EXHIBIT 10.31
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of [___________], 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
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the practices of the Corporation as in effect immediately prior to
the effective
date of this 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);
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(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 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
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Executive in accordance with any disability policy or program of
the Corporation
or its affiliates.
(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.
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(ii)
"Base Salary" shall mean the annual base salary paid
to Executive immediately prior to the termination of employment,
provided that
such amount 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
