EXECUTIVE SEVERANCE BENEFIT AGREEMENT
THIS EXECUTIVE SEVERANCE BENEFIT AGREEMENT (this "Agreement") is made
and entered into as of the 21st day of May, 1997, by and between GLENAYRE
TECHNOLOGIES, INC., a Delaware corporation (the "Company"), and XXX X. XXXXXXX
(the "Executive").
Statement of Purpose
It is important to the success of the Company that it continues to
have the benefit of the services of experienced management personnel such as the
Executive. It is therefore desirable and in the best interest of the Company
that, in the event of any prospective change in control of the Company, the
Executive be reasonably secure in the Executive's position with the Company so
that the Executive can exercise independent judgment for the best interests of
the Company and its shareholders, without concern for the security of the
Executive's own continued employment with the Company. For such purpose, the
Company and the Executive are entering into this Agreement to provide
compensation to the Executive in certain events in accordance with the terms
hereof.
NOW, THEREFORE, in consideration of the Statement of Purpose and the
mutual covenants and agreements hereinafter set forth, the Company and the
Executive do hereby agree as follows:
1. Definitions and Construction.
(a) Definitions. As used herein, the following terms shall have the
following meanings:
"Board" means the Board of Directors of the Company.
"Cause" means (1) dishonesty or fraud on the part of the Executive
which is intended to result in the Executive's substantial personal enrichment
at the expense of the Company or its affiliates; (2) a material violation of the
Executive's responsibilities as an executive of the Company or its subsidiaries
which is willful and deliberate; or (3) the conviction (after the exhaustion of
all appeals) of the Executive of a felony involving moral turpitude or the entry
of a plea of nolo contendere for such a felony. However, "Cause" shall not
include (i) any personal or policy disagreement between the Executive and the
Company or any member of the Board or (ii) any action taken by the Executive in
connection with the Executive's duties if the Executive acted in good faith and
in a manner the Executive reasonably believed to be in the best interest of the
Company and had no reasonable cause to believe the Executive's conduct was
unlawful.
"Change in Control" means any of the following:
(A) the acquisition, directly or indirectly after the date of this
Agreement, in one or a series of transactions, of 25% or more of the Company's
common stock by any "person" as that term is defined in Section 13(d)(3) of the
Exchange Act;
(B) the consummation of a merger, consolidation, share exchange or
similar transaction of the Company with any other corporation, entity or group,
as a result of which the holders of the voting capital stock of the Company as a
group would receive less than 50% of the voting capital stock of the surviving
or resulting corporation;
(C) the consummation of an agreement providing for the sale or
transfer (other than as security for obligations of the Company) of
substantially all the assets of the Company;
(D) a material change in the composition or character of the Board as
follows: (i) the replacement of a majority of directors on the effective date of
this Agreement by directors opposed by the Executive and a majority of the
members of the Executive Committee of the Board (or, in the absence of the
existence of an Executive Committee, a majority of the members of the Board) or
(ii) at any meeting of the Company's shareholders, the election of a majority of
directors standing for election who are opposed by the Executive and a majority
of the members of the Executive Committee of the Board (or, in the absence of
the existence of an Executive Committee, a majority of the members of the
Board).
"Disability" means the inability of the Executive, due to the condition
of the Executive's physical, mental or emotional health, to regularly and
satisfactorily perform the duties of the Executive's responsibilities as an
executive of the Company or its subsidiaries for a continuous period in excess
of three months. If the existence of the Executive's Disability shall be
disputed by either party, the determination by a physician duly licensed to
practice medicine that such Disability exists shall be necessary to establish
such Disability, unless the Executive refuses to submit to appropriate
examinations at the request of the Board, in which case the determination of the
Board in good faith and after the requisite period of Disability shall be
conclusive as to whether such Disability exists.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Good Reason" means the occurrence of any of the following without the
Executive's express written consent: (1) a significant change in the nature or
the scope of the Executive's authority as in effect immediately prior to a
Change in Control; (2) an assignment to the Executive of duties (or a change in
the Executive's title resulting in duties) which
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are materially inconsistent with the Executive's status, duties or
responsibilities immediately prior to a Change in Control; (3) a reduction in
the Executive's rate of base salary or level of participation in the Company's
Management by Objectives Plan; or (4) a change (or the requirement by the
Company of a change) of more than 30 miles in the principal location where the
Executive is required to perform services; provided, however, that the Executive
must first (i) provide the Board with written notice specifying the particular
failure of the Company under clauses (1), (2), (3) or (4) above and (ii) allow
the Board 60 days from receipt of written notice to cure such failure.
"Retirement" means the termination of the Executive's employment with
the Company on or after the Executive attains 65 years of age.
"Termination of Employment" means the termination of the Executive's
employment with the Company and its subsidiaries for any reason other than (1)
the Executive's death, (2) the Executive's Disability, (3) the Executive's
Retirement, (4) the termination by the Company of the Executive's employment for
Cause or (5) the Executive's voluntary termination of employment other than for
Good Reason.
(b) Construction. Paragraph headings and subheadings have been inserted
herein for convenience of reference only and shall not be deemed to have any
legal effect whatsoever in the interpretation of this agreement. As used herein,
the singular shall include the plural and the plural the singular, the word
"any" means one or more or all, and the conjunction "or" includes both the
conjunctive and the disjunctive.
2. Severance Benefits. If a Change in Control occurs and if the
Executive's Termination of Employment occurs within three years after the Change
in Control, the Company shall pay to the Executive, within 10 days after such
termination, in cash or equivalent a lump sum severance benefit equal to (i)
250% of the Executive's base salary in effect on such termination date (or if
the base salary was then greater, on the date immediately preceding the date of
the Change in Control), plus (2) a pro rata share of any bonus in which the
Executive participates for the fiscal year of the Company in which such
termination occurs, calculated under the assumption that all objectives and
goals for the payment of such bonus are met. The Executive shall also be
entitled to the sum of (1 ) the Executive's accrued but unpaid base salary
through the date of such termination, plus (2) the Executive's accrued but
unpaid vacation pay through such date, plus (3) any other compensation payments
or benefits which have accrued and are payable in connection with such
termination. In addition, the Company shall provide medical and dental benefits
to the Executive (and the Executive's dependents) for a period of 12 months
following such termination of employment (after a Change in Control) at the
Company's full expense and at the same levels of coverage as such benefits are
provided to active employees of the Company. The Executive's right to continue
medical and dental coverage required under the Consolidated Omnibus Budget
Reconciliation Act of 1995 ("'COBRA") shall begin at the expiration of the
one-year period described in the foregoing sentence. The Executive has been
awarded options to purchase shares of the Company's
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common stock under the Company's stock option plans (including the Glenayre
Technologies, Inc. 1996 Incentive Stock Plan) and may in the future be awarded
additional options to purchase shares of the Company's or a successor
corporation's common stock under the Glenayre Technologies, Inc. 1996 Incentive
Stock Plan or other option plans (collectively, the "Options"), such Options
having been granted, or to be granted, for the number of shares and at a price
per share specified in the agreements between the Company (or a successor
corporation) and the Executive granting the Options. Notwithstanding any terms
to the contrary contained in such stock option agreements, upon the Executive's
termination of employment for any reason other than "Cause" after a Change in
Control, (i) all Options shall become immediately vested in the Executive and
(ii) all Options shall become immediately exercisable and shall remain
exercisable for a period of 12 months following the date of Executive's
termination of employment.
3. Legal Expenses. The Company agrees to pay any reasonable legal
expenses incurred by the Executive in connection with the enforcement of this
Agreement or any determination of the validity of this Agreement.
4. Effect of Agreement on Other Rights. This Agreement shall not be
construed to provide the Executive with any right of continued employment by the
Company or its subsidiaries. This Agreement shall not diminish or increase other
rights the Executive (or the Executive's heirs or legal representatives) may
have under any other contract, employee benefit plan or policy of the Company
except as expressly provided in this Agreement.
5. Assignment. Neither this Agreement nor any rights or benefits
hereunder shall be assignable, either voluntarily or involuntarily, by the
Executive, except that all rights of the Executive under this Agreement shall
inure to the benefit of and be enforceable by the Executive's legal
representatives and heirs.
6. Notices. All notices and other communications hereunder to a party
hereto shall be in writing and, except as otherwise expressly provided herein,
shall be deemed to have been duly given when placed in the United States mail by
registered or certified mail, return receipt requested, postage prepaid,
addressed to such party as follows:
As to the Company: Glenayre Technologies, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Chief Executive Officer
As to the Executive: Xxx X. Xxxxxxx
c/o 0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
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Either party hereto may change such party's address (and in the case of the
Company the title of the person to whose attention communications hereunder
shall be directed) from time to time by serving notice thereof upon the other
party hereto as provided herein.
7. Survival. The provisions of this Agreement shall survive the
termination of the Executive's employment with the Company and its subsidiaries
regardless of the date, cause or manner of such termination, and such
termination shall not impair or otherwise affect the Executive's rights to the
severance benefits to the extent set forth in Paragraph 2.
8. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the subject matter hereof and all
prior or contemporaneous oral or written agreements or instruments are merged
herein. No amendment to or modification of this Agreement shall be effective
unless in writing and signed by both parties hereto.
9. Severability. If any provision of this Agreement is declared
invalid or unenforceable as a matter of law, such invalidity or unenforceability
shall not affect or impair the validity or enforceability of any other provision
of this Agreement or the remainder of this Agreement as a whole.
10. Law Applicable. The construction, interpretation and validity of
this Agreement shall be determined in accordance with and governed by the laws
of the State of North Carolina.
11. Freedom of the Company to Act. No provision of Agreement shall be
deemed to restrict the absolute right of the Company at any time to sell or
dispose of all or any part of its business or assets, or to reconstitute the
same into any one or more subsidiaries or to merge, consolidate, sell or
otherwise dispose of said subsidiaries or any of the assets thereof.
12. Execution. This Agreement is hereby executed in multiple
originals, one of which is being retained by each of the parties hereto and each
of which shall be deemed an original hereof.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be signed
by its duly authorized officers its corporate seal to be hereunto affixed and
the Executive has hereunto set the Executive's hand and seal, all as of the day
and year first above written.
GLENAYRE TECHNOLOGIES, INC.
[CORPORATE SEAL]
ATTEST: By:/s/ Xxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxxx Title: President and Chief Executive
Secretary Officer
/s/ Xxx X. Xxxxxxx [SEAL]
Xxx X. Xxxxxxx
