Exhibit 10.20
EMPLOYEE BENEFITS AGREEMENT
This Employee Benefits Agreement (the "Agreement") is entered into as
of the 1st day of August, 1997, by and between Elcom Systems, Inc. (the
"Company") and Xxxxx XxXxxx ("Employee").
WITNESSETH:
WHEREAS, Employee is a key employee of the Company; and
WHEREAS, the Company considers that providing Employee with certain
employment benefits will operate as an incentive for Employee during the period
of this Agreement, during which time Elcom International, Inc., the parent
corporation of the Company (the "Parent") may undergo a change in control or
ownership, or may cause a change in control or ownership of the Company; and
WHEREAS, this Agreement is intended to provide benefits in the event of
a change in control or ownership of Parent or the Company prior to January 1,
1999 (the "Expiration Date"); and
WHEREAS, this Agreement is also intended to provide certain benefits in
the event of a termination of Employee under certain circumstances prior to the
Expiration Date.
NOW THEREFORE, to induce Employee to remain productive, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and Employee agree as follows:
1. Definitions.
(a) "Change of Control" shall mean the occurrence of any one of the
following events:
(i) The stockholders of the Parent or the Company approve (A) a
merger or consolidation of the Parent or the Company with
any other corporation, other than a merger or consolidation
which would result in the voting securities of the Parent or
the Company, as applicable, outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than eighty percent (80%) of the
combined voting power of the voting securities of the Parent
or the Company, as applicable, or such surviving entity
outstanding immediately after such merger or consolidation,
or (B) a plan of complete liquidation of the Parent or the
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Company or an agreement for the sale or disposition by the
Parent or the Company of all or substantially all the assets
of the Parent or the Company to other than the Parent or any
of its subsidiaries; or
(ii) During any period of one (1) year, a majority of the Board
of Directors of the Parent or the Company ceases to be
comprised of "Continuing Directors," which term, for
purposes of this Subsection 1(a), shall mean individuals who
at the beginning of any period of one (1) year (not
including any period which ended prior to the date of this
Agreement) constitute the Board and any new director(s)
whose election by the Board or nomination for election by
the Parent's or the Company's stockholders, as applicable,
was approved by a vote of at least a majority of the
directors then still in office who either were directors at
the beginning of the period or whose election or nomination
for election was previously so approved; or
(iii) Any "person" (as defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Parent or of the Company representing
fifty percent (50%) or more of the combined voting power of
such entity's then outstanding securities; provided that a
Change of Control shall not be deemed to occur under this
clause (iii) by reason of the acquisition of securities by
the Parent, the Company or an employee benefit plan (or any
trust funding such a plan) maintained by the Parent or the
Company.
(b) "Severance Payments" shall mean any payment or distribution of
compensation or benefits made pursuant to Section 3 of this
Agreement.
(c) "Separation Date" shall mean the date, if any, of termination
of Employee's employment relationship with the Company.
(d) "Voluntary Separation" shall mean the voluntary resignation by
Employee from employment with the Company other than a
voluntary resignation following either of the following two
events:
(i) any future reduction in Employee's base salary; or
(ii) a future relocation of Employee's place of employment
which results in an increase of twenty-five (25)
miles or more in the distance from Employee's
residence to Employee's place of employment.
(e) "Termination With Cause" shall mean any termination of
Employee by the Company for malfeasance, insubordination,
theft, fraud, embezzlement,
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conviction of a felony, being under the influence of
alcohol or unlawful drugs during business hours, the
violation of Section 4 of this Agreement or of any other
agreement with the Company, the removal of any equipment
without the Company's written permission, the violation of
any state or federal law, repeated tardiness without
acceptable reasons therefor, and/or the failure to comply
with any of the Company's written policies and procedures.
2. Termination of Employee.
(a) Related to Change of Control. In the event of Employee's
termination of employment with the Company within twelve (12)
months following the date on which there is a Change of
Control of the Parent or of the Company, subject to Section 13
hereof, the Company shall provide Employee with the Severance
Payments outlined in Section 3(a)(i) and 3(b), unless the
termination is a Termination With Cause or a Voluntary
Separation.
(b) Upon Certain Other Terminations. In the event that no Change
of Control of the Parent or the Company has occurred and the
Company terminates Employee's employment relationship prior to
the Expiration Date, unless such termination is a Termination
With Cause, subject to Section 13 hereof, the Company shall
provide Employee with the Severance Payments outlined in
Section 3(a)(ii) and 3(b).
(c) No Duplication. In no event shall Employee be entitled to
receive benefits or Severance Payments under both Section 2(a)
and Section 2(b) hereof.
3. Severance Payments.
(a) Compensation.
(i) Related to Change of Control. In the event that
Employee is entitled to Severance Payments pursuant
to the terms of Section 2(a), the Company shall pay
Employee an amount equal to twelve (12) months base
salary as of the Separation Date, without giving
effect to any future reduction in base salary prior
to the Separation Date, payable in accordance with
the provisions of Section 13 hereof.
(ii) Upon Certain Other Terminations. In the event that
Employee is entitled to Severance Payments pursuant
to the terms of Section 2(b), the Company shall pay
Employee an amount equal to twelve (12) months base
salary as of the Separation Date, without giving
effect to any future reduction in base salary prior
to the Separation Date, payable in accordance with
the provisions of Section 13 hereof.
(iii) Payment of Compensation. Subject to Section 13
hereof, such payments shall be made in accordance
with the Company's normal payroll practices
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as such practices shall be in effect from time to
time, provided, however, that the Company may elect
to accelerate payments required under this Section 3(a).
(b) Employee Benefits. In the event that Employee is entitled to
Severance Payments pursuant to the terms of Section 2,
Employee shall be entitled to the following benefits, subject
to Section 13 hereof:
(i) Vacation. Any accrued vacation pay due but not yet
taken at the Separation Date shall be paid to
Employee within thirty (30) days following the
Separation Date.
(ii) Health Benefits. If Employee participated in any health
benefit plan in effect immediately prior to the
Separation Date, and if Employee elects to continue
participating in such plan pursuant to the terms of
said plan and the Comprehensive Omnibus Budget
Reconciliation Act ("COBRA"), the Company shall pay for
its normal portion of the costs of Employee's
participation in such plan from the Separation Date
until the earlier of: (a) the date which is three
months following the Separation Date; or (b) the date
of Employee's eligibility in any health benefit plan
offered by Employee's new employer, if any. Employee
shall notify the Company in writing within thirty (30)
days of any new employment.
(iii) Retirement and Benefit Plans. Notwithstanding
anything in this Agreement to the contrary,
Employee's rights in any retirement, pension, stock
option or profit-sharing plans offered by the Parent
or the Company shall be governed by the rules of such
plans as well as by applicable law.
(iv) Outplacement Assistance. The Company will provide
Employee up to two (2) months of employment
outplacement services with a Company-selected
service.
4. Continuing Obligations. In order to induce the Company to enter into
this Agreement, Employee hereby agrees that all documents, records, techniques,
business secrets and other information which have come into Employee's
possession from time to time during Employee's continued employment by the
Company or which may come into Employee's possession during Employee's
employment hereunder, shall be deemed to be confidential and proprietary to the
Company, and Employee further agrees to retain in confidence any confidential
information known to Employee concerning the Company, the Parent, any subsidiary
of the Parent, and their respective businesses so long as such information is
not publicly disclosed. Employee further agrees to cooperate fully as requested
from time to time by the Company's Board of Directors or Company Management in
connection with any transaction involving the possible sale of the Parent or of
the Company. Employee further agrees not to speak about a possible sale of the
Parent or of the Company with or otherwise respond to requests to or from any
third parties involving the possible sale of the Parent or of the Company,
unless specifically
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authorized to do so by the Company. The obligations of Employee under this
Section 4 shall be in addition to, and shall not limit, any other obligation of
Employee to the Company with respect to the matters set forth herein or
otherwise.
5. Assignments and Transfers. Employee agrees that Employee will not
assign, sell, transfer, delegate or otherwise dispose of, whether voluntarily or
involuntarily, or by operation of law, any rights or obligations under this
Agreement, nor shall Employee's rights be subject to encumbrance or the claims
of creditors. Any purported assignment shall be null and void. This Agreement
shall inure to the benefit of and be enforceable by Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. This Agreement shall be binding upon and shall inure to
the benefit of the Company and its successors and assigns, and the Company shall
require any successor or assign 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 or assignment had taken place,
except no assumption shall be required if this Agreement is automatically
assumed by operation of law. The term "the Company" as used herein shall include
such successors and assigns. The term "successors and assigns" as used herein
shall include a corporation or other entity acquiring at least 51% of the
outstanding shares of the Company or all or substantially all of the assets and
business of the Company.
6. Notices. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given and received when delivered, including by a national
overnight courier service or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed to the
Company at:
Elcom Systems, Inc.
00 Xxxxxx Xxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Chief Financial Officer
and to Employee at:
Xxxxx XxXxxx
00 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
or such address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
7. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the Commonwealth
of Massachusetts.
8. At-Will Employment. At the present time, the Company and Employee
have, and will continue to have, an at-will employment relationship. That is,
either party can terminate the
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employment relationship for any reason at any time. Nothing contained in this
Agreement shall be interpreted to amend or alter this at-will employment
relationship.
9. Entire Agreement. The terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to Employee's
severance benefits and supersedes any previous or contemporaneous agreements.
10. Amendments; Waivers. This Agreement may not be modified, amended,
or terminated except by an instrument in writing, signed by Employee and by a
duly authorized representative of the Company other than Employee. No failure to
exercise and no delay in exercising any right, remedy, or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, or power hereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy, or power provided herein or by law
or in equity.
11. Severability; Enforcement. If any provision of this Agreement, or
the application thereof to any person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable, or void, the
remainder of this Agreement and such provisions as applied to other persons,
places, and circumstances shall remain in full force and effect. Notwithstanding
any other provision in this Agreement to the contrary, if Employee breaches any
term of this Agreement, the Company may immediately cease making Severance
Payments.
12. Arbitration. The parties agree to submit any unresolved substantial
dispute arising under this Agreement to arbitration. Arbitration shall be by a
single arbitrator in the Norwood, Massachusetts area experienced in the matters
at issue selected by the Company and Employee in accordance with the commercial
arbitration rules of the American Arbitration Association. The decision of the
arbitrator shall be final and binding as to any matter submitted to arbitration
under this Agreement. All costs and expenses incurred in connection with any
such arbitration proceeding shall be borne by the party against whom the
decision is rendered as provided by the arbitrator.
13. Release. As a condition to and in consideration for the receipt of
Severance Payments to which Employee may be entitled pursuant to Section 3
hereof, Employee agrees to execute a Release Agreement with the Company, in
substantially the same form as that attached hereto as Exhibit A (the "Release
Agreement"), within the 30-day period beginning 21 days after Employee's
Separation Date. The Company shall not be obligated to make any Severance
Payments unless and until the Company shall have received from Employee a
validly executed Release Agreement that shall not have been revoked by Employee
during the applicable Revocation Period as such term is defined in the Release
Agreement, in compliance with applicable law. Provided that Company receives
from Employee a validly executed Release Agreement which is not revoked during
the applicable Revocation Period, the Company agrees to commence making any
Severance Payments theretofore withheld within 30 days of the expiration of such
Revocation Period.
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14. Expiration Date. This Agreement shall be null and void if an event
which would entitle Employee to Severance Payments does not occur on or before
the Expiration Date.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year set forth above.
ELCOM SYSTEMS, INC.
("Company")
By /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Chairman and Chief Executive Officer
By /s/ Xxxxx XxXxxx
Xxxxx XxXxxx
("Employee")
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RELEASE AGREEMENT
This Release Agreement (the "Agreement") is entered into as of the
Effective Date of the Agreement stated on the signature page below, by and
between Elcom Systems, Inc. (the "Company") and Xxxxx XxXxxx ("Employee").
WITNESSETH:
WHEREAS, Employee and the Company have entered into a Employee Benefits
Agreement dated as of August 1, 1997 (the "Employee Benefits Agreement"); and
WHEREAS, Employee is entitled to certain benefits under the Employee
Benefits Agreement, pursuant to Section 13 of which payment of such benefits is
made conditional upon and in consideration for Employee's valid execution of a
Release Agreement, all as more completely described in the Employee Benefits
Agreement. (Capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in the Employee Benefits Agreement.)
NOW THEREFORE, to induce the Company to make the Severance Payments
pursuant to the Employee Benefits Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and Employee agree as follows:
1. Release. Employee does hereby, for Employee and for Employee's
heirs, executors, successors and assigns, release and forever discharge the
Company, Elcom International, Inc., the parent corporation of the Company
("Elcom"), and the subsidiaries, divisions and affiliated businesses of either
the Company or Elcom, together with all of their officers, directors,
management, representatives, employees, shareholders, agents, successors,
assigns, attorneys and other affiliated persons, both known and unknown, in both
their personal and agency capacities (collectively, the "Releasees"), of and
from any and all claims, demands, actions or causes of action, damages, or suits
at law or equity, of whatsoever kind or nature, including, but not limited to,
all claims and/or demands for back pay, reinstatement, hire or re-hire, front
pay, group insurance or employee benefits of whatsoever kind (except as to
rights expressly provided for herein and in the Employee Benefits Agreement),
claims for monies and/or expenses, any claims arising out of or relating to the
cessation of Employee's employment with the Company, the sale of the stock or
assets of the Company or of Elcom, any claims for failing to obtain employment
at any other company or with any other person or employer, and/or demands for
attorneys' fees and legal expenses that Employee has or may have by reason of
any matter or thing arising out of, or in any way connected with, directly or
indirectly, any act and/or omission that has occurred prior to the Effective
Date of Agreement (as hereinafter defined). Employee further agrees not to
directly or indirectly pursue or initiate any action or legal proceeding of any
kind against the Releasees arising out of or related to the claims released in
the preceding sentence of this Section 1, or the sale of the stock or assets of
the Company or Elcom
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and also waives any right to recover as a result of any such proceedings
initiated on Employee's behalf. Notwithstanding the foregoing, Employee and the
Company agree and acknowledge that this Release shall not apply to the
obligations of the Company arising solely under this Agreement or under the
Employee Benefits Agreement.
2. ADEA. Employee recognizes and understands that, by executing this
Agreement, employee shall be releasing the Releasees from any and all claims
that Employee now has, or subsequently may have, under the Age Discrimination in
Employment Act of 1967, 19 U.S.C. ss.ss.621 et seq., as amended (the "ADEA"), by
reason of any matter or thing arising out of, or in any way connected with,
directly or indirectly, any acts or omissions which have occurred prior to and
including the Effective Date of this Agreement. In other words, Employee will
have none of the legal rights against the aforementioned Releasees that Employee
would have had otherwise under federal age discrimination law by signing this
Agreement.
3. "Consideration Period." The Company hereby notifies Employee of his
right to consult with Employee's chosen legal counsel before executing this
Agreement. The Company shall afford, and Employee acknowledges receiving, not
less than twenty-one (21) calendar days in which to consider this Agreement to
insure that Employee's execution of this Agreement is knowing and voluntary. In
signing below, Employee expressly acknowledges that Employee has had at least
twenty-one (21) days to consider this Agreement and that Employee's execution of
same is with full knowledge of the consequences thereof and is of Employee's own
free will.
4. Revocation Period. Employee and the Company agree and recognize
that, for a period of seven (7) calendar days following Employee's execution of
this Agreement (the "Revocation Period"), Employee may revoke this Agreement by
providing written notice revoking the same, within the Revocation Period, to
Elcom Systems, Inc., 00 Xxxxxx Xxx, Xxxxxxx, Xxxxxxxxxxxxx 00000, Attn: Chief
Financial Officer. Such revocation of this Agreement by Employee will
automatically revoke the Severance Payments provided for in the Employee
Benefits Agreement and Employee will not be entitled to any of the amounts
described therein.
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IN WITNESS WHEREOF, Employee and the Company have executed this
Agreement effective and binding as of the Effective Date.
Date of Execution by Employee
"Effective Date of Agreement" is AGREED TO AND ACCEPTED BY
the 8th calendar day after this Date EMPLOYEE
Xxxxx XxXxxx
Execution witnessed by:
Date of Execution by the Company AGREED TO AND ACCEPTED BY
THE COMPANY
ELCOM SYSTEMS, INC.
By:
Its:
Execution witnessed by:
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Date of Receipt by Employee RECEIPT ACKNOWLEDGED BY
EMPLOYEE
Xxxxx XxXxxx
Receipt witnessed by:
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