Ex-10(A)
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AGREEMENT dated June 2, 2003 between Comtech Telecommunications Corp. (the
"Company") and ▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇").
Kornberg is presently Chairman of the Board of Directors, President and
Chief Executive Officer of the Company and is employed pursuant to an Agreement
dated August 20, 1992, as amended (the "Employment Agreement"). The Company and
Kornberg desire to extend the term of Kornberg's employment and effect certain
other changes.
Accordingly, the Company and Kornberg hereby amend and restate the
Employment Agreement to read in its entirety as follows:
1. The Company hereby employs Kornberg as general manager and chief
executive officer of its business for the period (hereinafter referred to as the
"Employment Period") commencing the date hereof and, except as otherwise
provided in Paragraph 6 hereof, terminating on July 31, 2008; provided, however,
that the Employment Period shall be automatically extended (subject to Paragraph
6) for successive two-year periods unless either party hereto gives notice of
non-extension to the other at least six months in advance of the then scheduled
termination date. Kornberg shall have supervision over the business and affairs
of the Company and its subsidiaries, shall report and be responsible only to the
Board of Directors of the
Company, and shall have powers and authority superior to those of any other
officer or employee of the Company or any of its subsidiaries. Kornberg accepts
such employment and agrees to devote his full business time and effort to the
business and affairs of the Company and, subject to his election as such, to
serve as a director and as Chairman of the Board and President of the Company.
He shall not be required to relocate his principal residence or to perform
services which would make the continuance of such residence inconvenient to him.
2. The Company shall pay to Kornberg, for all services rendered by him
during the Employment Period, compensation as follows:
(a) Salary ("Base Salary") at the annual rate of $395,000,
commencing the date hereof (to be automatically increased to $475,000 as of
August 1, 2003), plus such additional amounts, if any, as the Board of Directors
may from time to time determine, payable in accordance with the Company's
current practice. Once increased, the Base Salary may not be decreased without
Kornberg's prior written consent.
(b) Incentive compensation ("Incentive Compensation") for each
fiscal year in which any part of the Employment Period falls in an amount (not
to exceed Kornberg's Base Salary for such fiscal year) equal to 3.5% of the
Company's Pre-Tax Income for each such fiscal year, plus such additional
amounts, if any, as the Board of Directors may from time to time determine;
provided, however, that if the Employment Period terminates other than at the
end of a fiscal year, Incentive Compensation shall be based upon the Company's
Pre-Tax Income for the then current fiscal year through
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the most recent fiscal quarter ended prior to such termination. For purposes of
this Paragraph 2(b):
(i) The Company's "Pre-Tax Income" for any fiscal year or
period shall be the consolidated earnings of the Company and its subsidiaries
for such fiscal year or period, as determined by the independent accounting firm
employed by the Company as its regular auditors in accordance with generally
accepted accounting principles applied on a consistent basis, before (i) any
extraordinary item, (ii) provision for federal, state or municipal income taxes
thereon, (iii) provision for any Incentive Compensation payable to Kornberg
hereunder, (iv) any write-off of in-process research and development acquired,
and (v) at the discretion of the Compensation Committee of the Company's Board
of Directors, any non-recurring items.
(ii) Incentive Compensation payable with respect to any fiscal
year shall be paid to Kornberg promptly after completion of the Company's
audited year-end financial statements for such fiscal year, or, for purposes of
the proviso in Paragraph 2(b), promptly after completion of the relevant
unaudited quarterly statements, as the case may be. At the discretion of the
Compensation Committee, one-third of the amount of any Incentive Compensation
may be paid by the issuance to Kornberg of shares of Common Stock of the Company
having an aggregate fair market value as of the day prior to issuance equal to
such one-third of the Incentive Compensation. The per share fair market value of
the Common Stock as of a date, for purposes of this provision, shall be the
average mean of the daily high asked and low bid prices of the Common Stock, if
then traded in the over-the-counter market, or the average mean of the daily
high and low closing prices of the Common Stock, if then
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traded on the National Market System of the NASDAQ Stock Market or on a national
securities exchange, for the 30 trading days immediately preceding the relevant
date. If Kornberg voluntarily terminates his employment with the Company other
than as permitted by Paragraph 6(b) of this Agreement, or if the Company
terminates his employment for cause as defined in Paragraph 6(a) hereof,
Kornberg shall forfeit his right to receive any Incentive Compensation accrued
but unpaid in accordance with this Paragraph 2(b)(ii).
3. During the Employment Period, Kornberg shall be entitled to participate
in, and receive benefits in accordance with, the Company's employee benefit
plans and programs at the time maintained by the Company for its executives,
subject to the provisions of such plans and programs, and to be reimbursed for
financial planning services not to exceed $35,000 in any fiscal year.
4. During the Employment Period, Kornberg shall be entitled to receive
reimbursement for all expenses reasonably incurred by him in connection with his
duties hereunder in accordance with the usual procedures of the Company, and he
shall be entitled to the incidental use of Company employee time for his
personal financial record keeping and related matters.
5. (a) The Company shall obtain (subject to Kornberg's insurability) and
keep in full force and effect during the Employment Period, at its own cost and
expense, insurance covering Kornberg's life in the amount of $2.5 million (or,
if higher, five times Kornberg's then Base Salary) (including any insurance
obtained pursuant to Paragraph 3 hereof) plus such additional amounts, if any,
as the Board of Directors
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may from time to time determine, payable to his estate or such other person or
persons as he may from time to time direct.
(b) In addition to the insurance provided for in Paragraph 5(a)
hereof, the Company, in its discretion, and at its own cost and expense, may
also obtain insurance covering Kornberg's life in such amount as it considers
advisable, payable to the Company, and Kornberg agrees to cooperate fully to
enable the Company to obtain such insurance.
6. The Employment Period may be terminated only as follows:
(a) By action of the Board of Directors of the Company, upon notice
to Kornberg, if during the Employment Period Kornberg shall fail to render the
services provided for hereunder for a continuous period of 12 months because of
his physical or mental disability, or for cause, which shall mean the commission
of acts of willful malfeasance or gross negligence materially and adversely
affecting the Company's business.
(b) By Kornberg, on thirty days notice to the Company within one
year after a Change in Control of the Company, as defined in Paragraph 7(d)
hereof, occurs.
7. If Kornberg terminates the Employment Period in accordance with
Paragraph 6(b) hereof, the following provisions shall apply:
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(a) Subject to Paragraph 7(c) hereof, the Company shall pay to
Kornberg, within 30 days after the effective date of the termination (the
"Effective Date"), a lump sum equal to:
(i) the greater of (x) Kornberg's Base Salary, at the rate in
effect at the time such notice is given, for the full unexpired term of the
Employment Period, or (y) three times Kornberg's Base Salary then in effect;
plus:
(ii) the amount of any unpaid Incentive Compensation (x)
accrued with respect to any fiscal year ended prior to the Effective Date,
and/or (y) with respect to the then current fiscal year, pursuant to the proviso
in Paragraph 2(b); plus
(iii) if and to the extent Kornberg so elects, an amount equal
to (x) the number of shares of Common Stock of the Company subject to
unexercised options (whether or not then exercisable) held by Kornberg at the
Effective Date, multiplied by (y) the difference between the weighted average
exercise price of such options and the per share fair market value of the Common
Stock at the Effective Date, against surrender to the Company of all options
(and any related stock appreciation rights) relating to the Common Stock held by
Kornberg at the Effective Date and elected by him to be treated in accordance
with this Paragraph. The per share fair market value of the Common Stock as of a
date, for purposes of this provision, shall be the average mean of the daily
high asked and low bid prices of the Common Stock, if then traded in the
over-the-counter market, or the average mean of the daily high and low closing
prices of the Common Stock, if then traded on the
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National Market System of the NASDAQ Stock Market or on a national securities
exchange, for the 30 trading days immediately preceding the relevant date.
(b) For the full unexpired term of the Employment Period, the
Company shall continue Kornberg's participation in each employee benefit plan or
reimbursement arrangement (including, without limitation, life insurance and
medical plans and including, to the extent allowed, amending such plans) in
which Kornberg was entitled to participate immediately prior to the Effective
Date as if he continued to be employed by the Company hereunder. If the terms of
any benefit plan of the Company may not under Section 401 (a) or other similar
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), permit
continued participation by Kornberg, the Company will arrange to provide to
Kornberg benefits substantially equivalent to, as to time and amount, and no
less favorable than, on an after-tax basis, the benefits he would have been
entitled to receive under such plan if he had been continuously employed by the
Company for the full unexpired term of the Employment Period. Kornberg shall
have the option to have assigned to him, at no cost and with no apportionment of
prepaid premiums, any assignable insurance policies owned by the Company that
relate specifically to Kornberg and are payable to his estate or his
designee(s).
(c) Notwithstanding any other provision of this Agreement, the
amounts payable to Kornberg under Paragraph 7(a) shall be equal to whichever of
the following amounts shall result in the greater after-tax payment to Kornberg,
after application of all federal, state and local taxes applicable to such
payments:
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(i) the amount otherwise payable under Paragraph 7(a) without
regard to this Paragraph 7(c); and
(ii) the amount payable in (i) above, reduced by the total
amounts payable under Paragraph 7(a) and (b) to the extent included as parachute
payments under Section 280G(b)(2) of the Code, but only to the extent such
amounts included as parachute payments exceed 299% of Kornberg's "Base Amount,"
as defined in Section 280G(b)(3)(A) and (d)(1) and (2) of the Code.
The calculation of after-tax payments under this Paragraph 7(c) shall be
made by independent public accountants selected by Kornberg and consented to by
the Company, which consent shall not be unreasonably withheld or delayed. The
fees and expenses of such accountants shall be borne by the Company.
(d) Except as provided below, for purposes of this Employment
Agreement a Change in Control shall be deemed to have occurred:
(i) upon any "person" as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Company, any trustee or other
fiduciary holding securities under any employee benefit plan of the Company, or
any company owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of Common Stock of the
Company), becoming the owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding securities;
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(ii) during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors, and any new director (other than a director designated by a person
who has entered into an agreement with the Company to effect a transaction
described in sub-paragraph (i), (iii), or (iv) of this Paragraph or a director
whose initial assumption of office occurs as a result of either an actual or
threatened election contest (as such term is used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than the
Board of Directors of the Company) whose election by the Board of Directors or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of the two-year period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority of the Board of Directors;
(iii) upon 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 50% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; provided, however,
that a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person (other than those covered by
the exceptions in (i) above) acquires more than 50% of the
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combined voting power of the Company's then outstanding securities shall not
constitute a Change in Control of the Company; or
(iv) upon the stockholders of the Company approval of a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets
other than the sale or disposition of all or substantially all of the assets of
the Company to a person or persons who beneficially own, directly or indirectly,
at least 50% or more of the combined voting power of the outstanding voting
securities of the Company at the time of the sale.
8. (a) In order to induce Kornberg to enter into this Agreement, the
Company agrees that if it breaches this Agreement, Kornberg shall have no
further obligations hereunder and shall be under no duty to seek other
employment or otherwise mitigate his damages, and the Company shall pay Kornberg
the following amounts as liquidated damages in lieu of any further obligations
hereunder:
(i) An amount equal to 85% of his total Base Salary, at the
rate in effect at the time of such breach, for the full unexpired term of the
Employment Period, such amount to be payable within 10 days after such breach;
plus
(ii) An amount equal to his Incentive Compensation for the
full fiscal year in which the breach occurs; and
(iii) If and to the extent Kornberg elects to receive such
amount, an amount equal to that which would be payable under Paragraph 7(a)(iii)
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hereof if Kornberg had terminated this Agreement pursuant to Paragraph 6(b) as
of the date of such breach;
provided however, that if a Change in Control of the Company has occurred at any
time prior to the date of such breach, Kornberg shall be entitled to receive as
liquidated damages amounts and benefits equal to the amounts and benefits he
would have been entitled to receive pursuant to Paragraph 7 hereof (including
Paragraph 7 (c)) if he had terminated the Employment Period effective on the
date of breach.
(b) The Company shall be responsible for Kornberg's reasonable
attorney's fees and disbursements in any action to recover any amounts due him
or obtain other relief under this Agreement or in any action relating to a
breach by the Company of this Employment Agreement.
9. (a) Kornberg acknowledges that his services hereunder are of a special
and unique nature and his position with the Company places him in a position of
confidence and trust with clients and employees of the Company. Therefore, and
in consideration of the Company's performance of its covenants and agreements
under this Agreement, Kornberg will not at any time during his employment with
the Company and for a period of two years thereafter (the "Restrictive Period"),
directly or indirectly, engage in any business (as an owner, joint venturer,
partner, stockholder, director, officer, consultant, agent or otherwise) which
competes with the business in which the Company is presently engaged or may be
engaged at any time during his employment with the Company.
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(b) Kornberg agrees that he will not (except on behalf of the
Company during his employment with the Company), during the Restrictive Period,
employ or retain, solicit the employment or retention of, or knowingly cause or
encourage any entity to retain or solicit the employment or retention of, any
person who is or was an employee of the Company at any time during the period
commencing 12 months prior to the termination of Kornberg's employment with the
Company. After termination of Kornberg's employment with the Company: (i)
Kornberg will refrain from disparaging, whether orally, in writing or in other
media, the Company, its Affiliates, the officers, directors and employees of
each of them, and the products and services of each of them, and (ii) the
Company will not disparage Kornberg or otherwise comment upon the employment
performance of Kornberg other than as may be required by law or as requested by
Kornberg.
(c) Any discovery, design, invention or improvement (whether or not
patentable) that Kornberg develops during his employment with the Company
(whether or not during his regular working hours or on the Company's premises)
and that is related to the Company's business or operations as then conducted or
contemplated, shall belong solely to the Company and shall be promptly disclosed
to the Company. During the period of his employment with the Company and
thereafter, Kornberg shall, without additional compensation, execute and deliver
to the Company any instruments of transfer and take any other action that the
Company may reasonably request to carry out the provisions of this Paragraph,
including executing and filing, at the Company's expense, patent and/or
copyright applications and assignments of such applications to the Company.
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(d) Kornberg will not at any time, directly or indirectly, without
the Company's prior written consent, disclose to any third party or use (except
as authorized in the regular course of the Company's business or in the
Kornberg's performance of his responsibilities as the Company's Chief Executive
Officer) any confidential, proprietary or trade secret information that was
either acquired by him during his employment with the Company or thereafter,
including, without limitation, sales and marketing information, information
relating to existing or prospective customers and markets, business
opportunities, and financial, technical and other data (collectively, the
"Confidential Information"). After termination of Kornberg's employment with the
Company for any reason and upon the written request of the Company, Kornberg
shall promptly return to the Company all originals and/or copies of written or
recorded material (regardless of the medium) containing or reflecting any
Confidential Information and shall promptly confirm in writing to the Company
that such action has been taken. Notwithstanding the foregoing, the following
shall not constitute Confidential Information: (i) information that is already
in the public domain at the time of its disclosure to Kornberg; (ii) information
that, after its disclosure to Kornberg, becomes part of the public domain by
publication or otherwise other than through Kornberg's act; and (iii)
information that Kornberg received from a third party having the right to make
such disclosure without restriction on disclosure or use thereof.
10. Kornberg acknowledges that, in view of the nature of the Company's
business, the restrictions contained in this Agreement are reasonably necessary
to protect the legitimate business interests of the Company and its Affiliates
and that any violation of such restrictions will result in irreparable injury to
the Company for which
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money damages will not be an adequate remedy. Accordingly, Kornberg agrees that,
in addition to such money damages, he may be restrained and enjoined from any
continuing breach of such covenants without any bond or other security being
required by any court. If any restriction contained in this Agreement shall be
deemed to be invalid, illegal or unenforceable by reason of the extent, duration
or geographical scope, or otherwise, then the court making such determination
shall have the right to reduce such extent, duration, geographical scope or
other provisions hereof, and in its reduced form such restriction shall then be
enforceable in the manner contemplated thereby.
11. In consideration of the payments and other undertakings set forth
herein, Kornberg acknowledges that upon the termination of his employment with
this Company, the execution of a release, in substantially the form attached
hereto as Exhibit A, is an express condition to his right to receive severance
compensation pursuant to Paragraph 8 hereof in the event such Paragraph is
applicable.
12. Any offer, notice, request or other communication hereunder shall be
in writing and shall be deemed to have been duly given if hand delivered or
mailed by registered or certified mail, return receipt requested, addressed to
the respective address of each party hereinafter set forth, or to such other
address as each party may designate by a notice pursuant hereto, which change of
address notice shall be effective upon receipt thereof:
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If to the Company: Comtech Telecommunications Corp.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Secretary
If to Kornberg: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
13. If any provision of this Agreement shall be held for any reason to be
unenforceable, the remainder of this Agreement shall nevertheless remain in full
force and effect.
14. This Agreement, including, without limitation, the provisions of this
Paragraph 14, shall be binding upon and inure to the benefit of, and shall be
deemed to refer with equal force and effect to, any corporate or other successor
to the Company which shall acquire, directly or indirectly, by merger,
consolidation, purchase or otherwise, all or substantially all of the assets or
business of the Company. This Agreement shall not be assignable by the Company
or any such successor, except to the corporate or other successor referred to in
the preceding sentence. Kornberg may not assign, pledge or encumber his interest
in this Agreement without the written consent of the Company. This Agreement
shall be binding upon and inure to the benefit of Kornberg, his heirs and
personal representatives.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
COMTECH TELECOMMUNICATIONS CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Authorized Signatory
Approval of Chairman of the
Compensation Committee of
the Board of Directors
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Exhibit A
General Release
For good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, I, for myself and my successors, assigns, heirs and
representatives (each, a "Releasing Party"), hereby release and forever
discharge Comtech Telecommunications Corp. (the "Company"), its stockholders,
officers, directors, employees, agents and attorneys, and their respective
successors, assigns, heirs and representatives (each, a "Released Party"),
individually and collectively, from any and all claims, demands, causes of
action, liabilities or obligations, known or unknown, pending or not pending,
liquidated or not liquidated, of every kind and nature whatsoever (collectively,
the "Released Claims") which the Releasing Party has, has had or may have
against any one or more of the Released Parties arising out of, based upon or in
any way, directly or indirectly, related to the Company's business, my
employment with the Company or the termination of such employment; provided,
however, that this General Release shall have no effect whatsoever upon the
Company's obligations, if any, to pay severance compensation pursuant to the
Amended and Restated Employment Agreement between the undersigned and the
Company, dated June 2, 2003 or the rights of the undersigned to enforce such
obligations.
The Released Claims include, without limitation, (a) all claims arising
out of or relating to breach of contract, the Fair Labor Standards Act, the Age
Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the
Civil Rights Act of 1866, the National Labor Relations Act, the Americans with
Disabilities Act, the Employee Retirement Income Security Act and/or any other
federal, state or local statute, law, ordinance, regulation or order as the same
may be amended or supplemented from time to time, (b) all claims for back pay,
lost benefits, reinstatement, liquidated damages, punitive damages, and damages
on account of any alleged personal, physical or emotional injury, and (c) all
claims for attorneys' fees and costs.
I understand and acknowledge that I am hereby being advised to consult
with an attorney prior to signing this General Release. My decision to sign this
General Release is my own voluntary decision made with full knowledge that I
have been advised to consult with an attorney and I intend to be bound by this
General Release in accordance with its terms.
Dated:
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