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EXHIBIT 10.22
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT is entered into as of March 20, 1997 (the "Effective
Date"), between CALIFORNIA MICROWAVE, INC., a Delaware corporation ("CMI") and
______________ (the "Employee").
RECITAL
The Employee serves as CMI's Chief Financial Officer, Vice President and
Secretary. 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, 1997 and any successor to any such director whose
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
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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 after the
occurrence of a Change in Control; or (b) termination by CMI 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
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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; or (c) the sale or other disposition
of business units within any 12-month period that contributed
for that 12-month period more than 45% of CMI's revenues.
2. Term. If no Change in Control has occurred, this Agreement will expire
one year from its Effective Date. If a Change in Control occurs within
one year of such Effective Date, 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 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 $2,080.00 in lieu of other employee
benefits (including health benefits) the Employee was receiving from
CMI. If the Employee become 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
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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 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
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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.
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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Xxxxxxx X. Xxxxxxx
President and Chief Operating Officer
