CHANGE IN CONTROL AGREEMENT
AGREEMENT, made as of this 1st day of March, 1999, by and between
Microwave Power Devices, Inc., a Delaware corporation (the "Company"), and
Xxxxxx X. Xxxxxx, the President and Chief Executive Officer of the Company (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Company believes that the establishment and maintenance
of a sound and vital management of the Company is essential to the protection
and enhancement of the interests of the Company and its stockholders;
WHEREAS, the Company also recognizes that the possibility of a
Change in Control of the Company (as defined in Section 1 hereof), with the
attendant uncertainties and risks, might result in the departure or distraction
of key employees of the Company to the detriment of the Company; and
WHEREAS, the Company has determined that it is appropriate to take
steps to induce key employees to remain with the Company, and to reinforce and
encourage their continued attention and dedication, when faced with the
possibility of a Change in Control of the Company.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. Change in Control Definition. A Change in Control shall mean the
occurrence of any of the following: (i) any person (as defined in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
and as used in Sections 13(d) and 14(d) thereof), excluding the Company, any
Affiliates (as hereinafter defined) of the Company, or any employee benefit plan
sponsored or maintained by the Company or its Affiliates (including any trustee
of any such plan acting in his capacity as trustee), becoming the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of securities of the
Company representing more than fifty percent (50%) of the total combined voting
power of the Company's then outstanding securities; (ii) the merger,
consolidation or other business combination of the Company (a "Transaction"),
other than a Transaction involving only the Company's Affiliates or a
Transaction immediately following which the stockholders of the Company
immediately prior to the Transaction continue to have a majority of the voting
power in the resulting entity; (iii) during any period of three (3) consecutive
years beginning on or after the date hereof, the persons who were members of the
Board of Directors of the Company (the "Board") immediately before the beginning
of such period (the "Incumbent Directors") ceasing (for any reason other than
death) to constitute at least a majority of the Board or the board of directors
of any successor to the Company, provided that, any director who was not a
director as of the date hereof shall be deemed to be an Incumbent Director if
such director was elected to the board of directors by, or on the recommendation
of or with the approval of, at least two-thirds of the directors who then
qualified as Incumbent Directors either actually or by prior operation of the
foregoing unless such election, recommendation or approval occurs as a result of
an actual or threatened election contest (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act or any
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successor provision) or other actual or threatened solicitation of proxies or
contests by or on behalf of a person other than a member of the Board; or (iv)
the approval by the stockholders of the Company of any plan of complete
liquidation of the Company or an agreement for the sale of all or substantially
all of the Company's assets, other than the sale of all or substantially all of
the assets of the Company to any of the Company's Affiliates. Only one Change in
Control may occur under this Agreement. For purposes of this Agreement, the term
"Affiliates" shall have the same meaning as set forth under the definition of
"affiliates" in Rule 405 of the Securities Act of 1933, as amended.
2. Term. This Agreement shall commence on the date hereof and shall
expire on the earlier of (i) three (3) years from the date hereof, or (ii) the
date of the death of the Executive, or (iii) the termination of the Executive's
employment with the Company (for any reason) prior to a Change of Control.
3. Effect of a Change in Control. If a Change in Control occurs
simultaneous with or prior to the expiration of this Agreement pursuant to
Section 2 hereof, then the Executive shall be entitled to the amounts and
benefits provided under Section 4 hereof regardless of whether or not, upon or
after a Change of Control, the Executive continues to be employed with the
Company. In the event the Executive continues to be employed with the Company
upon or after a Change in Control, any and all amounts and benefits provided to
the Executive under Section 4 hereof shall be in addition to, and not in lieu
of, any and all salary, amounts and benefits that Executive receives from the
Company in respect of such continued employment.
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4. Payments upon a Change in Control. If pursuant to Section 3
above, the Executive is entitled to amounts and benefits under this Section 4,
the Company shall pay or provide, as the case may be, the following items:
(a) within five (5) business days following a Change of Control, the
Company shall pay to the Executive in a lump sum an amount equal to two (2)
times the sum of (i) the Executive's then current annual salary plus (ii) the
Executive's then current annual targeted bonus pursuant to the terms of that
certain Executive Incentive Bonus Plan of the Company attached hereto as Exhibit
A (as such plan may be modified from time to time.)
(b) upon the occurrence of a Change in Control, all outstanding
stock options granted by the Company to the Executive under the Company's stock
option plans (collectively, the "Plan") shall immediately vest and be
exercisable notwithstanding any provisions of the Plan to the contrary.
(c) within five (5) business days (or at such earlier time as
required by applicable law) following his termination of employment with the
Company, the Company shall pay to the Executive in a lump sum: (i) any earned
but unpaid base salary, (ii) any earned but unpaid bonus, (iii) accrued but
unused vacation time as of the date of termination, and (iv) incurred but
unreimbursed business expenses for the period prior to termination.
(d) for a period of twenty-four (24) months commencing on the date
of the Change of Control, subject to the Executive's continued copayment of
premiums which shall not exceed the level of copayments prior to such Change of
Control, the Company shall continue to
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pay the premiums to provide health benefits and coverage for the Executive and
his dependents under the Company's health plans in effect prior to such Change
of Control which cover senior executives. The Company's obligation to pay
premiums hereunder shall cease upon the Executive's employment with any employer
(other than due to self-employment) following a Change of Control. Upon the
expiration of such twenty-four (24) month period, the Company shall offer COBRA
continuation health coverage to the Executive and his dependents in accordance
with applicable law.
5. No Duty to Mitigate/Set-off; Terminate Employment Agreement;
Severance. If pursuant to Section 4 hereof the Executive is entitled to payment,
the Executive will not be required to seek other employment or to attempt in any
way to reduce any amounts payable to the Executive by the Company pursuant to
this Agreement. Further, the amounts and benefits provided for in this Agreement
shall not be reduced by any compensation earned by the Executive or benefits
provided to the Executive as the result of employment by another employer or
otherwise. Notwithstanding anything herein to the contrary, if pursuant to
Section 4 hereof the Executive is entitled to payment: (i) the Executive's
Employment Agreement with the Company shall immediately terminate and the
Executive shall not be entitled to any payment with respect to such Employment
Agreement and (ii) the payment pursuant to Section 4 hereof shall be in lieu of
any other severance payments to which Executive may be entitled pursuant to any
severance plan of the Company or otherwise.
6. Successors; Binding Agreement. In addition to any obligations
imposed by law upon any successor to the Company, the Company will require any
successor (whether direct
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or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree in writing to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it. This Agreement
shall inure to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die while any amount
would still be payable to the Executive hereunder if the Executive had continued
to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the executors, personal
representatives or administrators of the Executive's estate. This Agreement is
personal to the Executive and neither this Agreement or any rights hereunder may
be assigned by the Executive.
7. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. This Agreement
constitutes the entire Agreement between the parties hereto pertaining to the
subject matter hereof. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. All references
to any law shall be deemed also to refer to any successor provisions to such
laws. This Agreement may be executed in several counterparts, each of which
shall be deemed to be an
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original but all of which together will constitute one and the same instrument.
If any provisions of this Agreement shall be declared to be invalid or
unenforceable, in whole or in part, such invalidity or unenforceability shall
not affect the remaining provisions hereof which shall remain in full force and
effect.
8. Notices. All notices under this Agreement shall be given in
writing and shall be either delivered personally or sent by certified or
registered mail, return receipt requested, addressed to the other party at the
appropriate address first set forth above, or to such other address as such
party shall designate by written notice as aforesaid. Notices shall be deemed
given when received or two (2) days after mailing, whichever is earlier.
9. Non-Exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive, equity or other plan or program provided by the
Company and for which the Executive may qualify. Amounts that are vested
benefits or which the Executive is otherwise entitled to receive under any plan
or program of the Company, at or subsequent to the date of termination shall be
payable in accordance with such plan or program, except as otherwise
specifically provided herein.
10. Not an Agreement of Employment. This is not an agreement
assuring employment and, subject to any other agreement between the Executive
and the Company, the Company reserves the right to terminate the Executive's
employment at any time with or without cause.
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11. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without
reference to rules relating to conflicts of law.
IN WITNESS WHEREOF, this Agreement has been executed as of the day
and year first above written.
MICROWAVE POWER DEVICES, INC.
By: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: EVP, COO/CFo
/s/ Xxxxxx X. Xxxxxx
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Executive
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