Exhibit
10(b)(2)
CHANGE-IN-CONTROL
AGREEMENT
Tier 3
Dated September 16,
2008
PERSONAL AND
CONFIDENTIAL
«First_Name»
«Last_Name»
«Job_Title»
«Company»
Dear
«First_Name»:
Comtech Telecommunications Corp. (the
“Company”) considers it essential to the best interests
of its stockholders to foster the continued employment of key
management personnel. Our Board of Directors (the
“Board”) recognizes that the possibility of a change in
ownership or control of the Company may result in the departure or
distraction of key personnel to the detriment of the Company and
our stockholders. Therefore, the Board has determined to
enter into this agreement with you (i) to encourage and reinforce
your attention and dedication to your assigned duties without
distraction in the face of the disruptive circumstances that can
arise from a possible change in control of the Company, (ii) to
enhance our ability to retain you in those circumstances, and (iii)
to provide you with fair and reasonable protection from the risks
of a change in ownership and control so that you will be in a
position to help the Company complete a transaction that would be
beneficial to stockholders. This Agreement amends and
restates the Change-in-Control Agreement between the Company and
you dated September 18, 2007, which is superseded in its entirety
by the terms of this Agreement.
You and the Company agree as follows:
1.
Term of Agreement and Protected Period.
(a)
Term of Agreement . The period during which this Agreement
shall be in effect (the “Term”) shall be the period
August 1, 2008 through the close of business on July 31, 2010;
provided , however, that the Term shall be automatically
renewed for successive one-year periods unless either party hereto
gives written notice of non-renewal to the other party at least
sixty (60) days prior to the expiration of the then current Term;
and provided further , that if a Change in Control
has occurred prior to expiration of the then current Term, the Term
shall continue until the date that is twenty-four (24) months after
such occurrence of a Change in Control. The foregoing
notwithstanding, if you remain employed with the Company at the end
of the Protected Period (as defined below), the Company's
obligations under Section 3(g) (and related provisions) will
continue during the defined "Extended Severance Period" after the
end of the Protected Period.
(b)
Protected Period . The “Protected Period” is the
period from the time of occurrence of a Change in Control until the
date that is twenty-four (24) months after the occurrence of the
Change in Control. Notwithstanding the preceding
sentence, the introductory text to Section 3 provides that certain
events occurring before a Change in Control shall be deemed to have
occurred during the Protected Period.
“Change
in Control” shall mean the occurrence during the Term of a
Change in Control as defined in Section 14.2 of the 2000 Stock
Incentive Plan, as such Plan may be amended from time to
time.
3.
Termination and Resulting Compensation .
The Agreement
provides no compensation or benefits in connection with
Terminations which occur prior to a Change in Control, except that,
if you are Terminated within 90 days prior to a Change in Control
by the Company without Cause at the direction of a Person who has
entered into an agreement with the Company the consummation of
which will constitute a Change in Control, or if you Terminate with
Good Reason within 90 days prior to a Change in Control (treating
the entry by such a Person into such an agreement as a Change in
Control in applying the definition of Good Reason) if the
circumstance or event which constitutes Good Reason occurs at the
direction of such Person, then your Termination shall be deemed to
have been during the Protected Period and following a Change in
Control and shall qualify for the compensation specified in Section
3(b); with payments thereunder to occur on the business day
following the 52d day after the Change in Control (subject to the
legal effectiveness of your release), except that, if a payment is
deemed to be a deferral of compensation for purposes of Section
409A of the Internal Revenue Code (the "Code") and the Change in
Control did not constitute a change in the ownership of the
Company, a change in effective control of the Company, or a change
in the ownership of a substantial portion of the assets of the
Company, as defined in Treasury Regulation
§ 1.409A-3(i)(5), then settlement shall occur at the date
six months after your Date of Termination.
(a)
Termination by the Company for Cause, by You Without Good
Reason, or by Reason of Death, and Failure to Perform Duties Due to
Disability . If during the Protected Period you are Terminated
by the Company for Cause, you voluntarily Terminate without Good
Reason, Termination occurs due to your death, or Termination
results from your failure to perform your duties with the Company
due to a disability, the Company will have no obligation to pay any
compensation or benefits to you under this Agreement.
(b)
Terminations Triggering Severance Compensation . In lieu of
any other severance compensation to which you may otherwise be
entitled under any plan, program, policy or arrangement of the
Company or any subsidiary, entitlement to which you hereby
expressly waive, the Company will pay you the payments described in
this Section 3(b) (the “Severance Payments”) upon
Termination during the Protected Period and during the Term, unless
such termination is (A) by the Company for Cause, (B) by reason of
death, (C) due to your failure to perform your duties
with the Company due to disability (for which you qualify for
disability benefits), or (D) by you without Good
Reason. The compensation provided under this Section
3(b) is as follows:
(i) The Company will pay you a lump
sum severance payment, in cash, equal to 1.5 times your Annual
Compensation. For this purpose, your "Annual
Compensation" will be the sum of (A) plus (B), where (A) is the
greater of your annual base salary in effect immediately prior to
the occurrence of the event or circumstance upon which the Notice
of Termination is based or your annual base salary in effect
immediately prior to the Change in Control, and (B) is the amount
equal to your average annual incentive award (i.e., bonus) actually
paid or payable for performance in the three fiscal years preceding
the year of your Termination; provided that, if you were
not
employed by the Company or a then wholly owned
subsidiary of the Company for the full three-fiscal-year period,
your average annual incentive will be the annual average of the sum
of the amounts of your annual incentive award paid for performance
in the fiscal year or fiscal years during such period as to which
you were employed during the full fiscal year plus the annualized
annual incentive paid in any partial year in such period in which
you were employed; and provided further, that for this purpose only
annual incentive amounts paid for service to the Company or to a
subsidiary that was at the time of such service wholly owned
(directly or indirectly) by the Company shall be
considered.
(ii) Other provisions of any plan or
annual incentive award authorization notwithstanding, with respect
to your annual incentive award for the fiscal year in progress at
your Date of Termination and your annual incentive award for any
previously completed year for which your final annual incentive
award has not yet been determined by the Board committee or other
authorized decision maker with authority to make such determination
(the "Committee"):
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If and to the
extent that the level of your earning of any such award is based on
one or more pre-set performance goals, any such award shall be
deemed vested as of the Date of Termination based on the level of
actual achievement of your applicable performance goal through the
earlier of the end of the performance period or the Date of
Termination. For this purpose, the level of actual
achievement of your performance goal through the applicable date
shall be determined in good faith by the Committee and without the
exercise of negative discretion, and any requirement that this
determination be based on audited financial results shall not
apply.
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If and to the
extent that the level of your earning of any such award is not
based on pre-set performance goals (i.e., is discretionary), any
such award shall be deemed vested as of the date of Termination and
shall be deemed earned at a level consistent with the level of
annual incentives (as a percentage of base salary) of other
executives of comparable rank whose annual incentives are based on
pre-set performance goals, provided that the annual incentive shall
in no event be less than a pro rata amount of your average prior
years' annual incentive amount determined under Section 3(b)(i)(B)
above (with prorationing based on the portion of the applicable
fiscal year during which you were employed). These
determinations shall be made in good faith by the Committee and
without the exercise of negative discretion, as provided
above.
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No amount of
such award will be payable based on performance after the Date of
Termination under this Section 3(b)(ii). If you are
entitled to all or any portion of the annual incentive under any
other plan or authorization, the amount payable hereunder will not
be paid to the extent it would duplicate such payment of the annual
incentive. The provisions regarding the timing of
payment under Section 3(d) take precedence over any other payment
timing rule applicable to any such annual incentive.
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In connection
with this award, you will not be required to execute the
Acknowledgement customarily required as a condition of payment of
annual incentive awards.
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For purposes of
this Section 3(b)(ii), if no annual incentive award opportunity has
been established for you for the fiscal year in progress at your
Date of Termination, your annual incentive award opportunity for
that year will be deemed to be identical to the annual incentive
award opportunity that was established for the preceding
year.
(iii) Your stock options and other equity awards
shall be governed by the terms of the applicable plans and award
agreements.
(c)
Gross-Up If Excise Tax Would Apply .
In the event you become entitled to any amounts
or benefits payable in connection with a Change in Control (whether
or not such amounts are payable pursuant to this Agreement) (the
“Change in Control Payments”), if any of such Change in
Control Payments are subject to the tax (the “Excise
Tax”) imposed by Section 4999 of the Code (or any
similar federal, state or local tax that may hereafter be imposed),
the Company shall pay to you at the time specified in
Section 3(c)(iii) hereof an additional amount (the
“Gross-Up Payment”) such that the net amount retained
by you, after deduction of any Excise Tax on the Total Payments (as
hereinafter defined) and any federal, state and local income tax
and Excise Tax upon the payment provided for by
Section 3(c)(i), shall be equal to the Total
Payments.
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For purposes of
determining whether any of the Change in Control Payments will be
subject to the Excise Tax and the amount of such Excise
Tax:
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Any other
payments or benefits received or to be received by you in
connection with a Change in Control or your termination of
employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any Person
whose actions result in a Change in Control or any Person
affiliated with the Company or such Person) (which, together with
the Change in Control Payments, constitute the “Total
Payments”) shall be treated as “parachute
payments” within the meaning of
Section 280G(b)(2) of the Code, and all “excess
parachute payments” within the meaning of
Section 280G(b)(1) of the Code shall be treated as
subject to the Excise Tax, unless in the opinion of a
nationally-recognized tax counsel selected by the Company such
other payments or benefits (in whole or in part) do not constitute
parachute payments, or such excess parachute payments (in whole or
in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the
Code in excess of the base amount within the meaning of
Section 280G(b)(3) of the Code, or are otherwise not
subject to the Excise Tax;
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The amount of
the Total Payments which shall be treated as subject to the Excise
Tax shall be equal to the lesser of (x) the total amount of the
Total Payments and (y) the amount of excess parachute payments
within the meaning of Section 280G(b)(1) of the Code
(after applying Section 3(c)(i)(A) hereof);
and
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The value of
any non-cash benefits or any deferred payments or benefit shall be
determined by a nationally-recognized
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accounting firm
selected by the Company in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code.
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For purposes of
determining the amount of the Gross-Up Payment, you will be deemed
to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment
is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of your
residence on the Date of Termination, net of the maximum reduction
in federal income taxes which could be obtained from deduction of
such state and local taxes. In the event that the Excise
Tax is subsequently determined to be less than the amount taken
into account hereunder at the time of the Change in Control, you
will repay to the Company within ten days after the time that the
amount of such reduction in Excise Tax is finally determined the
portion of the Gross-Up Payment attributable to such reduction
(plus the portion of the Gross-Up Payment attributable to the
Excise Tax and federal and state and local income tax imposed on
the Gross-Up Payment being repaid by you if such repayment results
in a reduction in Excise Tax and/or federal and state and local
income tax deduction) plus interest on the amount of such repayment
at the rate provided in Section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder at the time of the
Change in Control (including by reason of any payment the existence
or amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess within ten days after the time that the
amount of such excess is finally determined.
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The Gross-Up
Payment provided for in this Section 3(c) shall be made at the same
time as the Change in Control Payments are made; provided,
however , that if the amount of such Gross-Up Payment cannot be
finally determined at the same time as the Change in Control
Payments are made, the Company shall pay to you at the time the
Change in Control Payments are made an estimate, as determined in
good faith by the Company, of the minimum amount of such Gross-Up
Payment and shall pay the remainder of such Gross-Up Payment
(together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) at the time provided in Section 3(c)(ii)
above. In any event, any Gross-Up Payment shall be made
under this Section 3(c) not later than the last day of your taxable
year next following the taxable year in which you are required to
remit the Excise Tax. Anything in this Section 3(c) to
the contrary notwithstanding, any Gross-Up Payment to be made
hereunder shall be subject to such delay in payment as may apply
under Section 3(d) of this Agreement in the event that such payment
is made in connection with your Termination of Employment and is
deemed to be a deferral of compensation subject to Section 409A of
the Code. Your right to payments under this Section 3(c)
shall be treated as a right to a series of separate payments under
Treasury Regulation § 1.409A-2(b)(2)(iii). In the
event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall be
repayable on the terms set forth in Section
3(c)(ii). Other provisions of this Section 3(c)
notwithstanding, nothing in this Section 3(c) is intended to
violate the Sarbanes-Oxley Act of 2002, and to the extent that any
advance or repayment obligation hereunder would do so, such
obligation shall be modified so as to make the
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advance a
nonrefundable payment to Executive and the repayment obligation
null and void.
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All
determinations under this Section 3(c) shall be made at
the expense of the Company by a nationally recognized public
accounting firm selected by the Company, and such determination
shall be binding upon you and the Company.
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(d)
Time of Payment . The Company’s obligation to make the
payments provided for in Section 3(b)(i) and (ii) (and any related
payment under Section 3(c)) shall be subject to your execution of a
release, in the form attached as Exhibit A, which you have not
revoked, such actions to be completed by the end of any applicable
revocation period. If and only if such release has
become legally effective, on the business day immediately following
the 52d day after your Date of Termination, the Company shall pay
the amount specified in Section 3(b)(i) and (ii) in a lump
sum. For purposes of compliance with Section 409A of
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