Exhibit 10.I
THIS SEVERANCE AGREEMENT, dated as of January 5, 1998 (this "Agreement"),
is made by and between Merrimac Industries, Inc., a New Jersey corporation,
having its principal offices at 00 Xxxxxxxxx Xxxxx, Xxxx Xxxxxxxx, Xxx Xxxxxx
(the "Company"), and _______________________, residing in the State of New
Jersey (the "Executive").
WHEREAS, the Company considers it essential to the best interests of its
shareholders to xxxxxx the continued employment of key executive management
personnel; and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly-held corporations, the possibility of a
Change in Control (as defined in Section 1.3 below) of the Company exists from
time to time and that such possibility, and the uncertainty, instability and
questions which it may raise for and among key executive management personnel,
may result in the premature departure or significant distraction of such
management personnel to the material detriment of the Company and its
shareholders; and
WHEREAS, the Board has determined that appropriate steps should be taken to
reinforce, focus and encourage the continued attention and dedication of key
members of the executive management of the Company and its subsidiaries,
including (without limitation) the Executive, to their assigned duties without
distraction in the face of potentially disturbing or unsettling circumstances
arising from the possibility of a Change in Control of the Company; and
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Company and the Executive hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings set forth below:
1.1 "Annual Base Salary" shall mean the Executive's rate of regular
basic annual compensation prior to any reduction under a salary reduction
agreement pursuant to section 401(k) or section 125 of the Internal Revenue Code
of 1986, as amended from time to time (the "Code"), and shall not include
(without limitation) cost of living allowances, fees, retainers, reimbursements,
bonuses, incentive awards, prizes or similar payments.
1.2 "Cause" for termination by the Company of the Executive's
employment, after any Change in Control, shall mean (i) willful failure to
perform normal and customary duties for an extended period of time for any
reason other than death or disability; or (ii) gross negligence or willful
misconduct, including but not limited to fraud, embezzlement or intentional
misrepresentation; or (iii) commission of, or indictment or conviction for, a
felony; or (iv) misappropriation of a material opportunity of the Company; or
(v) willfully engaging in competitive activities against the Company or
purposely aiding a competitor of the Company; or (vi) violation of any material
term of the Agreement and, if the violation may be cured by the Executive, the
failure to cure the violation within ten days after receipt of written notice of
such violation.
1.3 "Change in Control" shall mean and be deemed to have occurred if:
(i) any Person (as that person is defined in Section 1.7 below), who is or
becomes the beneficial owner (as that term is used in Section 13(d) of the
Securities and Exchange Act of 0000 ("xxx Xxxxxxxx Xxx")) of stock of the
Company entitled to cast more than 25% of the votes at the time entitled to be
cast generally for the election of directors; or (ii) more than 50% of the
members of the Board of Directors of the Company shall not be Continuing
Directors (which term, as used herein, means the directors of the Company (A)
who were members of the Board of Directors of the Company on December 1, 1997 or
(B) who subsequently became directors of the Company and who were elected or
designated to be candidates for election as nominees of the Board of Directors,
or whose election or nomination for election by the Company's stockholders was
otherwise approved, by a vote of a majority of the Continuing Directors then on
the Board of Directors); or (iii) the Company is merged or consolidated with, or
in any transaction or series of transactions, all or substantially all of the
business or assets of the Company shall be sold or otherwise acquired by,
another corporation or entity and, as a result thereof, the stockholders of the
Company immediately prior thereto shall not have at least 50% or more of the
combined voting power of the surviving, resulting or transferee corporation or
entity.
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1.4 "Company" shall mean Merrimac Industries, Inc., a New Jersey
corporation, and any successor to its business and/or assets which assumes
(either expressly, by operation of law or otherwise) and/or agrees to perform
this Agreement by operation of law or otherwise (except in determining, under
Section 1.3 hereof, whether or not any Change in Control of the Company has
occurred in connection with such succession).
1.5 "Disability" shall mean if, as result of physical or mental
illness or injury, the Executive is unable to perform the essential duties of
his position for a period of 90 days or for a period of 120 non-consecutive days
in any twelve month period, or poses a direct threat to the safety and health of
the Executive or others and there is no reasonable accommodation that can be
provided by the Company that would allow the Executive to perform the essential
functions of the Executive's position as determined by applicable law.
1.6 "Good Reason" for termination by the Executive of the Executive's
employment in connection with or as a result of any Change in Control, shall
mean the occurrence (without the Executive's prior express written consent) of
any one of the following acts, or failures to act: (i) a material diminution of
the duties and responsibilities of the Executive; or (ii) a reduction in
compensation or benefits of the Executive; or (iii) any failure by the Company
to comply with any of the provisions of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive; or (iv) any purported termination of the Executive's employment which
is not in pursuant to a Notice of Termination satisfying the requirements of
Section 3.1; or (v) the relocation of the Company's principal executive offices
where the Executive works to a location more than twenty-five (25) miles from
its location on the date of this Agreement or, the Company's requiring the
Executive to be based anywhere other than the Company's principal executive
offices. Required travel on the Company's business to an extent substantially
consistent with the Executive's business travel obligations as of the date of
this Agreement is not a relocation event under this Agreement.
1.7 "Person" shall have the meaning ascribed thereto in Section 13(d)
and 14(d) in the Exchange Act provided, however, a Person shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of its
subsidiaries (in its capacity as such), (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same character and proportions as their ownership of stock of
the Company.
2. Severance Payments.
2.1 Severance. The Company shall pay the Executive the payments
described in this Section 2.1 (the "Severance Payments") upon the termination of
the Executive's employment with the Company within one year after a Change in
Control unless such termination is (i) by the Company for Cause, or (ii) by the
Executive without Good Reason, or (iii) due to Executive's death or disability.
The Executive's right to terminate the Executive's employment for Good Reason
shall not be affected by the Executive's incapacity due to physical or mental
illness. The Executive's continued employment shall not constitute consent to,
or a waiver of rights with respect to any act or failure to act constituting
Good Reason hereunder.
2.1.1 The Company shall pay to the Executive for a period of twelve
months, in accordance with the Company's regular salary payment procedures, an
annualized amount equal to two times the Annual Base Salary of the Executive.
2.1.2 For a twenty-four month period after the Date of Termination,
the Company shall arrange to provide the Executive with health insurance
benefits substantially similar to those which the Executive is receiving
immediately prior to any Change in Control.
2.2 Round Down. To the extent that any payments made under this
Agreement may be subject to the excise tax imposed under section 4999 of the
Code, the Company shall reduce the amount of such payments by the minimum amount
necessary to avoid being subject to such excise tax.
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3. Termination Procedures.
3.1 Notice of Termination. Within one year after a Change in Control
any purported termination of the Executive's employment with the Company (other
than by reason of death) shall be communicated by written Notice of Termination
from one party hereto to the other party hereto in accordance with Section 3
hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon, if any, and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment with the Company under the provision so indicated. For purposes of
this Agreement, any purported termination not effected in accordance with this
Section 3.1 shall not be considered effective.
3.2 Date of Termination. "Date of Termination", with respect to any
purported termination of the Executive's employment with the Company within one
year of after a Change in Control shall mean (i) if the Executive's employment
is terminated for Disability, 10 days after Notice of Termination is given
(provided that the Executive shall not have returned to the full-time
performance of the Executive's duties during such period), and (ii) if the
Executive's employment is terminated for any other reason, the date specified in
the Notice of Termination which, in the case of a termination by the Company,
shall not be less than ten business days except in the case of a termination for
Cause and, in the case of a termination by the Executive, shall not be less than
ten business days nor more than 20 business days, respectively, after the date
such Notice of Termination is given.
4. No Mitigation. The Company agrees that, if the Executive's employment is
terminated, the Executive is not required to seek other employment or attempt in
any way to reduce any amounts payable to the Executive by the Company pursuant
to Section 2. Further, the amount of any payment or benefit provided for in
Section 2 (other than pursuant to Section 2.1.2) shall not be reduced by any
compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, or offset against any amount claimed to be
owed by the Executive to the Company or any of its subsidiaries or otherwise.
5. Successors; Binding Agreement.
5.1 Successors. In addition to any obligations imposed by law upon any
successor to the Company, the Company will require any successor (whether direct
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 to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
5.2 Binding Agreement. This Agreement shall inure to the benefit of
and be enforceable by this 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 (other than amounts which, by their terms, terminate
upon the death of the Executive) the Executive shall be paid, 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.
6. Notices. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other addresses as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:
To the Company: Merrimac Industries, Inc.
00 Xxxxxxxxx Xxxxx
Xxxx Xxxxxxxx, XX 00000
Attn: Chief Executive Officer
To the Executive: -----------------------------
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7. Miscellaneous. No provision 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 of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. 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. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New Jersey without regard to the principles of
conflict of laws thereof. All references to sections of the Exchange Act or the
Code shall be deemed also to refer to and include any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law and any
additional withholding to which the Executive has agreed.
8. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. No Limitation. Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company or any of its affiliated companies and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other contract or
agreement with the Company or any of its affiliated companies. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first written above.
MERRIMAC INDUSTRIES, INC.
By:
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Name: Xxxxx X. Xxxxxx
Title: Chairman and Chief Executive Officer
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