Exhibit 10(a)
AGREEMENT dated October 9, 2001 between Comtech Telecommunications Corp.
(the "Company") and Xxxx Xxxxxxxx ("Xxxxxxxx").
Kornberg is presently Chairman of the Board of Directors, President and
Chief Executive Officer of the Company and is employed pursuant to an Agreement
dated August 20, 1992, as amended (the "Employment Agreement"). The Company and
Kornberg desire to extend the term of Kornberg's employment and effect certain
other changes.
Accordingly, the Company and Kornberg hereby amend and restate the
Employment Agreement to read in its entirety as follows:
1. The Company hereby employs Kornberg as general manager and chief
executive officer of its business for the period (hereinafter referred to as the
"Employment Period") commencing the date hereof and, except as otherwise
provided in Paragraph 6 hereof, terminating on August 31, 2003; provided,
however, that the Employment Period shall be automatically extended (subject to
Paragraph 6) for successive two-year periods unless either party hereto gives
notice of non-extension to the other at least six months in advance of the then
scheduled termination date. Kornberg shall have supervision over the business
and affairs of the Company and its subsidiaries, shall report and be responsible
only to the Board of Directors of the Company, and shall have powers and
authority superior to those of any other officer or employee of the Company or
any of its
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subsidiaries. Kornberg accepts such employment and agrees to devote his full
time and effort to the business and affairs of the Company and, subject to his
election as such, to serve as a director and as Chairman of the Board and
President of the Company. He shall not be required to relocate his residence or
to perform services which would make the continuance of such residence
inconvenient to him.
2. The Company shall pay to Kornberg, for all services rendered by him
during the Employment Period, compensation as follows:
(a) Salary ("Base Salary") at the annual rate of $385,000, commencing the
date hereof, plus such additional amounts, if any, as the Board of Directors may
from time to time determine, payable in accordance with the Company's current
practice.
(b) Incentive compensation ("Incentive Compensation") for each fiscal year
in which any part of the Employment Period falls in an amount (not to exceed
Kornberg's Base Salary for such fiscal year) equal to 3.5% of the Company's
Pre-Tax Income for each such fiscal year, plus such additional amounts, if any,
as the Board of Directors may from time to time determine; provided, however,
that if the Employment Period terminates other than at the end of a fiscal year,
Incentive Compensation shall be based upon the Company's Pre-Tax Income for the
then current fiscal year through the most recent fiscal quarter ended prior to
such termination. For purposes of this Paragraph 2(b):
(i) The Company's "Pre-Tax Income" for any fiscal year or period
shall be the consolidated earnings of the Company and its subsidiaries for such
fiscal year or period, as determined by the independent accounting firm employed
by the
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Company as its regular auditors in accordance with generally accepted accounting
principles applied on a consistent basis, before (i) any extraordinary item,
(ii) provision for federal, state or municipal income taxes thereon and (iii)
provision for any Incentive Compensation payable to Kornberg hereunder.
(ii) Incentive Compensation payable with respect to any fiscal year
shall be paid to Kornberg promptly after completion of the Company's audited
year-end financial statements for such fiscal year, or promptly after completion
of the relevant unaudited quarterly statements, as the case may be. If Kornberg
voluntarily terminates his employment with the Company other than as permitted
by Section 6(b) of this Agreement, or if the Company terminates his employment
for cause as defined in paragraph 6(a) hereof, Kornberg shall forfeit his right
to receive any Incentive Compensation accrued but unpaid in accordance with this
Section 2(b)(ii).
3. During the Employment Period, Kornberg shall be entitled to participate
in, and receive benefits in accordance with, the Company's employee benefit
plans and programs at the time maintained by the Company for its executives,
subject to the provisions of such plans and programs.
4. During the Employment Period, Kornberg shall be entitled to receive
reimbursement for all expenses reasonably incurred by him in connection with his
duties hereunder in accordance with the usual procedures of the Company.
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5. (a) The Company shall obtain (subject to Kornberg's insurability) and
keep in full force and effect during the Employment Period, at its own cost and
expense, insurance covering Kornberg's life in the amount of $1 million plus
such additional amounts, if any, as the Board of Directors may from time to time
determine, payable to his estate or such other person or persons as he may from
time to time direct.
(b) In addition to the insurance provided for in Paragraph 5(a)
hereof, the Company, in its discretion, and at its own cost and expense, may
also obtain insurance covering Kornberg's life in such amount as it considers
advisable, and Kornberg agrees to cooperate fully to enable the Company to
obtain such insurance.
6. The Employment Period may be terminated only as follows:
(a) By action of the Board of Directors of the Company, upon notice
to Kornberg, if during the Employment Period Kornberg shall fail to render the
services provided for hereunder for a continuous period of 12 months because of
his physical or mental disability, or for cause, which shall mean the commission
of acts of willful malfeasance or gross negligence materially and adversely
affecting the Company's business.
(b) By Kornberg, on ten days notice to the Company, at any time
during the Employment Period after a Change in Control of the Company, as
defined in Paragraph 7(d) hereof, occurs.
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7. If Kornberg terminates the Employment Period in accordance with
Paragraph 6(b) hereof, the following provisions shall apply:
(a) Subject to Paragraph 7(c) hereof, the Company shall pay to
Kornberg, within 30 days after the effective date of the termination (the
"Effective Date"), a lump sum equal to:
(i) the greater of (x) Kornberg's Base Salary, at the rate in
effect at the time such notice is given, for the full unexpired term of the
Employment Period, or (y) three times Kornberg's Base Salary then in effect;
plus:
(ii) the amount of any Incentive Compensation accrued with
respect to any fiscal year ended prior to the Effective Date but unpaid; plus
(iii) if and to the extent Kornberg so elects, an amount equal
to (x) the number of shares of Common Stock of the Company subject to
unexercised options held by Kornberg at the Effective Date, multiplied by (y)
the difference between the weighted average exercise price of such options and
the per share fair market value of the Common Stock at the Effective Date,
against surrender to the Company of all options (and any related stock
appreciation rights) relating to the Common Stock held by Kornberg at the
Effective Date and elected by him to be treated in accordance with this Section.
The per share fair market value of the Common Stock as of a date, for purposes
of this provision, shall be the mean of the high and low bid and asked prices of
the Common Stock, if then traded in the over-the-counter market, or the mean of
the high and low closing prices of the Common Stock, if then traded on the
National Market System of the
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National Association of Securities Dealers Automated Quotations System or on a
national securities exchange, for the 30 days immediately preceding the relevant
date.
(b) For the full unexpired term of the Employment Period, the
Company shall continue Kornberg's participation in each employee benefit plan
(including, without limitation, life insurance and medical plans and including,
to the extent allowed, amending such plans) in which Kornberg was entitled to
participate immediately prior to the Effective Date as if he continued to be
employed by the Company hereunder. If the terms of any benefit plan of the
Company may not under Section 401(a) or other similar provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), permit continued participation by
Kornberg, the Company will arrange to provide to Kornberg benefits substantially
equivalent to, as to time and amount, and no less favorable than, on an
after-tax basis, the benefits he would have been entitled to receive under such
plan if he had been continuously employed by the Company for the full unexpired
term of the Employment Period. Kornberg shall have the option to have assigned
to him, at no cost and with no apportionment of prepaid premiums, any assignable
insurance policies owned by the Company and relating specifically to Kornberg.
(c) Notwithstanding any other provision of this Agreement, the
amounts payable to Kornberg under Paragraph 7(a) shall be equal to whichever of
the following amounts shall result in the greater after-tax payment to Kornberg,
after application of all federal, state and local taxes applicable to such
payments:
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(i) the amount otherwise payable under Paragraph 7(a) without
regard to this Paragraph 7(c); and
(ii) the amount payable in (i) above, reduced by the total
amounts payable under Paragraph 7(a) and (b) to the extent included as parachute
payments under Section 28OG(b)(2) of the Code, but only to the extent such
amounts included as parachute payments exceed 299% of Kornberg's "Base Amount,"
as defined in Section 28OG(b)(3)(A) and (d)(1) and (2) of the Code.
The calculation of after-tax payments under this paragraph 7(c) shall be
made by independent public accountants selected by Kornberg and consented to by
the Company, which consent shall not be unreasonably withheld. The fees and
expenses of such accountants shall be borne by the Company.
(d) Except as provided below, for purposes of this Employment
Agreement a Change in Control shall be deemed to have occurred if:
(i) an event that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14a promulgated under the 1934 Act,
as in effect on the date hereof, occurs; or
(ii) any person or group of persons acting in concert becomes
the beneficial owner of 30% or more of the Company's outstanding voting
securities or securities convertible into such amount of voting securities; or
(iii) within two years after a tender offer or exchange offer,
or as the result of a merger, consolidation, sale of substantially all of the
Company's assets or a
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contested election of the Board of Directors, or any combination of such
transactions, the persons who were directors of the Company prior to the
transaction do not constitute a majority of the Board of Directors of the
Company or its successor; provided, however, that no such event shall be deemed
to constitute a Change in Control if such event is approved by two-thirds of the
Prior Directors of the Company and the Successor Directors (each as hereafter
defined), if any, voting together. For purposes of this Agreement, Prior
Directors are those directors of the Company in office immediately prior to such
event, and Successor Directors are successors to Prior Directors who were
recommended to succeed Prior Directors by a majority of the Prior Directors then
in office.
8. Kornberg agrees that during the Employment Period and for a period of
two years thereafter, he will not, in any manner, directly or indirectly, engage
in any business which competes with the business in which the Company is
presently engaged or may be engaged at any time during the Employment Period,
and he will not directly or indirectly own, manage, operate, join, control or
participate in the ownership, management, operation or control of, or be
employed by, or connected in any manner with, any corporation, firm or business
that is so engaged; provided, however, that nothing herein contained shall
prohibit Kornberg from owning not more than five per cent of the outstanding
stock of any publicly held corporation.
9. (a) In order to induce Kornberg to enter into this Agreement, the
Company agrees that if it breaches this Agreement, Kornberg shall have no
further obligations hereunder and shall be under no duty to seek other
employment or otherwise
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mitigate his damages, and the Company shall pay Kornberg the following amounts
as liquidated damages in lieu of any further obligations hereunder:
(i) An amount equal to 85% of his total Base Salary, at the
rate in effect at the time of such breach, for the full unexpired term of the
Employment Period, such amount to be payable within 10 days after such breach;
plus
(ii) An amount equal to his Incentive Compensation for the
full fiscal year in which the breach occurs;
(iii) If and to the extent Kornberg elects to receive such
amount, an amount equal to that which would be payable under Paragraph 7(a)(iii)
hereof if Kornberg had terminated this Agreement pursuant to Paragraph 6(b) as
of the date of such breach, provided however, that if a Change in Control of the
Company has occurred at any time prior to the date of such breach, Kornberg
shall be entitled to receive as liquidated damages amounts and benefits equal to
the amounts and benefits he would have been entitled to receive pursuant to
Paragraph 7 hereof (including Paragraph 7 (c) ) if he had terminated the
Employment Period effective on the date of breach.
(b) Kornberg shall be entitled to reasonable attorney's fees and
disbursements in any action to recover any amounts due him or obtain other
relief under this Agreement or in any action relating to a breach by the Company
of this Employment Agreement.
10. Any offer, notice, request or other communication hereunder shall be
in writing and shall be deemed to have been duly given if hand delivered or
mailed by
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registered or certified mail, return receipt requested, addressed to the
respective address of each party hereinafter set forth, or to such other address
as each party may designate by a notice pursuant hereto, which change of address
notice shall be effective upon receipt thereof:
If to the Company: Comtech Telecommunications Corp.
000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Secretary
If to Kornberg: Xx. Xxxx Xxxxxxxx
00 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
11. If any provision of this Agreement shall be held for any reason to be
unenforceable, the remainder of this Agreement shall nevertheless remain in full
force and effect.
12. This Agreement, including, without limitation, the provisions of this
Paragraph 12, shall be binding upon and inure to the benefit of, and shall be
deemed to refer with equal force and effect to, any corporate or other successor
to the Company which shall acquire, directly or indirectly, by merger,
consolidation, purchase or otherwise, all or substantially all of the assets or
business of the Company. This Agreement shall not be assignable by the Company
or any such successor, except to the corporate or other successor referred to in
the preceding sentence. Kornberg may not assign, pledge or encumber his interest
in this Agreement without the written consent of the Company. This
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Agreement shall be binding upon and inure to the benefit of Kornberg, his heirs
and personal representatives.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
COMTECH TELECOMMUNICATIONS CORP.
By: ____________________________________
Authorized Signatory
Approval of Chairman
of the Compensation
Committee of the
Board of Directors
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Xxxx Xxxxxxxx
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