CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT, dated May 23, 1995, by and between: C-COR ELECTRONICS, INC., a
Pennsylvania corporation (the "Company") and Xxxxxx X. Xxxxxxx (the "Employee").
Recital
A.Employee is an executive of the Company with significant policy-making and
operational responsibilities in the conduct of its business.
B.The Company recognizes that Employee is a valuable resource for the Company
and the Company desires to be assured of the continued service of Employee.
C. The Company is concerned that upon a possible or threatened change in control
Employee may have concerns about the continuation of his employment and/or his
status and responsibilities and may be approached by others with employment
opportunities, and desires to provide Employee some assurance as to the
continuation of his employment status and responsibilities on a basis consistent
with that which he has earned in the event of such possible or threatened change
in control.
D. The Company desires to assure that if a possible change of control situation
should arise and Employee should be involved in deliberations or negotiations in
connection therewith that Employee would be in a secure position to consider
and/or negotiate such transaction as objectively as possible and without implied
threat to his financial well-being.
E.The Company is concerned about the possible effect on Employee of the
uncertainties created by any proposed change in control of the Company.
F. Employee is willing to continue to serve but desires that in the event of
such a change in control he will continue to have the responsibility, status,
income, benefits and perquisites that he received immediately prior to that
event.
Agreements
The parties do hereby agree as follows:
1. Change of Control. The provisions of Section 2 and 3 of this Agreement
shall become operative upon a change in control of the Company, as hereinafter
defined. For purposes of this Agreement, a "change in control" shall be deemed
to have occurred if and when:
(a) Subsequent to the date of this Agreement, any person or group of persons
acting in concert shall have acquired ownership of or the right to vote or to
direct the voting of shares of capital stock of the Company representing 30% or
more of the total voting power of the Company, or
(b) The Company shall have merged into or consolidated with another corporation,
or merged another corporation into the Company, on a basis whereby less than 50%
of the total voting power of the surviving corporation is represented by shares
held by former shareholders of the Company prior to such merger or
consolidation, or
(c)The Company shall have sold more than 50% of its assets to another
corporation or other entity or person, or
(d) As the result of, or in connection with, any cash tender or exchange offer,
merger or other business combination, sale of assets or contested election, the
persons who were Directors of the Company before such transaction cease to
constitute a majority of Directors of the Company.
2.Termination Within Eighteen (18) Months. In the event that the employment of
Employee with the Company is terminated involuntarily within eighteen (18)
months after a change in control occurs:
(a)Employee shall be entitled to receive an amount of cash equal to the sum of
the following amounts:
(i) two (2) times his annual salary at his rate on the date of termination of
employment (but not less than two times Employee's annual salary prior to the
Change of Control); and
(ii) two (2) times the Company's annual 401(k) retirement plan contribution at
the Employee's contribution rate on the termination of his employment (but not
less than the amount the company was matching prior to Change of Control)
(subject to applicable limitations of the Internal Revenue Code, which may
dictate that such amount shall not be added to the retirement plan but shall be
paid in cash). The sum of these amounts shall be paid in equal monthly
installments over a period of twenty-four (24) months, the first such
installment to be paid within ten (10) days after Employee's termination of
employment.
(b) Employee shall be entitled to receive an amount of cash equal to two times
the average of the Profit Incentive Plan ("PIP") payments of the last two years
awarded to him under the PIP of the Company, pursuant to the terms of such Plan
as in effect immediately prior to such change of control. Such amount will be
paid to the Employee within ten (10) days after termination of employment.
(c) Employee shall continue for a period of 24 months from the date of his
termination to be covered at the expense of the Company by the same or
equivalent health, dental, accident, life and disability insurance coverages as
he was enrolled in immediately prior to termination of his employment; provided,
however, that the Employee may elect to be paid in cash within thirty (30) days
after termination of his employment an amount equal to the Company's cost of
providing such coverages during such period.
(d) If on the date of termination of employment, Employee were a participant in
the Company's Supplemental Retirement Plan, Employee shall become eligible for
the benefits payable under such Plan and such benefits shall be paid to
Employee, or, if applicable, Employee's beneficiary, in the same manner, amounts
and intervals as if Employee had, on the date of his termination of employment
following a change of control, retired from employment with the Company. If
Employee has not attained age fifty-five (55) on the date of his termination of
employment due to a change of control, Employee shall be deemed to have attained
age fifty-five (55) for the purpose of determining his eligibility for benefits
under the Supplemental Retirement Plan, and only for this purpose.
(e) All outstanding options held by Employee, both exercisable and
nonexercisable, shall be immediately exercisable regardless of the time the
option has been held by Employee and shall remain exercisable until their
original expiration date, subject to applicable requirements of the Internal
Revenue Code.
3. Other Events. If Employee resigns from the Company within eighteen (18)
months of a change of control, Employee shall be entitled to receive all
payments and enjoy all of the benefits specified in Section 2 hereof should one
or more of the following events occur within eighteen (18) months following a
change in control:
(a) If Employee determines that there has been a significant change in his
responsibilities or duties with the Company and, for that reason, Employee
resigns from the Company; or
(b) If the base salary paid by the Company to Employee is reduced by more than
ten (10%) percent from his salary immediately prior to the change in control; or
(c) If the Company requires Employee to relocate his principal place of work to
a location more than forty (40) miles from the Employee's former place of work.
4. Agreements Not Exclusive. The specific agreements referred to herein are not
intended to exclude Employee's participation in other benefits available to
executive personnel generally or to preclude other compensation benefits as may
be authorized by the Board of Directors of the Company at any time, and shall be
in addition to the provisions of any other employment or similar agreements.
5. Enforcement Costs. The Company is aware that upon the occurrence of a change
in control the Board of Directors or a shareholder of the Company may then cause
or attempt to cause the Company to refuse to comply with its obligations under
this Agreement, or may cause or attempt to cause the Company to institute, or
may institute, litigation seeking to have this Agreement declared unenforceable,
or may take, or attempt to take, other action to deny Employee the benefits
intended under this Agreement. In these circumstances, the purpose of this
Agreement could be frustrated. It is the intent of the company that Employee not
be required to incur the expenses associated with the enforcement of his rights
under this agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits extended to
Employee hereunder, nor be bound to negotiate any Battlement of his rights
hereunder under threat of incurring such expenses. Accordingly, it following a
change of control, it should appear to Employee that the Company has failed to
comply with any of its obligations under this Agreement or in the event that the
Company or any other person takes any action to declare this agreement void or
unenforceable, or institutes any litigation or other legal action designed to
deny, diminish or to recover from Employee the benefits intended to be provided
to Employee hereunder and that Employee has complied with all reasonable
obligations related to Employee's employment with the Company, the Company
irrevocably authorizes Employee from time to time to retain counsel of his
choice at the direct expense and liability of the company as provided in this
section 5, to represent Employee in connection with the initiation or defense of
any litigation or other legal action, whether by or against the Company or any
director, officer, shareholder or other person affiliated with the Company, in
any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to Employee entering into an attorney-client relationship with such
counsel, and in that connection the Company and Employee agree that a
confidential relationship shall exist between Employee and such counsel. The
reasonable fees and expenses of counsel selected from time to time by Employee
as hereinabove provided shall be paid or reimbursed to Employee by the company
on a regular, periodic basis upon presentation by Employee of a statement or
statements prepared by such counsel in accordance with its customary practices
up to a maximum aggregate amount or $500,000, said to be "grossed up" to cover
federal and state income taxes. The amount of the gross up shall be calculated
in accordance with the following formula: A/ (1-R), where A is the amount of
legal fees and R is the combined highest marginal tax rate applicable to
employee in the tax year that the payment is made.
6. No Set.-Off. The company shall not be entitled to set-off against the amount
payable to Employee any amounts earned by Employee in other employment after
termination of his employment with the Company, or any amounts which might have
been earned by Employee in other employment had he sought other employment. The
amounts payable to Employee under this Agreement shall not be treated as damages
but as severance compensation to which Employee is entitled by reason of
termination of his employment in the circumstances contemplated by this
Agreement. However, a set-off may be taken by the Company against the amounts
payable to Employee for expenses covering the same or equivalent hospital,
medical, accident and disability insurance coverages as set forth in Section
2(c) of this Agreement if such benefit is paid for the Employee by the Employer
to which the Employee may Join after termination by the Company or after
resignation as defined in Section 3 of this Agreement.
7. Termination. This Agreement has no specific term, but shall terminate if,
prior to a change in control of the Company, the employment of Employee with the
Company shall terminate, so long as such termination was not in anticipation of
or related to change of Control.
8.Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns, and shall be binding
upon and inure to the benefit. of Employee and his legal representatives, heirs,
and assigns.
9. Severability. In the event that any Section, paragraph, clause or other
provision of this Agreement shall be determined to be invalid or unenforceable
in any jurisdiction for any reason, such Section, paragraphs clause or other
provision shall be enforceable in any other jurisdiction in which valid and
enforceable and, in any event, the remaining Sections, paragraphs, clauses and
other provisions of this Agreement shall be unaffected and shall remain in full
force and effect to the fullest permitted by law.
10.Governing Law. This Agreement shall be interpreted, construed and governed
by the laws of the Commonwealth of Pennsylvania.
11.Headings. The headings used in this Agreement are for ease of reference only
and are not intended to affect the meaning or interpretation of any of the terms
hereof.
12.Gender and Number. whenever the context shall require, all words in this
Agreement in the male gender shall be deemed to include the female or neuter
gender, all singular words shall include the plural, and all plural words shall
include the singular.
IN WITNESS WHEREOF, this Agreement has been executed the date and year first
above written.
ATTEST:
C-COR ELECTRONICS, INC.
/s/Xxxxxxx X. Xxxxx
Chairman, and Chief
Executive Officer
/s/Xxxxxx X. Xxxxxxx
Employee
