ANDREA ELECTRONICS CORPORATION AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT
EXHIBIT
10.2
XXXXXX
ELECTRONICS CORPORATION
AMENDED
AND RESTATED
The Board
of Directors (the “Board”) of Xxxxxx Electronics Corporation (the “Company”), a
New York corporation, desires to assure the Company of the continued services of
Xxxxxx X. Xxxxxxx (the “Employee”) for the benefit of the Company, particularly
in the face of a take over attempt.
This
Change in Control agreement (“Agreement”) therefore sets forth those benefits
which the Company will provide to Employee in the event Employee’s employment
with the Company is terminated after a “Change in Control of the Company” (as
defined in paragraph 2) under the circumstances described below.
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1)
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TERM
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If a
Change in Control of the Company should occur while Employee is still an
employee of the Company, then this Agreement shall continue in effect from the
date of such Change in Control of the Company for so long as Employee remains an
employee of the Company, but in no event for more than three full calendar years
following a Change in Control of the Company; provided, however, that the
expiration of the term of this Agreement shall not adversely affect Employee’s
rights under this Agreement which have accrued prior to such
expiration. If no Change in Control of the Company occurs before
Employee’s status as an employee of the Company is terminated, this Agreement
shall expire on such date.
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2)
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CHANGE
IN CONTROL
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a)
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For
purposes hereof, a “change in control” shall be defined
as:
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i)
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The
acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within
the meaning of Rule 13D-3 promulgated under the Exchange Act) of 20% or
more of either (A) the then outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or (B) the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of Directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this
subsection (I), the following acquisitions shall not constitute a Change
of Control: (i) any acquisition directly from the Company, (ii)
any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or
any corporation controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (A), (B)
and (C) of subsection (iii) below:
or
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ii)
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Individuals
who, as of the date hereof, constitute the Committee (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the
Committee, provided, however, that any individual becoming a director
subsequent to the date hereof whose election or nomination for election by
the Company’s shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption
of office occurs as a result of an actual or threatened election contest
with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Committee; or
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iii)
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Consummation
of a reorganization, merger, consolidation or sale or other disposition of
all or substantially all of the assets of the Company (a “Business
Combination”), in each case, unless, following such Business Combination,
(A) all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or
indirectly, more than 60% or, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior
to such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such
ownership existed prior to the Business Combination and (C) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Committee, providing for such Business Combination;
or
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iv)
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Approval
by the shareholders of the Company of a complete liquidation or
dissolution of the Company.
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b)
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For
purposes hereof, “Termination” shall be defined as: involuntary
termination or a “voluntary” termination following an event of “Good
Reason.” For the purposes of the this Agreement “Good Reason”
shall mean the occurrence of any of the following events without the
Employee’s consent::
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i)
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The
assignment to Employee of duties that constitute a material diminution of
her authority, duties, or responsibilities (including reporting
requirements);
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ii)
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A
material diminution in Employee’s base
salary;
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iii)
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Relocation
of Employee to a location outside a radius of 15 miles of the Company’s
main office; or
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iv)
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Any
other action or inaction by the Company that constitutes a material breach
of this Agreement;
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provided,
that within ninety (90) days after the initial existence of such event, the
Company shall be given notice and a opportunity, not less than thirty (30) days,
to effectuate a cure for such asserted “Good Reason” by
Employee. Employee’s resignation hereunder for Good Reason shall not
occur later than one hundred fifty (150) days following the initial date of
which the event Employee claims constitutes Good Reason occurred.
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c)
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Upon
the occurrence of a Change in Control followed by the Employee’s
Termination of employment, the Company shall pay Employee, or in the event
of her subsequent death, her beneficiary or beneficiaries, or her estate,
as the case may be, a sum equal to three (3) times Employee’s average
annual compensation for the five (5) preceding taxable
years. Such annual compensation shall include bonuses, pension
and profit sharing plan benefits, severance payments, retirement benefits
and fringe benefits paid or to be paid to the Employee during such
years. Such annual compensation shall not include any
commissions. Payments will be made, at the Company’s election,
in a lump sum or paid in equal thirty (30) monthly installments following
the Employee’s Termination.
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d)
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All
restrictions on the restricted stock will lapse immediately, incentive
stock options and stock appreciation rights will become immediately
exercisable, and Performance Shares/Units will vest immediately, in full,
in the event of a Change in
Control.
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e)
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Upon
the occurrence of a Change in Control, Employee will be entitled to
receive benefits due her under or contributed by the Company on her behalf
pursuant to any retirement, incentive, profit sharing, bonus, performance,
disability or other employee benefit plan maintained by the Company on
Employee’s behalf to the extent such benefits are not otherwise paid to
Employee under a separate provision of this
Agreement.
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f)
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Upon
the occurrence of a Change in Control followed by the Employee’s
Termination of employment, the Company will cause to be continued life,
medical, dental and disability coverage substantially identical to the
coverage maintained by the Company for Employee prior to her severance,
except to the extent that such coverage may be changed in its application
for all Company employees on a nondiscriminatory basis. Such
coverage and payments shall cease upon the expiration of thirty-six (36)
full calendar months following the date of
Termination.
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g)
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Any
and all payments to be made to the Employee under this Agreement or
otherwise as a result of a Change in Control (hereinafter referred to as
“Change in Control Payments”), shall be made free and clear of, and
without deduction or withholding for or on account of, any tax which may
be payable under Section 4999 of the Code, now or hereafter imposed,
levied, withheld or assessed (such amounts being hereinafter referred to
as the “Excise Taxes”). If, notwithstanding the foregoing
provision, any Excise Taxes are withheld from any Change in Control
Payments made or to be made to Employee, the amounts so payable to the
Employee shall be increased to the extent necessary to yield to the
Employee (after payment of any tax which may be payable under Section 4999
of the Code) the full amount which he is entitled to receive pursuant to
the terms of this Agreement or otherwise without regard to liability for
any Excise Taxes and any other Federal, State, FICA/Medicare and
unemployment taxes thereon. In the event any Excise Taxes are
now or hereafter imposed, levied, assessed, paid or collected with respect
to the Change of Control Payments made or to be made to the Employee,
Excise Taxes and any other Federal, State and unemployment taxes thereon
shall be paid by the Company or, if paid by the Employee, shall be
reimbursed to the Employee by the Company upon its receipt of satisfactory
evidence of such payment having been
made.
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h)
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Section
409A of the Code.
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i)
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This
Agreement is intended to comply with the requirements of Section 409A of
the Internal Revenue Code (the “Code”), and specifically, with the
“short-term deferral exception” under Treasury Regulation Section
1.409A-1(b)(4) and the “separation pay exception:” under Treasury
Regulation Section 1.409(A)-1(b)(9)(iii), and shall in all respects be
administered in accordance with Section 409A of the Code. If
any payment or benefit hereunder cannot be provided or made at the time
specified herein without incurring sanctions on Employee under Section
409A of the Code, then such payment or benefit shall be provided in full
at the earliest time thereafter when such sanctions will not be
imposed. For purposes of Section 409A of the Code, all payments
to be made upon termination of employment under this Agreement may only be
made upon a “separation from service” (within the meaning of such term
under Section 409A of the Code), each payment made under this Agreement
shall be treated as a separate payment, the right to a series of
installment payments under this Agreement (if any) is to be treated as a
right to a series of separate payments, and if a payment is not made by
the designated payment date under this Agreement, the payment shall be
made by December 31 of the calendar year in which the designated date
occurs. To the extent that any payment provided for hereunder
would be subject to additional tax under Section 409A of the Code, or
would cause the administration of this Agreement to fail to satisfy the
requirements of Section 409A of the Code, such provision shall be deemed
null and void to the extent permitted by applicable law, and any such
amount shall be payable in accordance with (ii) below. In no
event shall Employee, directly or indirectly, designate the calendar year
of payment.
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ii)
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If
when separation from service occurs Employee is a “specified employee”
within the meaning of Section 409A of the Code and if the cash severance
payment under this Agreement would be considered deferred compensation
under Section 409A of the Code, and, finally, if an exemption from the
6-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not
available, the Company will make the severance payment under the Agreement
to Employee in a single lump sum without interest of the first payroll
date that occurs after the date that is six (6) months after the date on
which Employee separate from
service.
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iii)
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If
(x) under the terms of the applicable policy or policies for the insurance
or other benefits specified in this Agreement it is not possible to
continue coverage for Employee and her dependents, or (y) when a
separation from service occurs Employee is a “specified employee” within
the meaning of Section 409A of the Code, and if any of the continued
insurance coverage or other benefits specified in this Agreement would be
considered deferred compensation under Section 409A of the Code, and,
finally, if an exemption from the six-month delay requirement of Section
409A(a)(2)(B)(i) of the Code is not available for that particular
insurance or other benefit, the Company shall pay to Employee in a single
lump sum an amount in cash equal to the present value of the Company’s
projected cost to maintain that particular insurance benefit (and
associated income tax gross-up benefit, if applicable) had Employee’s
employment not terminated, assuming continued coverage for 36
months. The lump-sum payment shall be made thirty (30) days
after employment termination or, if provision (ii) of this section
applies, on the first payroll date that occurs after the date that is six
(6) months after the date on which Employee separates from
service.
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iv)
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Reference
in this Agreement to Section 409A of the Code include rules, regulations,
and guidance of general application issued by the Department of the
Treasury under Internal Revenue Section 409A.Any payments are to intended
to comply with Section 409A of the Code. Section 409A of the
Code….
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SIGNATURES
IN WITNESS WHEREOF, Xxxxxx Electronics
Corporation has caused this Agreement to be executed and its seal to be affixed
hereunto by its duly authorized officer and its directors, and Employee has
signed this Agreement, on the 11th day of
November, 2008.
XXXXXX
ELECTRONICS CORPORATION
By: /s/ Xxxxxxxx
Spaet_________________________
Xxxxxxxx
Xxxxx
Chairman
of the Compensation Committee of the Board of Directors, Xxxxxx Electronics
Corporation
EMPLOYEE
/s/ Xxxxxx X.
Guiffre________________________
Xxxxxx X.
Xxxxxxx
Vice
President, Chief Financial Officer and Assistant Corporate
Secretary
