and
matters of difference in any way related to this Agreement, its
performance or breach, to arbitration in San Francisco, California,
according to the rules and practices of the American Arbitration
Association from time to time in effect. Any awards in such arbitration
shall be final and binding on all parties. The arbitrators shall
allocate the costs of the arbitration in such manner as they deem
equitable. The arbitrators may require the reimbursement of all or a
portion of the reasonable legal fees incurred by the prevailing party
in the arbitration proceeding and any legal proceedings which are taken
to enforce the arbitral award.
d. Entire Agreement: Modifications. This Agreement is the entire agreement
between the parties with respect to the matters covered hereby, and may
be amended, modified, superseded or canceled, or its terms waived, only
by a written instrument executed by each party or, in the case of a
waiver, by the party waiving compliance. Failure of a party at any time
to require performance of any provision of this Agreement will not
affect the right at a later time to enforce the same. No waiver of a
breach of this Agreement, whether by conduct or otherwise, in any one
or more instances will be construed as a further or continuing waiver
of the breach or of any other term of this Agreement. This Agreement
shall inure to the benefit of and be binding upon the successors and
assigns of the parties hereto.
e. Confidential Information. The Employee agrees not to disclose, either
while in the Company's employ or at any time thereafter, to any person
not employed by CMI any confidential information obtained while in the
employ of CMI (including, without limitation, any of CMI's inventions,
processes, methods of distribution, customers or trade secrets). This
shall not preclude the Employee from the use or disclosure of
information known generally to the public or from making disclosures
required by law or court order.
f. Applicable Law. This Agreement will be construed under and governed by
the laws of the State of California without regard or reference to the
rules of conflicts of law that would require the application of the
laws of any other jurisdiction.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
CALIFORNIA MICROWAVE, INC.
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Xxxxxxxxx X. Xxxxxxxx (Employee Name)
Chairman and Chief Executive Officer (Job Title)
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