Exhibit 10.1 SEVERANCE AND RELEASE AGREEMENT This SEVERANCE AND RELEASE AGREEMENT (this “Agreement”) is made and entered into by Mr. John Halnen (“Mr. Halnen”) and Elcom International, Inc., a Delaware corporation (the “Company”). WHEREAS, Mr....
Exhibit 10.1
SEVERANCE AND RELEASE AGREEMENT
This SEVERANCE AND RELEASE AGREEMENT (this “Agreement”) is made and entered into by ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
(“▇▇. ▇▇▇▇▇▇”) and Elcom International, Inc., a Delaware corporation (the “Company”).
WHEREAS, ▇▇. ▇▇▇▇▇▇’▇ employment with the Company ended on June 20, 2007 (the “Separation Date”); under
circumstances that are in accord with Regulation >§1.409A-1(n); and
WHEREAS, this Agreement is intended to supersede in all respects the terms of an employment agreement
between ▇▇. ▇▇▇▇▇▇ and the Company, dated December 21, 2005, as amended (the “Employment Agreement”), with the
exception of Section 7 thereof, and an Agreement to Repay Accrued Salaries, between ▇▇. ▇▇▇▇▇▇ and the Company
(the “Repay Agreement”);
WHEREAS, the parties hereto intend that the severance under this Agreement shall not constitute
deferred compensation for purposes of §409A of the Internal Revenue Code of 1986, as amended (“Code”) by reason
of the safe harbor for severance pay set forth at Regulation §1.409A-1(b)(9)(iii);
NOW, THEREFORE, in consideration of the promises and covenants set forth herein, the Company and the
Executive hereby agree as follows:
1. ▇▇. ▇▇▇▇▇▇’▇ last date of employment was June 20, 2007. On the Effective Date of this Agreement, as
defined below, ▇▇. ▇▇▇▇▇▇ shall resign from any and all seats he held on the Board of Directors of the Company
and any and all parents, subsidiaries, and affiliates of the Company, effective June 20, 2007. ▇▇. ▇▇▇▇▇▇ shall
cooperate in preparing and executing appropriate notices and documents to reflect such change in employment
status and his termination from any and all applicable Boards.
2. If the Company or ▇▇. ▇▇▇▇▇▇ become involved in any legal action by any third party, provided that the
Company does not have claims against ▇▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇ does not have any claims against the Company,
relating to events which occurred during ▇▇. ▇▇▇▇▇▇’▇ employment, ▇▇. ▇▇▇▇▇▇ and the Company will cooperate in
good faith in the preparation, prosecution, or defense of the case, including, but not limited to, the execution
of affidavits or documents or providing of information reasonably requested by the other. The parties will
cooperate to schedule any availability required by the Company of ▇▇. ▇▇▇▇▇▇ or by ▇▇. ▇▇▇▇▇▇ of any officer,
director or employee of the Company at mutually convenient times, and, subject to the terms of this Agreement,
the Company will reimburse reasonable out-of-pocket expenses, not including attorneys’ fees and costs except as
provided under section 6 of this Agreement, related to assistance provided by ▇▇. ▇▇▇▇▇▇ at the Company’s
request, provided that any such reimbursements not otherwise deductible by ▇▇. ▇▇▇▇▇▇ under Code Section 162 or
167 are made no later than the end of the calendar year after the year in which such expense was occurred.
3. The Company shall pay ▇▇. ▇▇▇▇▇▇ the aggregate sum of Three Hundred Thousand Dollars and Zero Cents
($300,000.00) as severance and as consideration in settlement of all claims, demands, liabilities and causes of
action whatsoever of every name and nature arising out of ▇▇. ▇▇▇▇▇▇’▇ employment by the Company, the Employment
Agreement and any other prior agreements, promises or covenants, other than the Indemnity Agreement, executed on
or about August 27, 2003 by ▇▇. ▇▇▇▇▇▇ (the “Indemnity Agreement”), the Indemnification Agreement for Internal
Revenue Code Section 409A, dated April 24, 2006 (the “Indemnification Agreement”) subject to Section 4 hereof,
the grants and plans applicable to any stock options or other stock rights held by ▇▇. ▇▇▇▇▇▇ on the Separation
Date, and Section 7 of the Employment Agreement, and termination of his employment, payable to ▇▇. ▇▇▇▇▇▇ in
installments as follows:
(a) On the first regularly scheduled payroll period after the Effective Date as defined below, the Company
will pay ▇▇. ▇▇▇▇▇▇ the sum of Twenty-Five Thousand Dollars and Zero Cents $25,000.00, less
applicable withholdings and required deductions; and
(b) Commencing with the first regularly scheduled payroll period after the Effective Date, the Company will
pay ▇▇. ▇▇▇▇▇▇ the sum of Two Hundred Seventy-Five Dollars and Zero Cents $275,000 in
twenty-four (24) consecutive, equal bi-weekly installments, each in the amount of Eleven
Thousand Four Hundred Fifty-Eight and 33 Cents ($11,458.33), less applicable withholdings and
required deductions.
All payments will be subject to applicable withholdings and reported as wage income, and not as nonqualified
deferred compensation, on one or more Forms W-2 and any comparable state forms. In the case of any failure of
the Company to make a payment of any installment set forth in this Agreement, the Company shall pay all costs or
expenses incurred in the collection of any sum due including reasonable attorney’s fees if the Company fails to
cure such failure within ten (10) days of receipt of notice of such failure. Notwithstanding anything herein to
the contrary, if, for any reason, ▇▇. ▇▇▇▇▇▇ is deemed a specified employee, as defined under §409A(a)(2)(B)(i)
of the Code, as of his Separation Date and the severance safe harbor of Reg. §1.409A-1(b)(9)(iii) does not apply,
then the payment dates hereunder shall be adjusted so that no payment hereunder that is subject to Code §409A may
be made before the expiration of six (6) months after ▇▇. ▇▇▇▇▇▇’▇ Separation Date or, if earlier, his death, and
the Company shall pay all amounts accumulated during the six (6) month period on the first day of the seventh
(7th) month following the Separation Date.
In addition, for an eight (8) month period after the Separation Date, the Company shall pay the premium for
continuation of group health coverage under COBRA. The monetary compensation plus the benefits set forth in this
Section 3 will constitute the “Severance Benefits”.
4. Release. In consideration of the Company’s providing the Severance Benefits set forth in this Agreement, and other good and valuable consideration, ▇▇. ▇▇▇▇▇▇, individually and on behalf of his heirs, next of kin, executors, administrators and assigns, hereby fully irrevocably and unconditionally remises, releases, acquits and forever discharges Elcom International, Inc. and any parent or related corporation, affiliate, subsidiary, successor and assign, as well as its and their past, present and future stockholders, directors, officers, managers, members, employees, agents, representatives, insurers and attorneys (collectively, the “Released Parties”) from and with respect to any and all claims, demands, liabilities and causes of action whatsoever of every name and nature, in law and at equity, including but not limited to claims or allegations that the Released Parties or any of them has violated Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Older Workers’ Benefit Protection Act, the Employee Retirement Income Security Act of 1974, the Massachusetts Payment of Wages Act, and any common law and statutory claims under federal, state and local laws which prohibit discrimination (including, without limitation, claims of discrimination based on race, religion, national origin, sex, disability or handicap or sexual orientation) or so-called whistle-blowing, and any claims for breach of contract (express and/or implied), wrongful termination, intentional infliction of emotional distress, interference with contractual or advantageous business relations, loss of consortium, invasion of privacy, defamation, and any other tort, payment of wages, debts, costs, expenses, attorneys’ fees or other damages, whether known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which he now has, may have, or may have had against the Released Parties or any of them prior to this date, arising out of or in any way related to his employment relationship with the Released Parties or any of them, and/or the termination of his employment. This release does not apply to (a) ▇▇. ▇▇▇▇▇▇’▇ rights to accrued benefits under any stock or stock option plan or an employee pension or welfare benefit plan as defined under ERISA, (b) enforcement of the terms of this Agreement, (c) any rights or claims that may arise after the Execution Date, (d) ▇▇. ▇▇▇▇▇▇’▇ COBRA rights, (e) any claim for indemnification from the Company as specifically identified in this Agreement. The exclusion of the Indemnification Agreement from the above release, the survival of the Indemnification Agreement or the reference to the Indemnification Agreement in this Agreement are not intended to be an admission, or agreement, covenant or promise by the Company that it will indemnify ▇▇. ▇▇▇▇▇▇ or that ▇▇. ▇▇▇▇▇▇ is entitled to be indemnified by the Company, nor an admission or agreement by ▇▇. ▇▇▇▇▇▇ that he is not entitled to be indemnified by the Company, for all taxes, penalties, interest, fees or legal fees assessed to or otherwise that may be incurred or owed by ▇▇. ▇▇▇▇▇▇ as a result of Section 409A in connection with the Severance Benefits or any other payment to ▇▇. ▇▇▇▇▇▇ set forth in this Agreement. ▇▇. ▇▇▇▇▇▇ understands that nothing in this Agreement prevents him from filing, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission (“EEOC”) or a state fair employment practices agency. ▇▇. ▇▇▇▇▇▇ waives any right to recover monetary benefits in connection with any proceeding before the EEOC or a state fair employment practices agency.
5. In connection with his release of claims under the Age Discrimination in Employment Act and Older
Workers’ Benefit Protection Act, ▇▇. ▇▇▇▇▇▇ acknowledges that:
(a) he has been advised by the Company that he should consult an attorney of his choice concerning
this Agreement.
(b) he has been given a period of at least twenty-one (21) days within which to consider the terms
of this Agreement.
(c) if he chooses to sign this Agreement before twenty-one (21) such days have passed, then his
signature will be treated as effective by the Company upon receipt of this Agreement signed by him (the
“Execution Date”).
(d) for a period of seven (7) additional days after signing this Agreement, he has the right to
revoke it.
(e) any revocation notice, to be effective, must be in writing, sent to the attention of Mr. ▇▇▇▇
▇▇▇▇, Elcom International, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and must be received by the Company
before the 7-day revocation period has expired.
(f) if ▇▇. ▇▇▇▇▇▇ revokes this Agreement, the Company shall have no obligation to pay him the
Severance Benefits under this Agreement.
(g) if the Company does not receive from him written notice of his revocation prior to the
expiration of seven (7) revocation period, this Agreement shall have full force and effect as of the
eighth (8th) day after the Execution Date (the “Effective Date”).
(h) ▇▇. ▇▇▇▇▇▇ is specifically waiving his rights and claims under the Age Discrimination in
Employment Act and the Older Worker’s Benefit Protection Act.
(i) the waiver of rights and claims under the Age Discrimination in Employment Act and the Older
Worker’s Benefit Protection Act does not extend to any rights or claims arising after the date ▇▇.
▇▇▇▇▇▇ executes this Agreement.
(j) he has carefully read and fully understands all of the provisions of this Agreement, knowingly
and voluntarily agrees to, and intends to be legally bound by, all of the terms set forth in this
Agreement.
(k) the Company is providing ▇▇. ▇▇▇▇▇▇ with ▇▇▇▇▇▇▇▇▇ Benefits and other consideration that ▇▇.
▇▇▇▇▇▇ would not otherwise be entitled to, but for his entering into this Agreement voluntarily and as
his free act and deed.
6. Indemnification. The Company will indemnify ▇▇. ▇▇▇▇▇▇ to the fullest extent required by law, the
Company’s By Laws, the Company’s Certificate of Incorporation, the Indemnity Agreement and the Indemnification
Agreement, subject to Section 4 hereof.
7. Governing Law and Jurisdiction. Except as otherwise preempted by federal law, this Agreement shall be governed by and construed under Massachusetts law, without regard to state conflict of laws principles. ▇▇. ▇▇▇▇▇▇ and the Company agree that any lawsuit between them arising under this Agreement shall be filed in any state court located in Massachusetts, and each hereby agrees, acknowledges, waiving any and all objections, and submits himself or itself to the exclusive jurisdiction and venue of such courts for the purposes of any such lawsuit and agrees to accept service of process in accordance with the provisions for delivery of notices set forth in this Agreement. 8. Entire Agreement. This Agreement supersedes all prior agreements between the parties with the exception of the Indemnification Agreement, subject to Section 4 hereof, the Indemnity Agreement, the grants and plans applicable to any stock options or other stock rights held by ▇▇. ▇▇▇▇▇▇ on the Separation Date, and Section 7 of the Employment Agreement. This Agreement, the Indemnification Agreement, the Indemnity Agreement, and Section 7 of the Employment Agreement, constitute the entire agreement between the parties. This Agreement reflects terms and conditions that were negotiated by the parties. Accordingly, no term or condition should be construed strictly against any party on the basis that it was drafted by such party. 11. Notices. All notices and other communications hereunder shall be in writing; shall be delivered by hand delivery to the other party or mailed by registered or certified mail, return receipt requested, postage prepaid; shall be deemed delivered upon actual receipt; and shall be addressed as follows:
If to ▇▇. ▇▇▇▇▇▇: If to the Company:
▇▇. ▇▇▇▇ ▇▇▇▇▇▇ Mr. ▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ Elcom International, Inc.,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
12. Authority. The Company warrants to ▇▇. ▇▇▇▇▇▇ that it is duly authorized in accordance with the laws of
its domicile, is in good standing, with full powers and authority to enter into, execute and be bound to this
Agreement and that the person executing this Agreement is authorized to do so.
13. Nonadmission. Nothing in this Agreement is intended to be and shall not be construed as an admission of
wrongdoing by the Company or ▇▇. ▇▇▇▇▇▇.
14. Counterparts. This Agreement may be executed with duplicate original counterparts and with facsimile
signatures, each of which shall constitute an original and which together shall constitute one and the same
document.
15. Severability. Each provision of this Agreement shall be treated as a separate and independent clause,
and the invalidity or unenforceability of any one clause shall in no way impair the enforceability of any of the
other clauses herein.
I HEREBY ACKNOWLEDGE THAT I HAVE TAKEN A SUFFICIENT AMOUNT OF TIME TO CAREFULLY AND THOROUGHLY REVIEW THIS
AGREEMENT, THAT I HAVE READ THIS AGREEMENT AND UNDERSTAND ALL OF ITS TERMS AND CONDITIONS AND THAT I HAVE SIGNED
THIS AGREEMENT OF MY OWN FREE WILL AND NOT UNDER ANY DURESS FROM ANY REPRESENTATIVE OF ELCOM OR ANY OTHER PERSON.
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ |
Dated: July 17, 2007 |
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ELCOM INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, Acting CEO |
Dated: July 18, 2007 |