EXHIBIT 10.12
TCI INTERNATIONAL, INC.
CHANGE OF CONTROL AGREEMENT
This AGREEMENT, dated as of the 2nd day of May, 2000, by and between TCI
INTERNATIONAL, INC. (the "Company") and XXXX X. XXXXXXX III (the "Executive").
WHEREAS, the Board of Directors considers the Executive a key officer the
Company, and needs the Executive's best efforts, skills and dedication in the
event of a threat of a major change in the control of the Company to assure that
the best interests of all shareholders are protected, as determined by the Board
of Directors.
WHEREAS, the Board of Directors recognizes that the course of action which
it decides upon and which the Executive will be responsible to implement may be
contrary to his own personal interests and needs.
WHEREAS, in order to assure the availability of the Executive's best
efforts, skills and dedication which would be required in such difficult
circumstances to obtain the most beneficial outcome for the shareholders, the
Company is willing to provide the Executive with income protection in the event
of a change in control of the Company.
NOW, THEREFORE, the Company shall be bound, in consideration of the
Executive's services, as follows:
1. If during the term of this Agreement, the Executive's employment with the
Company terminates due to involuntary termination by the Company without
Cause or a Voluntary Resignation for Good Reason then the Executive shall
be entitled to receive severance benefits as follows:
(a) If the Executive's employment terminates as a result of involuntary
termination by the Company without Cause or Voluntary Resignation for
Good Reason prior to the first anniversary of a Change of Control,
then the Company shall pay the Executive within ten (10) business days
after the Termination Date a lump sum amount in cash equal to two (2)
times the Executive's annual Base Compensation (based on annualizing
the rate at which Executive most recently was accruing Base
Compensation).
(b) If the Executive's employment terminates as a result of involuntary
termination by the Company without Cause or Voluntary Resignation for
Good Reason on or after the first anniversary of a Change of Control
but before the third anniversary of a Change of Control, then the
Company shall pay the Executive within ten (10) business days after
the Termination Date a lump sum amount in cash equal to one (1) times
the Executive's annual Base Compensation (based on annualizing the
rate at which Executive most recently was accruing Base Compensation).
(c) The Executive's "Base Compensation" means the Executive's current
annual rate of salary, determined in accordance with the Company's
employment practices, excluding bonuses, incentive compensation, stock
option gains or other benefits and special allowances for which the
Executive is eligible.
The Executive shall also receive such other benefits as may be payable to the
Executive under the Company's then-existing benefit plans, including the
Company's stock option plan, in accordance with the terms of such plans.
2. Notwithstanding any other provisions of this Agreement or of any Other
Agreement or Benefit Plan, if any Change of Control payment would be
considered a "parachute payment" within the meaning of Section 280G(b)(2)
of the Code and if, after reduction for any excise tax and federal income
tax imposed by the Code, the Executive's net proceeds of such Change of
Control payment would be less than the amount of the Executive's net
proceeds resulting from the payment of the Reduced Amount after reduction
for federal income taxes, then the Change of Control payment payable to the
Executive shall be limited to the Reduced Amount. The "Reduced Amount"
means the largest amount that could be received by the Executive as a
Change of Control payment such that no portion of such Change of Control
payment would be subject to the excise tax. The determinations required by
the preceding sentence shall be made by a firm of independent certified
public accountants serving as the outside auditor of TCI International,
Inc. as of the date of the applicable Change of Control, and such
determinations shall be binding upon the Executive and TCI International,
Inc.
3. Definition of Terms. The following terms referred to in this Agreement
shall have the following meanings:
(a) "Cause" shall mean (i) a willful act of personal dishonesty knowingly
taken by the Executive in connection with his responsibilities as an
employee and intended to result in his substantial personal
enrichment, (ii) a willful and knowing act by the Executive which
constitutes gross misconduct, (iii) any refusal by the Executive to
comply with a reasonable written directive of the Board, (iv) a
willful breach by the Executive of a material provision of this
Agreement, or (v) a material and willful violation of a federal or
state law or regulation applicable to the business of the Company. No
act, or failure to act, by the Executive shall be considered "willful"
unless committed without good faith and without a reasonable belief
that the act or omission was in the Company's best interest.
Termination for Cause shall not be deemed to have occurred unless, by
the affirmative vote of all of the members of the Board (excluding the
Executive, if applicable), at a meeting called and held for that
purpose (after reasonable notice to the Executive and his counsel and
after allowing the Executive and his counsel to be heard before the
Board), a resolution is adopted finding that in the good faith opinion
of such Board members the Executive was guilty of conduct set forth in
(i), (ii), (iii), (iv) or (v), specifying the particulars thereof;
provided that in the case of conduct set forth in (iii), (iv) or (v),
the Executive shall have the opportunity to cure same within 30 days
following the Executive's receipt of written notice thereof.
(b) "Change in Control" shall mean the occurrence of any of the following
events:
(i) Any "person" or "group" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended, but
excluding any person or group as such term is used in Rule 13d-1(b)
under the Exchange Act)) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of
the total voting power represented by the Company's then outstanding
voting securities; or
(ii) a sale, exchange or transfer of all or substantially all of the
Company's assets; or
(iii) a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more
than fifty percent (50%) of the total voting power represented by the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of
the Company approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets (other than to a subsidiary or
subsidiaries).
(c) "Voluntary Resignation for Good Reason" shall mean:
(i) the continued assignment to the Executive of any duties or the
continued significant change in the Executive's responsibilities,
position or authority which is substantially inconsistent with his
responsibilities, position or authority in effect immediately prior to
the Change in Control, or constitutes a material reduction in the
Executive's duties, responsibilities, position or authority
immediately prior to such assignment or change for a period of 30 days
after notice thereof from the Executive to the Board setting forth in
reasonable detail the respects in which Executive believes such
assignments or duties are significantly inconsistent with or a
material reduction of the Executive's prior duties, responsibilities,
position or authority;
(ii) a reduction in the Executive's Base Compensation, other than any
such reduction which is part of, and generally consistent with, a
general reduction of officer salaries;
(iii) a material reduction by the Company in the kind or level of
employee benefits (other than salary) to which the Executive is
entitled immediately prior to such reduction with the result that the
Executive's overall benefits package (other than salary) is
substantially reduced (other than any such reduction applicable to
officers of the Company generally);
(iv) the relocation of the Company's principal executive office to a
location more than fifty (50) miles from its present location; or
(v) any purported termination of the Executive's employment by the
Company other than for Cause.
(d) "Effective Date" shall mean the date of the Change of Control.
(e) "Termination Date" shall mean the last day of the Executive's
employment.
4. This Agreement shall commence on the date hereof and shall continue in
effect through December 31 2003; provided, however, that commencing on
January 1, 2004 and each January 1 thereafter, the term of this Agreement
shall automatically be extended for one additional year unless, not later
than June 30 of the preceding year, the Company or the Executive shall have
given notice that it does not wish to extend this Agreement.
Notwithstanding any such notice by the Company not to extend, if a Change
in Control shall have occurred during the original or any extended term of
this Agreement, or within three months thereafter, this Agreement shall
continue in effect. In any event, the term of this Agreement shall expire
on the third (3rd) anniversary of the date of a Change in Control. This
Agreement shall terminate if your employment is terminated by you or the
Corporation prior to a Change in Control of the Corporation.
5. (a) The Executive shall not be required to mitigate the amount of any
Change of Control payment paid to the Executive by seeking other
employment or otherwise, nor shall the amount of any Change of Control
payment be reduced by any compensation earned by the Executive as the
result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the Executive to the
Company, or otherwise.
(b) After the Executive has the right to receive the Change of Control
payment, as provided for in Section 1 above, the Company shall also
pay to the Executive, within thirty (30) days after incurred by the
Executive, an amount equal to all legal fees and expenses incurred by
the Executive as a result in seeking to obtain or enforce any right or
benefit provided by this Agreement or in connection with any tax audit
or proceeding to the extent attributable to the application of section
4999 of the Internal Revenue Code of 1986, as amended from time to
time, to any payment or benefit provided hereunder.
6. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of California.
7. If a court or arbitrator holds any provision of this Agreement to be
invalid, unenforceable, or void, the remainder of the Agreement shall
remain in full force and effect.
8. Except as provided herein, neither party may assign any right or delegate
any obligation under this Agreement without the other party's written
consent and any
purported assignment or delegation by a party without the other party's
written consent is void. The Company shall require any successor 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 if no such succession had taken place.
9. This Agreement may not be amended except in written form signed by each of
the parties.
IN WITNESS WHEREOF, the Company and the Executive have caused this
Agreement to be duly executed as of the date first set forth above.
TCI INTERNATIONAL, INC. EXECUTIVE
By By
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Xxxx Xxx X. Xxxxx Xxxx X. Xxxxxxx III
Chief Financial Officer Chief Executive Officer
TCI International, Inc. TCI International, Inc.
