AGREEMENT
Exhibit 10.6
AGREEMENT
THIS AGREEMENT, effective as of this day of , 200___, by and between EMS
TECHNOLOGIES, INC., a Georgia corporation (the “Company”), and (the
“Executive”).
WITNESSETH:
WHEREAS, the Company wishes to assure both itself and its key employees of continuity of
management and objective judgment in the event of any Change in Control (as defined below) of the
Company and to provide certain other benefits, and the Executive is a key employee of the Company
and an integral part of its management;
NOW, THEREFORE, for and in consideration of the premises and the mutual covenants herein
contained, the parties hereby agree as follows:
I. TERM OF AGREEMENT.
This Agreement shall be effective immediately upon its execution by the parties hereto. The
term of this Agreement shall be for a rolling, three-year term commencing on the date hereof, and
shall be deemed automatically (without further action by either the Company or the Executive) to
extend each day for an additional day such that the remaining term of the Agreement shall continue
to be three years.
II. DEFINITIONS.
1. Board — The Board of Directors of the Company, or its successor.
2. Cause — The term “Cause” as used herein shall mean: (i) any act that constitutes,
on the part of the Executive, (a) fraud, dishonesty, gross negligence, or willful misconduct and
(b) that directly results in material injury to the Company, or (ii) the Executive’s conviction of
a felony or crime involving moral turpitude. A termination of the Executive for “Cause” based on
clause (i) of the preceding sentence shall take effect 30 days after the Company gives written
notice of such termination to the Executive specifying the conduct deemed to qualify as Cause,
unless the Executive shall, during such 30-day period, remedy the events or circumstances
constituting Cause to the reasonable satisfaction of the Company. A termination for Cause based on
clause (ii) above shall take effect immediately upon giving of the termination notice.
3. Change in Control — The term “Change in Control” as used herein shall mean the
occurrence of one of the following:
(i) the Company consolidates or merges with or into another corporation, or is
otherwise reorganized, if the Company is not the surviving corporation in such
transaction or if after such transaction any other corporation, association or other
person, entity or group or the shareholders thereof own, directly or indirectly,
more than 50% of the then-outstanding shares of common stock or more than 50% of the
assets of the Company; or
(ii) more than 35% of the then-outstanding shares of common stock of the Company
are, in a single transaction or in a series of related transactions, sold or
otherwise transferred to or are acquired by any other corporation, association or
other person, entity or group, whether or not any such shareholder or any
shareholders included in such group were shareholders of the Company prior to the
Change in Control; or
(iii) an election, or series of related elections, of members of the Board of
Directors shall occur such that a majority of such members following such
election(s) shall not have been nominated or recommended for election by a majority
of the members of the Board of Directors who were serving immediately prior to such
election(s); or
(iv) the occurrence of any other event or circumstance which is not covered by (i)
through (iii) above which the Board determines affects control of the Company and
constitutes a Change in Control for purposes of this Agreement;
in each such case without the approval prior to the occurrence of such event or circumstance by the
Board of Directors
4. Disability — The term “Disability” shall mean the Executive’s inability as a result
of physical or mental incapacity to substantially perform his duties for the Company on a full-time
basis for a period of six months.
5. Excess Severance Payment — The term “Excess Severance Payment” shall have the same
meaning as the term “excess parachute payment” defined in Section 280G(b) (1) of the Code.
6. Severance Payment — The term “Severance Payment” shall have the same meaning as the
term “parachute payment” defined in Section 280G(b) (2) of the Code.
7. Present Value — The term “Present Value” shall have the same meaning as provided in
Section 280G(d) (4) of the Code.
8. Reasonable Compensation — The term “Reasonable Compensation” shall have the same
meaning as provided in Section 280G(b) (4) of the Code.
III. BENEFITS UPON TERMINATION.
1. Termination Upon Change in Control — If a Change in Control occurs during the term
of this Agreement and the Executive’s employment is terminated within 24 months thereafter, and
such termination is a result of Involuntary Termination or Voluntary Termination, as defined below,
then the benefits described in Section 2 below shall, subject to Article IV of this Agreement, be
paid or provided to the Executive. The fact that Executive is eligible for early, normal or
delayed retirement under a Company retirement plan at the time of his termination shall not make
him ineligible to receive benefits hereunder.
(a) Involuntary Termination — For purposes hereof, “Involuntary Termination”
shall mean termination of employment that is involuntary on the part of the
Executive and that occurs for reasons other than Cause, Disability or death.
(b) Voluntary Termination — For purposes hereof, “Voluntary Termination”
shall mean termination of employment that is voluntary on the part of the Executive,
and, in the judgment of the Executive, is due to, and which occurs within six months
of:
(i) the assignment to the Executive of any duties inconsistent with the
Executive’s title and status in effect prior to the Change in Control, a
material increase or decrease in the Executive’s responsibilities at the
Company from those in effect immediately prior to the Change in Control, or
an adverse alteration in the nature or status of such responsibilities
(other than any such alteration to the extent incidental to the fact that
the Company may no longer be a public company);
(ii) a reduction by the Company of the Executive’s base salary from such
salary in effect prior to the Change in Control;
(iii) the relocation of the Company’s principal executive offices to a
location outside the Atlanta, Georgia metropolitan area, or the Company’s
requiring the Executive to be based anywhere other than the Company’s
principal executive offices, except for required travel on the Company’s
business to an extent substantially consistent with the Executive’s business
travel obligations prior to the Change in Control;
(iv) the failure by the Company, without the Executive’s consent, to pay to
the Executive any portion of the Executive’s then-current compensation
(including base salary and annual bonus), or to pay to the Executive any
portion of an installment of deferred compensation under any deferred
compensation program of the Company, in each case within seven days of the
date such compensation is due;
(v) the failure by the Company to continue in effect any compensation plan
in which the Executive participates immediately prior to the Change in
Control, which is material to the Executive’s total compensation, including
but not limited to the Company’s annual bonus plan, stock option plan, or
any similar or substitute plans adopted prior to the Change in Control,
unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the failure by
the Company to continue the Executive’s participation in such plan (or in
such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the level of
the Executive’s participation relative to other participants, as existed
immediately prior to the Change in Control; or
(vi) the failure by the Company to continue to provide the Executive with
benefits substantially similar to those enjoyed by the Executive under any
of the Company’s life insurance, medical, health and accident or disability
plans in which the Executive was participating immediately prior to the
Change in Control, or the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits or would
deprive the Executive of any material fringe benefit otherwise enjoyed by
the Executive immediately prior to the Change in Control.
A termination shall not be considered voluntary within the meaning of this Agreement if such
termination is the result of Cause, Disability or death of the Executive. The Executive’s
continued employment shall not constitute consent to, or a waiver of rights with respect to, any
act or failure to act relating to Voluntary Termination hereunder.
2. Benefits to be Provided — If the Executive becomes eligible for benefits under
Section 1 above, the Company shall pay or provide to the Executive the compensation and benefits
set forth in this Section 2.
(a) Salary — The Executive will continue to receive his current salary
(subject to withholding of all applicable taxes and any amounts referred to in
Section 2(b) below) for a period of 36 months from his date of termination in the
same manner as it was being paid as of the date of termination; provided,
however, that the salary payments provided for hereunder shall be paid in a
single lump sum payment, to be paid not later than 30 days after his termination of
employment; provided, further, that the amount of such lump sum
payment shall be determined by taking the salary payments to be made and discounting
them to their Present Value on the date the Executive’s employment is terminated.
For purposes hereof, the Executive’s “current salary” shall be the highest rate in
effect during the six-month period prior to the Executive’s termination.
(b) Health and Life Insurance Coverage — The health and life insurance
benefits coverage (including any executive medical plan or split dollar insurance
plan) provided to the Executive at his date of termination (or within six months
prior to such date of termination), shall be provided by the Company at its expense
at the same level and in the same manner as if his employment had not terminated
(and, if applicable, such coverage had not been terminated or modified within six
months prior to such date of termination), but subject to the customary changes in
such coverages if the Executive reaches age 65 or has similar changes in personal or
family circumstances, beginning on the date of such termination and ending on the
date 12 months from the date of such termination. Any additional coverages the
Executive had at termination, including dependent coverage, will also be continued
for such period on the same terms, to the extent permitted by the applicable
policies or contracts. Any costs the Executive was paying for such coverages at the
time of termination shall be paid by the Executive by separate check payable to the
Company each month in advance. If the terms of any benefit plan referred to in this
Section do not permit continued participation by the Executive, then the Company
will arrange for other coverage at its expense providing substantially similar
benefits. The coverages provided for in this Section shall be applied against and
reduce the period for which
COBRA will be provided, and may at the Company’s election be provided as
COBRA coverage, subject to payment by the Company
to the Executive of additional compensation equal to the excess of the COBRA premium
over the costs otherwise payable by the Executive as provided above, in each case as
in effect from time to time, plus an additional amount as necessary to reimburse the
Executive for additional taxes payable on both such additional compensation and such
additional amount at a combined tax rate of 45%.
(c) Stock Options — As of the Executive’s date of termination, all
outstanding stock options granted to the Executive under any stock option plan or
program maintained by the Company shall become 100% vested and immediately
exercisable, and shall thereafter remain exercisable until the expiration dates
otherwise in effect had the Executive remained continuously employed by the Company.
(d) Effect of Death — In the event of the Executive’s death after he becomes
entitled to benefits hereunder, the benefits shall be continued to his spouse for
the remainder of the applicable 36 or 12-month period. If the Executive is not
married, the benefits shall cease on his date of death.
IV. LIMITATION OF BENEFITS.
1. Limitation of Amount — Notwithstanding anything in this Agreement to the contrary,
if any of the compensation or benefits payable, or to be provided, to the Executive by the Company
under this Agreement are treated as Excess Severance Payments (whether alone or in conjunction with
payments or benefits outside of this Agreement), the compensation and benefits provided under this
Agreement shall be modified or reduced in the manner provided in Section 2 below to the extent
necessary so that the compensation and benefits payable or to be provided to the Executive under
this Agreement that are treated as Severance Payments, as well as any compensation or benefits
provided outside of this Agreement that are so treated, shall not cause the Company to have paid an
Excess Severance Payment. In computing such amount, the parties shall take into account all
provisions of Code Section 280G, and the regulations thereunder, including making appropriate
adjustments to such calculation for amounts established to be Reasonable Compensation. The
determinations under this Section IV.1 with regard to Excess Severance Payments shall be made by an
independent accounting firm selected by the Company and the Executive, which shall provide detailed
supporting calculations to the parties.
2. Modification of Amount — In the event that the amount of any Severance Payments
which would be payable to or for the benefit of the Executive under this Agreement must be modified
or reduced to comply with this Article, the Executive shall direct which Severance Payments are to
be modified or reduced; provided, however, that no increase in the amount of any payment shall be
made without the consent of the Company.
3. Avoidance of Penalty Taxes — This Article shall be interpreted so as to avoid the
imposition of excise taxes on the Executive under Section 4999 of the Code or the disallowance of a
deduction to the Company pursuant to Section 280G(a) of the Code with respect to amounts payable
under this Agreement. In connection with any Internal Revenue Service examination, audit or other
inquiry, the Company and the Executive agree to take action
to provide, and to cooperate in
providing, evidence to the Internal Revenue Service that the
compensation and benefits provided under this Agreement do not result in the payment of Excess
Severance Payments.
4. Additional Limitation — In addition to the limits otherwise provided in this
Article, to the extent permitted by law the Executive may in his sole discretion elect to reduce
(or change the timing of) any payments he may be eligible to receive under this Agreement to
prevent the imposition of excise taxes on the Executive under Section 4999 of the Code or to
otherwise reduce or delay liability for taxes owed under the Code.
V. MISCELLANEOUS.
1. Notices — Any notice to a party required or permitted to be given hereunder shall
be in writing and shall be deemed given when delivered and shall be hand delivered, sent by
facsimile transmission with request for confirmation of receipt, or mailed registered or certified
mail (return receipt requested), to such party at such party’s address as specified below, or at
such other address as such party shall specify by notice to the other.
| If to the Company: | EMS Technologies, Inc. | |||
| 000 Xxxxxxxxxxx Xx. | ||||
| Xxxxxxxx, XX 00000 | ||||
| Attention: General Counsel |
If to the Executive, to his last address provided to the Company by the Executive, and if none
as otherwise shown on the records of the Company.
2. Assignment — This Agreement shall inure to the benefit of and shall be binding upon
the parties hereto and their respective executors, administrators, heirs, personal representatives
and successors, but, except as hereinafter provided, neither this Agreement nor any right hereunder
may be assigned or transferred by either party thereto, or by any beneficiary or any other person,
nor be subject to alienation, anticipation, sale, pledge, encumbrance, execution, levy or other
legal process of any kind against the Executive, his beneficiary or any other person.
Notwithstanding the foregoing, any person or business entity succeeding to substantially all of the
business of the Company by purchase, merger, consolidation, sale of assets or otherwise, shall be
bound by and shall adopt and assume this Agreement and the Company shall obtain the assumption of
this Agreement by such successor. Failure by the Company to obtain such assumption and agreement
prior to the effective date of any such succession shall be a breach of this Agreement and shall
entitle Executive to the same compensation and benefits upon Involuntary Termination or Voluntary
Termination as if a Change in Control had occurred.
3. No Obligation to Fund — The agreement of the Company (or its successor) to make
payments to the Executive hereunder shall represent solely the unsecured obligation of the Company
(and its successor), except to the extent the Company (or its successor) in its sole discretion
elects in whole or in part to fund its obligations under this Agreement pursuant to a trust
arrangement or otherwise.
4. Applicable Law — This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Georgia.
5. Arbitration of Disputes; Expenses — All claims by the Executive for compensation
and benefits under this Agreement shall be directed to and determined by the Board and shall be in
writing. Any denial by the Board of a claim for benefits under this Agreement shall be delivered
to the Executive in writing within 20 days following the submission of such claim, and shall set
forth the specific reasons for the denial and the specific provisions of this Agreement relied
upon. Any further dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration in Atlanta, Georgia, in accordance with the commercial
arbitration rules of the American Arbitration Association then in effect. The arbitration award
shall be final and binding upon the parties, and judgment upon the award may be entered on the
arbitrator’s award in any court having jurisdiction. Any arbitration award in favor of the
Executive, in whole or in part, shall include interest, at the rate of 10% per annum, on the amount
awarded from the date it was due for payment as provided in this Agreement. In the event the
Executive incurs legal fees and other expenses in seeking to obtain or enforce any rights or
benefits provided by this Agreement and is successful, in whole or in part, in obtaining or
enforcing any such rights or benefits through settlement, arbitration or otherwise, the Company
shall promptly pay, and any arbitration award shall include, the Executive’s reasonable legal fees
and expenses incurred in enforcing this Agreement and the Executive’s share of the fees of the
arbitrator. Except to the extent provided in the preceding sentence, each party shall pay its own
legal fees and other expenses associated with any dispute, provided, that the fee for the
arbitrator shall be shared equally.
6. Amendment — This Agreement may only be amended by a written instrument signed by
the parties hereto, which makes specific reference to this Agreement.
7. Severability — If any provision of this Agreement shall be held invalid or
unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provisions hereof.
8. Other Benefits — Nothing in this Agreement shall limit or replace the compensation
or benefits payable to the Executive, or otherwise adversely affect the Executive’s rights, under
any other benefit plan, program or agreement to which the Executive is a party.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its
duly authorized officers and the Executive has hereunder set his hand, as of the date first above
written.
| EMS TECHNOLOGIES, INC. | ||||||
| By: | ||||||
| Title: | ||||||
(Corporate Seal) |
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Attest: |
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Secretary |
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| EXECUTIVE | ||||||
