Exhibit 10.10.1
FORM OF
SEVERANCE AND RESTRICTIVE
COVENANT AGREEMENT
THIS SEVERANCE AND RESTRICTIVE
COVENANT AGREEMENT (this “ Agreement ”) is dated
as of February 2, 2009 (the “ Effective Date
”), between TESSCO TECHNOLOGIES INCORPORATED, a Delaware
corporation (the “ Company ”),
and
(“ Executive ”).
Section 1.
TERM OF AGREEMENT
The term of this Agreement shall
commence on and as of the Effective Date and continue until
Executive’s employment has terminated and the obligations of
the parties hereunder have terminated or expired or have been
satisfied in accordance with their terms.
Section 2.
DEFINITIONS
For purposes of this Agreement, the
following terms have the meanings set forth in this
Section:
2.1.
“
Board ” means the Board of Directors of the
Company.
2.2.
“
Cause ” means:
(a)
Executive’s
willful violation of a Company policy (excluding any act or
omission that Executive reasonably believed in good faith to have
been in the best interest of the Company), commission of an act of
fraud or dishonesty, or willful engagement in illegal conduct or
gross misconduct, which in each case is materially and demonstrably
injurious to the Company;
(b)
Executive’s
continued failure to substantially perform Executive’s duties
with the Company or to substantially comply with a specific and
lawful directive of the Company’s President and Chief
Executive Officer or the Board (other than a continued failure
caused by or attributable to physical or mental illness or
infirmity), in each case after a written demand for substantial
performance or substantial compliance is delivered to Executive by
or on behalf of the Company’s President and Chief Executive
Officer or the Board, which demand is based on a good-faith
determination by the Company’s President and Chief Executive
Officer or the Board, after reasonable inquiry, specifically
identifying the manner in which the Company’s President and
Chief Executive Officer or the Board believes Executive has not
substantially performed Executive’s duties or substantially
complied with a lawful directive;
(c)
Executive’s
conviction of (including a plea of nolo contendere to) a crime
constituting a felony;
(d)
Executive’s
embezzlement or criminal diversion of funds; or
(e)
Executive’s
failure (other than by reason of physical or mental illness or
infirmity) to perform or to comply with any material term or
condition of this Agreement, which failure:
(i)
is of such a
nature that it is reasonably capable of being cured, but only if
(x) Executive does not cure such failure within thirty (30)
days after written notice of such failure or (y) if such
failure cannot be cured in such period and the continuation of such
failure will not be materially and demonstrably injurious to the
Company, Executive does not commence and diligently seek to cure
such failure within such period and thereafter continue to seek to
cure such failure until cured; or A
(ii)
is of such a
nature that it is not reasonably capable of being cured, in which
case Executive shall be given written notice thereof but shall not
be entitled to any opportunity to cure such failure.
2.3.
“ Change
in Control ” means any change in ownership or effective
control of the Company or any of its subsidiaries or change in the
ownership of a substantial portion of the assets of the Company or
of any subsidiary.
2.4.
“
Code ” means the Internal Revenue Code of 1986, as
amended.
2.5.
“ Date
of Termination ” means: (i) if Executive’s
employment terminates by virtue of Executive’s death, the
date of death and (ii) in all other cases, the date as of
which a termination of Executive’s employment becomes
effective in accordance with the provisions of
Section 3.1(d).
2.6.
“
Disability ” means any physical or mental illness or
infirmity of Executive (expressly excluding habitual use of alcohol
or drugs) that causes Executive to be substantially unable to
perform Executive’s duties hereunder for any period of one
hundred eighty (180) consecutive days or two hundred seventy (270)
days, whether or not consecutive, in any period of three hundred
sixty five (365) days, despite provision by the Company of
reasonable accommodations as required by law. The determination of
whether a Disability exists shall be made by a licensed physician
who is board certified in the specialty mutually determined by the
Company and Executive to be applicable and who is mutually selected
by the Company and Executive. If the parties cannot agree on such a
physician or specialty, each party shall select a physician and the
two physicians so selected shall select a third physician board
certified in the specialty determined appropriate by the two
physicians, and such board-certified physician shall make the
determination of whether a Disability exists. Absent certification
by the physician so selected that the circumstances of
Executive’s condition have changed materially since the time
of the then most recent determination, neither party shall be able
to initiate a determination as to Disability for a period of nine
months after the completion of the then most recent
determination.
2.7.
“ Good
Reason ” means the occurrence, without Executive’s
express prior written consent, of any of the following:
(a)
any substantial
reduction in the scope of Executive’s authority, duties, or
responsibilities, other than a reduction attributable to
Executive’s continued failure to
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substantially
perform Executive’s duties with the Company or to accommodate
Executive’s physical or mental illness or infirmity;
or
(b)
any substantial
reduction in Executive’s base compensation or total
compensation opportunity for any fiscal year (taking into account
base compensation, bonus or other incentive compensation
opportunities, and noncash compensation);
but only if (i) Executive
delivers a written notice to the Company specifically identifying
the occurrence and demanding that it be remedied within ninety (90)
days of the initial existence of such occurrence and (ii) if
the same is capable of being rectified, the Company fails to
rectify the same within thirty (30) days after receiving such
written notice or, if the same is not capable of being rectified
within such period of time, the Company fails to commence
diligently to seek to rectify the same within such period and
thereafter to continue to seek to rectify such failure until
rectified.
For the avoidance of
doubt: (x) neither the relocation of Executive’s
place of employment to another location nor the occurrence of a
Change in Control shall, of itself, constitute “Good
Reason” and (y) any prospective action that would, if
actually taken or implemented, constitute Good Reason through the
application of (a) or (b) above (after the expiration
without cure of the applicable notice and cure period provided for
above) shall not in any event be deemed to have occurred unless and
until such action is actually taken or implemented.
2.8.
“
Separation from Service ” means a termination of
Executive’s employment that constitutes a separation from
service under Section 409A(a)(2)(A)(i) of the
Code.
Section 3.
TERMINATION AND COMPENSATION UPON
TERMINATION
3.1.
In
General .
(a)
Termination by
Company . The Company (acting through
the President and Chief Executive Officer or the Board) may at any
time elect to terminate Executive’s employment by delivery of
a notice of termination to Executive for any reason (including on
account of Disability) or no reason, with or without
Cause.
(b)
Termination by
Executive . Executive may elect to
terminate Executive’s employment by delivery of a notice of
termination for any reason (including on account of Disability) or
no reason, with or without Good Reason at any time.
(c)
Notice of
Termination . Any termination of
Executive’s employment, whether by the Company or by
Executive, shall be communicated by written notice of termination
to the other party in accordance with the terms of
Section 5.5. The notice of termination shall state the
specific termination provision in this Agreement relied upon and
set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive’s employment
under the provision so indicated and shall state an effective date
of termination that complies with the requirements of
subsection (d).
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(d)
Effective Date
of Termination . Unless otherwise agreed
upon in writing by the Company and Executive:
(i)
the effective
date of termination of Executive’s employment in the case of
a termination of Executive’s employment by the Company for
any or no reason shall not be more than ninety (90) days after the
date the notice of termination is given by the Company;
(ii)
the effective
date of termination in the case of a termination of
Executive’s employment by Executive for any reason shall not
be less than thirty (30) nor more than thirty-five (35) days after
the date the notice of termination is given by
Executive.
The foregoing, however, shall not
preclude the Company from requiring that Executive take a leave of
absence with pay until the expiration of the period between the
date the notice of termination is given and the effective date of
termination.
(e)
All payments made
to or in respect of Executive pursuant to this Section 3 shall
be made in a cash lump sum within thirty (30) days following the
Date of Termination, except where this Agreement (or the plan
pursuant to which such payment is to be made) provides otherwise.
No amounts that are “deferred compensation” within the
meaning of Section 409A of the Code and that are payable under
this Agreement as a result of Executive’s termination of
employment shall be payable to Executive unless Executive’s
termination of employment also constitutes a Separation from
Service.
3.2.
Death,
Disability, Cause, or Resignation without Good
Reason . Executive’s
employment shall be terminated automatically on the date of
Executive’s death or Disability. Upon such a termination of
employment, or upon a termination of employment by the Company for
Cause, or upon a termination of employment by Executive without
Good Reason, the Company shall pay to Executive (or, in the event
of Executive’s death, to Executive’s beneficiary or
estate), when the same would otherwise have been due, the base
compensation and any bonus then payable through the Date of
Termination and shall have no further obligations under this
Agreement.
3.3.
Termination
Without Cause or With Good Reason . If Executive’s
employment is terminated by the Company without Cause or by
Executive for Good Reason, the Company shall pay to
Executive:
(a)
when the same
would otherwise have become due and payable, the base compensation
and any bonus then payable through the Date of Termination (without
regard to any reduction therein constituting Good Reason within the
meaning of Section 2.7(b)), plus
(b)
an amount of
severance pay equal to one and 65/100 (1.65) times the amount of
Executive’s annual base compensation as in effect on the Date
of Termination (without regard to any reduction therein
constituting Good Reason within the meaning of
Section 2.7(b)), which amount shall be paid in twelve (12)
consecutive equal monthly installments, commencing not later than
the first day of second calendar month following the Date of
Termination and continuing thereafter monthly until paid in full.
In the event that any payments due under this
subsection (b) constitute “deferred
compensation” within the meaning
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of
Section 409A of the Code, Executive’s right to receive a
series of installment payments shall be treated as a right to a
series of separate payments.
3.4.
Cost of
COBRA Continuation Coverage . If and to the extent that
Executive, following a termination of Executive’s employment
described in Section 3.3, properly and timely elects (on
behalf of Executive and Executive’s qualified beneficiaries)
continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“ COBRA
”) with respect to the Company’s group health plan,
Executive shall pay from time to time the then-current portion of
the cost of such coverage that would be payable by the
Company’s similarly situated active employees and the Company
shall pay the balance of such then-current costs as long as and for
the period during which the Company remains obligated for
continuing payments under Section 3.3(b) (without regard
to any acceleration by the Company of such payments). The Company
shall be authorized to deduct from the consecutive biweekly
installments to be paid under Section 3.3 Executive’s
then-current share of the cost of such coverage. The
Company’s subsidy of such group health plan coverage shall
terminate upon the earlier of (1) the date of termination of
COBRA continuation coverage and (2) the payment in full by the
Company of its obligations under Section 3.3(b) (without
regard to any acceleration by the Company of such payments),
whereupon Executive shall be fully responsible for the cost of
continuing coverage and benefits, if any.
3.5.
General
Release Agreement . The obligations of the
Company to make the payments and provide the benefits described in
Sections 3.3 and 3.4 are expressly conditioned upon
Executive’s signing and delivering to the Company, not later
than three (3) months after the Date of Termination, and
thereafter not revoking a valid general release agreement in form
and substance reasonably acceptable to the Company, which release
shall include a general release of all claims against the Company,
its directors, officers, and affiliates (other than claims in
respect of future Company obligations under this Agreement). Any
breach of Executive’s nondisclosure, nonsolicitation, or
noncompetition obligations to the Company that has or is reasonably
likely to have a material and adverse effect on the Company shall,
in addition
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