Exhibit 10.16
GENRAD, INC.
SEVERANCE AGREEMENT
This is an AGREEMENT entered into between GenRad, Inc. (the "Company")
and Xxxxx X. Xxxxx ("Executive") effective as of the 21st day of August, 1998.
Executive is a key executive of the Company and a vital part of its
management. In consideration of Executive's continued employment with the
Company, the parties agree as follows:
1. TERM; WINDOW PERIOD. The term during which this Agreement (the
"Agreement") will be in effect (the "Term of the Agreement") will begin on
August 21, 1998 (the "Effective Date") and, except as provided below, will
terminate on the date which is two years from the date the Company advises the
Executive in writing that it is terminating this Agreement. If a Change of
Control (as defined in Exhibit A) occurs during the Term of the Agreement, the
Agreement will remain in effect until all obligations hereunder have been
discharged. The period starting on the date of such a Change of Control and
ending on the third anniversary of the Change of Control will be a "Window
Period" during which special provisions of this Agreement will apply.
2. POSITIONS AND DUTIES. Subject to the provisions of the Agreement:
2.1 Executive will serve as Vice President, Manufacturing
Operations, of the Company with responsibilities consistent with these
positions.
2.2 Executive will be a full-time employee of the Company and,
except for reasonable work-related travel, will perform his duties at the
Company's headquarters location or, if different, the location at which he now
principally performs his employment duties for the Company.
2.3 Executive will devote his entire business time and attention
and his best efforts to the duties and services of his positions. However,
Executive may serve on boards of directors of other businesses and attend to
personal investments and community and charitable service, provided that such
activities are not competitive with the business of the Company and do not
interfere with the performance of Executive's duties to the Company.
3. COMPENSATION AND BENEFITS. During the term of the Agreement, the
Company will provide compensation and benefits to Executive as follows:
3.1 BASE SALARY. Executive's base salary as of the Effective Date
will be $150,000 per year, payable in accordance with the applicable payroll
practices of the Company. The company will review Executive's base salary
annually, and Executive will receive such increases in base salary, if any, for
each succeeding year as the Board of
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Directors of the Company (the "Board") determines in its sole discretion.
Executive's Base Salary will not be decreased during the Term of the Agreement
except as part of a general reduction in which the base salaries of all
corporate officers of the Company have been decreased and will not be decreased
during a Window Period without Executive's prior written agreement.
3.2 PERFORMANCE BONUS. Executive will be eligible for an annual
performance bonus. Executive's bonus for any year ending during a Window Period
will not be less than 100 percent of his bonus for the completed year
immediately preceding the Change of Control.
3.3 OTHER BENEFITS. Executive will be entitled to participate in
all policies and arrangements (or in any successor or supplemental plans,
policies or arrangements) generally made available to officers of the Company.
Such benefits shall not be reduced during the Window Period.
4. TERMINATION OF EMPLOYMENT; Severance Benefits.
4.1 TERMINABILITY OF EMPLOYMENT. Either the Company or Executive
may at any time terminate Executive's employment with the Company after giving
30 days' written notice to the other party. However, if Executive's employment
terminates during the Term of the Agreement, the parties will be required to
discharge the applicable obligations described in this Section 4 and elsewhere
in this Agreement. If Executive's employment terminates at any time other than
during the Term of the Agreement, Executive will have no rights under the
Agreement.
4.2 TERMINATION UPON DEATH OR DISABILITY. If Executive ceases to
be an employee of the Company as a result of death or disability, the Executive
will be entitled to receive the severance benefits set forth in Section 4.4.
However, nothing in this Agreement is intended to interfere with the rights of
Executive and his family or beneficiaries under other applicable plans, policies
or arrangements of the Company. For purposes of this Section 4.2, the Company
may terminate Executive's employment for "disability" if, because of physical or
mental incapacity, Executive is unable for a period of 30 consecutive days to
perform each of the material duties of his position and if determined by a
qualified physician chosen by the Company (and, if during a Window Period,
approved by the Executive or his conservator) to be probable that such
incapacity will continue for an additional 60 consecutive days.
4.3 TERMINATION BY THE COMPANY FOR CAUSE OR BY EXECUTIVE WITHOUT
GOOD REASON. If the Company terminates Executive's employment for Cause (as
defined in this Section 4.3) or if Executive terminates his employment other
than for Good Reason (as defined in Section 4.4), the Company will have no
further obligation or liability to Executive hereunder other than for Base
Salary earned and unpaid at the time of
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termination and compensation for accrued vacation, and the term of the Agreement
will end when those amounts are paid.
"Cause" mean (a) willful malfeasance or gross negligence in the
performance by Executive of his duties, resulting in harm to the Company, (b)
fraud or dishonesty by Executive with respect to the Company, or (c) Executive's
conviction of a felony.
4.4 BY THE COMPANY WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON.
(a) ENTITLEMENT TO SEVERANCE BENEFITS. If, during the Term
of the Agreement, the Company terminates Executive's employment
without Cause, or if Executive terminates his employment for Good
Reason, the Company will, subject to Section 5 below, provide
severance benefits to Executive as set forth below in this Section
4.4.
"Good Reason" means (i) failure by the Company to maintain
Executive in the positions described in Section 2 or assignment to
Executive of duties materially inconsistent with such positions,
(ii) failure by the Company to provide Executive with the
compensation and benefits described in Section 3, or (iii)
relocation of Executive's principal place of work to a location
more than 50 miles from the previous location.
(b) NORMAL SEVERANCE BENEFITS. Except as provided in
paragraph (c), the Company will provide severance benefits as
follows:
(i) The Company will pay to Executive within 30
days of the termination a lump-sum cash
amount equal to one hundred percent (100%)
of his annual Base Salary in effect at the
time of his termination (or, if his Base
Salary has been reduced within 60 days of
the termination, his Base Salary in effect
prior to the reduction).
(ii) The Company will continue for a period of
one year from the date of termination to
provide Executive with the benefits set
forth in Section 3.3 above. To the extent
that the Company is unable to provide such
benefits to Executive under its existing
plans and arrangements, it will pay
Executive cash amounts equal to the cost the
Company would have incurred to provide these
benefits.
(iii) Notwithstanding any contrary provisions of
the plans or arrangements under which they
are granted, all options to purchase Company
stock held by Executive will immediately
become exercisable.
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(c) SEVERANCE BENEFITS FOLLOWING A CHANGE OF CONTROL. If
the termination occurs during a Window Period, the Company will,
instead of the benefits prescribed in paragraph (b), provide
severance benefits to Executive as follows:
(i) The Company will pay to Executive within 30
days of the termination a lump-sum cash
amount equal to two hundred percent (200%)
of the sum of (A) Executive's annual Base
Salary in effect immediately prior to the
termination (or, if his Base Salary has been
reduced within 60 days of the termination or
at any time after the Change of Control, his
Base Salary in effect prior to the
reduction), plus (B) an amount equal to the
bonus earned by Executive for the fiscal
year completed immediately prior to the
termination.
(ii) The Company will also pay to Executive
within 30 days of the termination a pro-rata
portion of his target bonus (provided for in
Section 3.2 above) for the year of
termination.
(iii) The Company will continue for a period of
three years from the date of termination to
provide Executive with the benefits set
forth in Section 3.3 above. To the extent
the Company is unable to provide such
benefits to Executive under its existing
plans and arrangements, it will either
arrange to provide Executive with
substantially similar benefits upon
comparable terms or pay Executive cash
amounts equal to Executive's cost of
obtaining such benefits.
(iv) Notwithstanding any contrary provisions of
the plans or arrangements under which they
are granted, all options to purchase Company
stock held by Executive will immediately
become exercisable.
5. LIMITATIONS ON SEVERANCE BENEFITS.
5.1 Except as provided in Section 5.2 below, the payments and
benefits to which Executive will be entitled under Section 4 of this Agreement
will be reduced to the extent necessary to prevent Executive from becoming
liable for the excise tax levied on certain "excess parachute payments" under
section 4999 of the Internal Revenue Code of
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1986, as amended (the "Code"). If a reduction is made under this Section 5.1,
Executive will have the right to determine which payments and benefits will be
reduced.
5.2 The limitations of Section 5.1 will not apply if--
(i) the present value, net of all federal, state and
other income and excise taxes, of all payments and
benefits to which Executive is entitled hereunder
without such limitations, exceeds
(ii) the present value, net of all federal, state and
other income and excise taxes, of all payments and
benefits to which Executive would be entitled
hereunder if such limitations applied.
5.3 Determinations under this Section 5 will be made by the firm
of certified public accountants then serving as the Company's auditor unless
Executive has reasonable objections to the use of that firm, in which case the
determinations will be made by a comparable firm chosen by Executive after
consultation with the Company. The determinations of such firm will be binding
upon the Company and Executive.
6. WITHHOLDING. All payments required to be made by the Company to
Executive under this Agreement will be subject to the withholding of such
amounts, if any, relating to tax and other payroll deductions as may be required
by law.
7. FEES AND EXPENSES. In the event of Executive's termination of
employment during a Window Period, the Company will pay any and all fees and
expenses (including legal fees and other costs of arbitration or litigation)
that may be incurred by Executive in enforcing his rights under this Agreement.
If the termination of employment does not occur during a Window Period, the
Company will pay that amount of such fees and expenses that bears the same ratio
to the total fees and expenses as the dollar amount of payments and benefits
determined to be payable to Executive bears to the total dollar amount of
payments and benefits in dispute.
8. NO DUTY TO MITIGATE. Benefits payable under this Agreement as a
result of termination of Executive's employment will be considered severance pay
in consideration of his past service and his continued service from the
Effective Date, and his entitlement thereto will neither be governed by any duty
to mitigate his damages by seeking further employment nor offset by any
compensation that he may receive from other employment.
9. CONFIDENTIALITY AND EXCLUSIVITY. Executive agrees to maintain the
confidentiality of the Company's (and its related entities and projects) books,
records, financial information, technical information, business plans and/or
strategies, and other confidential matters unless required to make disclosure in
the performance of his duties for the Company or as a result of a legal
proceeding or other legally mandated cause. In the event of termination without
Good Reason by Executive, other than such a
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termination occurring during a Window Period, Executive will not for one year
following termination act as an executive officer for any company that directly
competes against the Company. The parties recognize and agree that should the
Company be required to pursue a claim against Executive under this Section 9,
the Company will likely be required to seek injunctive relief as well as damages
at law. Accordingly, Section 11, Arbitration, will not apply to any action by
the Company against Executive for violation of this Section 9. Executive agrees
for purposes of any disputes arising under this Section 9 to submit to the
exclusive jurisdiction of the federal and state courts in the Commonwealth of
Massachusetts.
10. INDEMNIFICATION. To the extent permitted by law, the Company will
defend, indemnify and hold Executive harmless from and against any and all
losses, liabilities, damages, expenses (including attorneys' fees and costs),
actions, causes of action or proceedings arising directly or indirectly from
Executive's performance of this Agreement or services as an employee of the
Company. Executive may retain his own counsel to defend himself in such actions,
and the Company will pay for the reasonable costs and expense of such counsel.
This indemnification is in addition to any right of indemnification to which
Executive may be entitled under the Company's Articles of Organization and
By-laws and any insurance policies that may be maintained by the Company.
11. ARBITRATION. Except as otherwise provided in Section 9, any dispute
or controversy between the parties involving the construction or application of
any terms, covenants or conditions of this Agreement, or any claim arising out
of or relating to this Agreement, or any claim arising out of or relating to
Executive's employment by the Company that is not resolved within ten days by
the parties will be settled by arbitration in Boston, Massachusetts, in
accordance with the rules of the American Arbitration Association then in
effect, and judgment upon the award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof. The Company and Executive agree that
the arbitrator(s) will have no authority to award punitive or exemplary damages
or so-called consequential or remote damages such as damages for emotional
distress. Any decision of the arbitrator(s) will be final and binding upon the
parties. Upon request, the arbitrator(s) shall submit written findings of fact
and conclusions of law. The parties agree and understand that they hereby waive
their rights to a jury trial of any dispute or controversy relating to the
matters specified above in this Section 11.
12. RIGHTS OF SURVIVORS. If Executive dies after becoming entitled to
benefits under Section 4 following termination of employment but before all such
benefits have been provided, (a) all unpaid cash amounts will be paid to the
beneficiary that have been designated by Executive in writing (the
"beneficiary"), or if none, to Executive's estate, (b) all applicable insurance
coverage will be provided to Executive's family as though Executive had
continued to live, and (c) any stock options that become exercisable under
Section 4.4(b)(iii) or Section 4.4(iv) will be exercisable by the beneficiary,
or if none, the estate.
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13. SUCCESSORS. This Agreement will inure to and be binding upon the
Company's successors. The Company will require any successor to all or
substantially all of the business and/or assets of the Company by sale, merger
or consolidation (where the Company is not the surviving corporation), lease or
otherwise, by agreement in form and substance satisfactory to Executive, to
assume this Agreement expressly. This Agreement is not otherwise assignable by
the Company.
14. SUBSIDIARIES. For purposes of this Agreement, employment by a
corporation or other entity that is controlled directly or indirectly by the
Company will be deemed to be employment by the Company. Thus, references in the
Agreement to "Company" include such corporations or other entities where
appropriate in the context.
15. AMENDMENT OR MODIFICATION; WAIVER. Except as provided in clause (1)
of Exhibit A, this Agreement may not be amended unless agreed to in writing by
Executive and the Company. No waiver by either party of any breach of this
Agreement will be deemed a waiver of a subsequent breach.
16. SEVERABILITY. In the event that any provision of this Agreement is
determined to be invalid or unenforceable, the remaining provisions shall remain
in full force and effect to the fullest extent permitted by law.
17. CONTROLLING LAW. This Agreement will be controlled and interpreted
pursuant to Massachusetts law without regard to the conflict of laws principles
thereof.
18. SUPERSEDED AGREEMENT. This Agreement supersedes any prior or
contemporaneous agreement between the parties with respect to the subject matter
hereof.
19. NOTICES. Any notices required or permitted to be sent under this
Agreement are to be delivered by hand or mailed by registered or certified mail,
return receipt requested, and addressed as follows:
IF TO THE COMPANY:
GenRad, Inc.
0 Xxxxxxxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000-0000
Attn: President
IF TO EXECUTIVE:
Xxxxx X. Xxxxx
00 Xxxxxx Xxxx
Xxxxxxx, XX 00000
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Either party may change its address for receiving notices by giving
notice to the other party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
---------------------------------
Xxxxx X. Xxxxx
GENRAD, INC.
By________________________________
Xxx X. Xxxxx
Its President
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EXHIBIT A
"Change of Control" means the occurrence of any of the following
events:
(1) any Person becomes the owner of 20% or more of the
Company's Common Stock; provided, however, that the Board of Directors
of the Company may unilaterally amend this clause (1) to increase the
20% threshold to any percentage up to, but not exceeding, 50%; or
(2) individuals who, as of the Effective Date, constitute the
Board of Directors of the Company (the "Continuing Directors") cease
for any reason to constitute at least a majority of such Board;
provided, however, that any individual becoming a director after the
Effective Date whose election or nomination for election by the
Company's shareholders was approved by a vote of at least a majority of
the Continuing Directors will be deemed to be a Continuing Director,
but excluding for this purpose any such individual whose initial
assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Securities and Exchange Act of
1934 (the "Exchange Act")) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the
Board; or
(3) approval by the shareholders of the Company of a
reorganization, merger, consolidation or other transaction that will
result in the transfer of ownership of more than 50% of the Company's
Common Stock; or
(4) liquidation or dissolution of the Company or sale of
substantially all of the Company's assets.
In addition, for purposes of this definition the following terms have
the meanings set forth below:
"Common Stock" means the then outstanding Common Stock of the Company
plus, for purposes of determining the stock ownership of any Person, the number
of unissued shares of Common Stock which such Person has the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) upon the exercise of conversion rights, exchange rights, warrants or
options or otherwise. Notwithstanding the foregoing, the term "Common Stock"
does not include shares of preferred stock or convertible debt or options or
warrants to acquire shares of Common Stock (including any shares of Common Stock
issued or issuable upon the conversion or exercise thereof) to the extent that
the Board expressly so determines in any future transaction or transactions.
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A Person will be deemed to be the "owner" of any Common Stock of which
such Person would be the "beneficial owner", as such term is defined in Rule
13d-3 promulgated by the Securities and Exchange Commission under the Exchange
Act.
"Person" has the meaning used in Section 13(d) of the Exchange Act,
except that "Person" does not include (i) the Employee, an Employee Related
Party, or any group of which the Employee or Employee Related Party is a member,
or (ii) the Company or a wholly-owned subsidiary of the Company or an employee
benefit plan (or related trust) of the Company or of a wholly-owned subsidiary.
An "Employee Related Party" means any affiliate or associate of the
Employee other than the Company or a subsidiary of the Company. The terms
"affiliate" and "associate" have the meanings given in Rule 12b-2 under the
Exchange Act; the term "registrant" in the definition of "associate" means, in
this case, the Company.
