Exhibit 10.1
EMPLOYMENT
AGREEMENT
THIS AGREEMENT, made and entered
into as of April 27, 2006, by and between Communications &
Power Industries Canada Inc., an Ontario corporation (hereinafter
called the “Corporation”), and O. Joe Caldarelli
(hereinafter called the “Executive”).
WITNESSETH THAT:
WHEREAS, the Corporation desires to
continue to employ the Executive, and the Executive desires to
continue in such employment;
NOW, THEREFORE, the Corporation and
the Executive, each intending to be legally bound, hereby mutually
covenant and agree as follows (certain defined terms are set forth
in Section 8(d) hereof):
1.
Employment and
Term .
(a)
Employment
. The Corporation
shall employ the Executive as the President of the Corporation, and
the Executive shall so serve, for the term set forth in
Section 1(b) .
(b)
Term . The term of the
Executive’s employment under this Agreement shall commence on
the date hereof and end on the third anniversary of the date
hereof, subject to the extension of such term as hereinafter
provided and subject to earlier termination as provided in
Section 8 . The term of this Agreement shall be
extended automatically for one (1) additional year as of the third
anniversary hereof, and each anniversary date thereafter unless, no
later than six (6) months prior to any such renewal date, either
the Board or the Executive gives written notice to the other, in
accordance with Section 14 , that the term of this
Agreement shall not be so extended; provided, however, no automatic
extension of the term shall occur with respect to an anniversary
date if Executive has attained the age of 65.
2.
Duties
. During the
period of employment as provided in Section 1(b)
hereof, the Executive shall serve as President of the Corporation
and Chief Executive Officer of Communications & Power,
Industries, Inc. (“CPI”) and the Parent and have all
powers and duties consistent with such positions, subject to the
reasonable direction of the Board. The Executive shall also
continue to serve as a member of the Board if elected as such. The
Executive shall devote substantially his entire time during
reasonable business hours (reasonable sick leave and vacations
excepted) and reasonable best efforts to fulfill faithfully,
responsibly and to the best of his ability his duties
hereunder.
3.
Salary
.
(a)
Base
Salary . For services performed by
the Executive for the Corporation pursuant to this Agreement during
the period of employment as provided in Section 1(b) hereof,
the Corporation shall pay the Executive a base salary at the rate
of Five
Hundred Fifty Thousand
Canadian dollars ($550,000 Canadian) per year, payable in
substantially equal installments in accordance with the
Corporation’s regular payroll practices. The
Executive’s base salary (with any increases under Section
3(b) , below) shall not be subject to reduction; provided,
however, in connection with an across-the-board salary reduction
that applies to substantially all of the management executives of
Parent and its subsidiaries, Executive’s base salary may be
reduced by a percentage amount equal to the average amount of the
percentage decrease affecting such other management executives, but
in no event more than 10%. Any compensation which may be paid to
the Executive under any additional compensation or incentive plan
of the Corporation, Parent, or any affiliate thereof
or which may be
otherwise authorized from time to time by the Board (or an
appropriate committee thereof) shall be in addition to the base
salary to which the Executive shall be entitled under this
Agreement.
(b)
Salary
Increases . During the period of
employment as provided in Section 1(b) hereof, the base
salary of the Executive shall be reviewed no less frequently than
annually by the Board to determine whether or not the same should
be increased in light of the duties and responsibilities of the
Executive and the performance thereof, and if it is determined that
an increase is merited, such increase shall be promptly put into
effect and the base salary of the Executive as so increased shall
constitute the base salary of the Executive for purposes of
Section 3(a) .
4.
Annual
Bonuses . For each fiscal year during
the term of employment, the Executive shall be eligible to receive
a bonus payable in cash and/or in Parent’s common stock. The
amount of the bonus shall be based on the achievement of certain
operating and/or financial goals, in accordance with the terms of a
bonus plan adopted and administered by the Board for senior
executives of the Parent and its subsidiaries, which plan may be
amended from time to time by the Board in its discretion.
Executive’s target annual bonus for fiscal year 2006 will be
equal to 1.0 times his current annual salary.
5.
Equity
Incentive Compensation . During the term of
employment hereunder the Executive shall be eligible to
participate, in an appropriate manner relative to other senior
executives of the Parent and its subsidiaries, in any equity-based
incentive compensation plan or program approved by the Board from
time to time, including (but not by way of limitation) any plan
providing for the granting of (a) options to purchase stock of the
Parent, (b) restricted stock of the Parent or (c) similar
equity-based units or interests.
6.
Other
Benefits . In addition to the
compensation described in Sections 3, 4 and 5 , above,
the Executive shall also be entitled to the following:
(a)
Participation
in Benefit Plans . The Executive shall be
entitled to participate in all of the various retirement, welfare,
disability, fringe benefit, executive perquisite and expense
reimbursement plans, and any other programs and arrangements of the
Corporation, Parent and its affiliates to the extent the Executive
is eligible for participation under the terms of such plans,
programs and arrangements, with the participation levels to be
determined by Executive’s salary, position and tenure, and
such other factors as apply in such plans and programs. Except as
otherwise specifically provided in this Agreement, the Executive
shall also be entitled to all benefits provided to him under the
practices of the Corporation as in effect immediately prior to the
effective date of this
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Agreement, including without
limitation Executive’s individual automobile expense
reimbursement plan, as in effect on the date hereof. In addition,
without limiting the foregoing, the Corporation will provide
Executive with the maximum short-term disability coverage available
through the Corporation’s (and its subsidiaries’)
insurance carriers; if such coverage does not amount to 66 2/3% of
Executive’s base salary, then any shortfall shall be funded
by the Corporation through self-insurance.
(b)
Vacation and
Holidays . The Executive shall be
entitled to the number of weeks of vacation during each year of
this Agreement per the formula determined by the existing policies
of the Corporation, or such greater period as the Board may
approve, and to the paid holidays given by the Corporation to its
employees generally, without reduction in salary or other
benefits.
7.
Covenants of
the Executive . In order to induce the
Corporation to enter into this Agreement, the Executive hereby
agrees as follows:
(a)
Confidentiality
. Except for and
on behalf of the Corporation with the consent of or as directed by
the Board, the Executive shall keep confidential and shall not
divulge to any other person or entity, during the term of
employment or thereafter, any of the business secrets or other
confidential information regarding the Parent and its subsidiaries
which has not otherwise become public knowledge; provided, however,
that nothing in this Agreement shall preclude the Executive from
disclosing information (i) to an appropriate extent to parties
retained to perform services for the Parent or its subsidiaries or
(ii) under any other circumstances to the extent such
disclosure is, in the reasonable judgment of the Executive,
appropriate or necessary to further the best interests of the
Corporation or its affiliates or (iii) as may be required by
law, legal process or subpoena.
(b)
Records
. All papers,
books and records of every kind and description relating to the
business and affairs of the Parent and its subsidiaries, whether or
not prepared by the Executive, other than personal notes prepared
by or at the direction of the Executive, shall be the sole and
exclusive property of the Corporation, and the Executive shall
surrender them to the Corporation at any time upon request by the
Board.
(c)
Non-Competition
. The Executive
hereby agrees with the Corporation that during the term of his
employment hereunder, and in certain instances, as provided below,
for a period following termination of his employment hereunder, he
shall not, directly or indirectly, engage in, or be employed by, or
act as a consultant to, or be a director, officer, owner or partner
of, or acquire a substantial interest in, any business activity or
entity which competes significantly with the Parent or any of its
subsidiaries, provided, however, that as to the period after
termination of the Executive’s employment hereunder, the
restrictive covenants set forth in this Section 7(c) shall
apply only in the case of terminations without Cause or
resignations for Good Reason and then only for a period beginning
on the Date of Termination and ending, as applicable, twenty-four
(24) months or thirty (30) months later (which period will be based
the applicable multiplier pursuant to subsection (ii) of
Section 9(b) of this Agreement);
(d)
Non-Solicitation
. During the time
period after termination (if any) during which the Executive is
subject to the noncompetition covenants of Section 7(c)
of
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this Agreement, he shall not
induce or attempt to induce any customer, supplier, licensee or
other individual, corporation or other business organization having
a business relation with the Parent or its subsidiaries to cease
doing business with the Parent or its subsidiaries or in any way
interfere with the relationship between any such customer,
supplier, licensee or other person and the Parent or its
subsidiaries. In addition, during the two-year period following
termination of employment for any reason (or, if longer, the period
during which the Executive is subject to the non-competition
covenants of Section 7(c) of this Agreement), Executive
shall not solicit any employee of the Parent or any of its
subsidiaries to leave the employment thereof or in any way
interfere with the relationship of such employee with the Parent or
its subsidiaries.
(e)
Enforcement
. The Executive
recognizes that the provisions of this Section 7 are vitally
important to the continuing welfare of the Corporation and its
subsidiaries and that money damages would constitute an inadequate
remedy for any violation thereof. Accordingly, in the event of any
such violation by the Executive, the Corporation and its
subsidiaries, in addition to any other remedies they may have,
shall have the right to institute and maintain a proceeding to
compel specific performance thereof or to seek an injunction
restraining any action by the Executive in violation of this
Section 7 .
8.
Termination
. Unless earlier
terminated in accordance with the following provisions of this
Section 8 , the Corporation shall continue to employ the
Executive and the Executive shall remain employed by the
Corporation during the entire term of this Agreement as set forth
in Section 1(b) . Section 9 hereof sets forth certain
obligations of the Corporation in the event that the
Executive’s employment is terminated.
(a)
Death or
Disability . Except to the extent
otherwise provided in Section 9 with respect to certain
post-Date of Termination payment obligations of the Corporation,
this Agreement shall terminate immediately as of the Date of
Termination in the event of the Executive’s death or in the
event that the Executive becomes disabled. The Executive will be
deemed to be disabled upon the earlier of (i) the end of a
twelve (12) consecutive month period during which, by reason of any
medically determinable physical or mental impairment, the Executive
has been unable to perform substantially all of his usual and
customary duties under this Agreement or (ii) the date that a
reputable physician selected by the Board, and as to whom the
Executive has no reasonable objection, determines in writing that
the Executive will, by reason of any medical determinable physical
or mental impairment, be unable to perform substantially all of his
usual and customary duties under this Agreement for a period of at
least twelve (12) consecutive months. If any question arises as to
whether the Executive is disabled, upon reasonable request therefor
by the Board, the Executive shall submit to reasonable medical
examination for the purpose of determining the existence, nature
and extent of any such disability. In accordance with Section
14 , the Board shall promptly give the Executive written notice
of any such determination of the Executive’s disability and
of any decision of the Board to terminate the Executive’s
employment by reason thereof. In the event of disability, until the
Date of Termination, the base salary payable to the Executive under
Section 3 hereof shall be reduced dollar-for-dollar by the
amount of disability benefits, if any, paid to the Executive in
accordance with any disability policy or program of the Corporation
or its affiliates.
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(b)
Discharge for
Cause . In accordance with the
procedures hereinafter set forth, the Board may discharge the
Executive from his employment hereunder for Cause. Except to the
extent otherwise provided in Section 9 with respect to
certain post-Date of Termination obligations of the Corporation,
this Agreement shall terminate immediately as of the Date of
Termination in the event the Executive is discharged for Cause. Any
discharge of the Executive for Cause shall be communicated by a
Notice of Termination to the Executive given in accordance with
Section 14 of this Agreement. For purposes of this
Agreement, a “ Notice of Termination ” means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the
provision so indicated and (iii) if the Date of Termination is to
be other than the date of receipt of such notice, specifies the
Date of Termination (which date shall in all events be within
thirty (30) days after the giving of such notice). In the case of a
discharge of the Executive for Cause, the Notice of Termination
shall include a copy of a resolution duly adopted by the Board at a
meeting called and held for such purpose (after reasonable notice
to the Executive and reasonable opportunity for the Executive to be
heard before the Board prior to such vote), finding that, in the
reasonable and good faith opinion of the Board, the Executive was
guilty of conduct constituting Cause. No purported termination of
the Executive’s employment for Cause shall be effective
without a Notice of Termination.
(c)
Termination
for Other Reasons . The Corporation may
discharge the Executive without Cause by giving written notice to
the Executive in accordance with Section 14 at least thirty
(30) days prior to the Date of Termination. The Executive may
resign from his employment by giving written notice to the
Corporation in accordance with Section 14 at least thirty
(30) days prior to the Date of Termination. Except to the extent
otherwise provided in Section 9 with respect to certain
post-Date of Termination obligations of the Corporation, this
Agreement shall terminate immediately as of the Date of Termination
in the event the Executive is discharged without Cause or
resigns.
(d)
Definitions
. For purposes of
this Agreement, the following capitalized terms shall have the
meanings set forth below:
(i)
“
Accrued Obligations ” shall mean, as of the Date of
Termination, the sum of (A) the Executive’s base salary
hereunder through the Date of Termination to the extent not
theretofore paid, (B) the amount of any incentive compensation,
deferred compensation and other cash compensation accrued by the
Executive as of the Date of Termination to the extent not
theretofore paid, (C) any vacation pay, expense reimbursements and
other cash entitlements accrued by the Executive as of the Date of
Termination to the extent not theretofore paid, and (D) with
respect to any bonus plans for the fiscal year of termination, if
Executive has been employed for at least six (6) months during such
fiscal year and has not been terminated for Cause or resigned
without Good Reason, a partial bonus for the fiscal year of
termination equal to the bonus payable for the full fiscal year in
accordance with the applicable plan, program or policy, multiplied
by a fraction equal to the fraction of the fiscal year preceding
Executive’s termination.
(ii)
“ Base
Salary ” shall mean the annual base salary paid to
Executive immediately prior to the termination of employment,
provided that such amount
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shall in no event be less
than the annual base salary payable to Executive during the one (1)
year period immediately prior to the termination.
(iii)
“
Board ” means the board of directors of
Parent.
(iv)
“
Cause ” shall mean (i) acts or omissions by the
Executive which constitute intentional material misconduct or a
knowing violation of a material policy of the Parent or any of its
subsidiaries, (ii) the Executive personally receiving a
benefit in money, property or services from the Parent or any of
its subsidiaries or from another person dealing with the Parent or
any of its subsidiaries, in material violation of applicable law or
policy of Parent or any of its subsidiaries, (iii) an act of
fraud, conversion, misappropriation, or embezzlement by the
Executive or his conviction of, or entering a guilty plea or plea
of no contest with respect to, a felony, or the equivalent thereof
(other than DUI), or (iv) any deliberate and material misuse or
deliberate and material improper disclosure of confidential or
proprietary information of Parent or any of its subsidiaries.
Notwithstanding the foregoing, no act or omission by the Executive
shall constitute Cause hereunder unless the Corporation has given
detailed written notice thereof to the Executive, and the Executive
has failed to remedy such act or omission within a reasonable time
after receiving such notice.
(v)
A “
Change of Control ” shall be deemed to have occurred
if:
(A)
Any individual or
group constituting a “person”, as such term is used in
Sections l3(d) and l4(d)(2) of the Securities Exchange Act of 1934,
as amended (“ Exchange Act ”) (other than (A)
the Parent or any of its subsidiaries, (B) any trustee or other
fiduciary holding securities under an Executive benefit plan of the
Parent or of any of its subsidiaries or (C) any Cypress Fund(s)),
is or becomes the beneficial owner, directly or indirectly, of
securities of the Parent representing fifty percent (50%) or more
of the combined voting power of the Parent’s outstanding
securities then entitled ordinarily (and apart from rights accruing
under special circumstances) to vote for the election of directors;
or
(B)
Continuing
Directors cease to constitute at least a majority of the Board;
or
(C)
there occurs a
reorganization, merger, consolidation or other corporate
transaction involving the Parent (a “ Transaction
”), in each case with respect to which the stockholders of
the Parent immediately prior to such Transaction do not,
immediately after the Transaction, own more than 50% of the
combined voting power of the Parent or other corporation resulting
from such T
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