Exhibit 10.2
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 1st day of January 1997, by and between HERLEY
INDUSTRIES, INC., a Delaware corporation (hereinafter called the "Company"), and
LEE N. BLATT, residing at 471 North Arrowhead Trail Vero Beach, Fl 32963,
(hereinafter called the "Employee").
WITNESSETH
WHEREAS, the Employee has been employed by the Company under an employment
agreement dated June 11, 1984 as amended; and the Company desires to enter into
a new employment agreement with Employee; and,
WHEREAS, Employee desires to enter into the new employment agreement with the
Company;
NOW THEREFORE, it is agreed as follows:
1. PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes any employment
agreements, oral or written, entered into between Employee and the Company
prior to the date of this Agreement.
2. RETENTION OF SERVICES. The Company hereby retains the services of
Employee, and Employee agrees to furnish such services, upon the terms and
conditions hereinafter set forth.
3. TERM. Subject to earlier termination on the terms and conditions
hereinafter provided, the term of this Agreement shall be comprised of a 6
six year period of employment commencing January 1, 1997 and ending
December 31, 2002. On each January 1, the term of the Employment Agreement
shall extend to six years from that date. In no event shall the term of the
Employment Agreement extend beyond December 31, 2006.
4. DUTIES AND EXTENT OF SERVICES DURING PERIOD OF EMPLOYMENT. During the
period of employment, Employee shall be employed as a Senior Executive of
the Company. In such capacity, Employee agrees that he shall serve the
Company under the direction of the Board of Directors of the Company to the
best of his ability, shall perform all duties incident to his offices on
behalf of the Company, and shall perform such other duties as may from time
to time be assigned to him by the Board of Directors of the Company.
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Employee shall also serve in similar capacities of such of the subsidiary
corporations of the Company as may be selected by the Board of Directors
and shall be entitled to such additional compensation therefore as may be
determined by the Board of Directors of the Company. Notwithstanding the
foregoing, it is understood and agreed that the duties of Employee during
the period employment shall not be inconsistent with (i) his position and
title as Senior Executive of the Company; or (ii) with those duties
ordinarily performed by a comparable executive officer.
5. REMUNERATION. During the period of employment, Employee shall be
entitled to receive the following compensation for his services:
i) The Company shall pay to Employee an annual salary at the rate
of FOUR HUNDRED SEVENTY-FIVE THOUSAND ($475,000) DOLLARS
commencing January 1, 1997, payable in weekly installments, or in
such other manner as shall be agreeable to the Company and
Employee.
ii) In addition to his salary set forth in Paragraph 5(i) above,
Employee shall receive an increment in an amount equal to the
greater of (a) the cumulative cost of living on his base salary as
reported in the "Consumer Price Index, New York Northeastern New
Jersey, all items", published by the United States Department of
Labor, Bureau of Labor Statistics, using January 1,1996 as the
base year for computation, or (b) 10% of his annual salary for the
year then ending. Such cost of living increment with respect to
the aforesaid salary of Employee shall be made semi-annually as
follows:
A. With respect to the first six months of each calendar
year during the period of employment, such increment shall
be calculated and payable cumulatively on or before the
first day of August of such year; and
B. With respect to the last six months of each calendar year
during the period of employment, such increment shall be
calculated and payable cumulatively on or before the first
day of February of the following calendar year.
If Employee's employment shall terminate during any six-month
period referred to in this Paragraph 5 (ii), then the cost of
living increment provided for herein shall be prorated
accordingly.
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iii) Not later than one hundred twenty (120) days after the end of
the fiscal year of the Company and each subsequent fiscal year of
the Company ending during the period of employment, the Company
shall pay to Employee, as incentive compensation an amount equal
to a bonus at the discretion of the Board of Directors but in no
event less than five (5%) percent of the Consolidated Pretax
Earnings of the Company.
For purposes hereof, the term "Consolidated Pretax Earnings"
of the Company shall mean, with respect to any fiscal year, the
consolidated income, if any, of the Company for such fiscal year as set
forth in the audited, consolidated financial statements of the Company
and its subsidiaries included in its Annual Report to stockholders for
such fiscal year, before deduction of taxes based on income or of the
incentive compensation to be paid to Employee for such fiscal year
under this Agreement."
6. EMPLOYEE BENEFITS - EXPENSES
a) Commencing January 1, 1997 and during the term of this agreement,
the Company shall provide, at its expense up to $40,000 annually to
purchase life insurance in the face amount of $4,000,000, with Employee
having the right to designate the insurer, owner and beneficiary of
such life insurance.
b) In the event of the death of Employee, within 30 days thereafter the
Company shall promptly make a lump sum payment to Employee's widow, or
to such other person or persons as may be designated by Employee in his
Will, or to his estate in the event of Employee's intestacy, of the
salary and compensation to which Employee is entitled hereunder for the
three year period from date of death and one-half of such salary for
the balance of the period covered by this Agreement, and in the year of
death an additional payment equal to the pro rata amount for said year
of the compensation set forth in paragraph 5 (iii), the Company's
contribution to the 401(k), and the pro-rata cost of living increment,
which additional payment shall be made in accordance with paragraph 5
(ii).
c) During the period of employment, Employee shall be eligible to
participate in the Company's stock option and stock purchase plans to
the extent determined in the sole discretion of the Board of Directors
of the Company or a committee thereof.
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d) During the period of employment, Employee shall be furnished with
office space and facilities commensurate with his position and adequate
for the performance of his duties; he shall be provided with the
perquisites customarily associated with the position of a Senior
Executive of the Company; and he shall be entitled to six weeks regular
vacation during each year.
e) It is contemplated that, during the period of employment, Employee
may be required to incur out-of-pocket expenses in connection with the
performance of his services hereunder, including expenses incurred for
travel and business entertainment. Accordingly, the Company shall pay,
or reimburse Employee, for all out-of-pocket expenses reasonably
incurred by Employee in the performance of his duties hereunder in
accordance with the usual procedures of the Company. Notwithstanding
the foregoing, the recognition that Employee will be required during
the term of this Agreement to do a considerable amount of driving in
connection with his services hereunder, the Company shall provide
Employee with the use of a suitable automobile and all expenses
incidental throughout the term of this Agreement, including fuel,
repairs, maintenance and insurance.
f) All benefits to Employee specially provided for herein shall be in
addition to, and shall not diminish, (i) such other benefits and/or
compensation as may hereafter be granted to or afforded to Employee by
the Board of Directors of the Company; and (ii) any rights which
Employee may have or may acquire under any hospitalization, life
insurance, pension, profit-sharing, incentive compensation or other
present or future employee benefit plan or plans of the Company
g) Employee currently works from offices in Lancaster, Pennsylvania and
from his homes where he has created work space and his responsibilities
do not require regular attendance at any Company office. These
responsibilities include, among other things, conducting executive
recruiting tasks and visiting customers, investment banks and potential
acquisition candidates in the best interests of the Company. In
recognition of these special employment conditions, disability for
Employee shall occur if he becomes unable, for twelve consecutive
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months or more, due to ill health or other incapacity to perform the
services described above. In that event, the Company may thereafter,
upon at least 90 days written notice to employee, place him on
disability status and terminate this agreement. If employee is so
determined by the Company as disabled, he shall be entitled to his
annual compensation as set forth in paragraph 5 (i) and 5 (ii) hereof
payable in weekly installments for the first two years after notice of
disability and thereafter one-half of such compensation payable in
weekly installments for the balance of the period covered by this
agreement.
7. NON-COMPETITION. Employee agrees that, during term of this Agreement, he
will not, without the prior written approval of the Board of Directors of
the Company, directly or indirectly through any other individual or
entity,(a) become an officer or employee of, or render any services to, any
competitor of the Company, (b) solicit, raid, entice or induce any customer
of the Company to cease purchasing goods or services from the Company or to
become a customer of any competitor of the Company, and Employee will not
approach any customer for any such purpose or authorize the taking of any
such actions by any other individual or entity, or (c) solicit, raid,
entice or induce any employee of the Company to become employed by any
competitor of the Company, and Employee will not approach any such employee
for any such purpose or authorize the taking of any such action by any
other individual or entity. However, nothing contained in this paragraph 7
shall be construed as preventing Employee from investing his assets in such
form or manner as will not require him to become an officer or employee of,
or render any services (including consulting services) to, any competitor
of the Company.
8. TERMINATION FOR CAUSE.
a) The Company has been intimately familiar with the ability,
competence and judgment of Employee, which are acknowledged to be of
the highest caliber. Accordingly, the Company and Employee agree that
Employee's services hereunder may be terminated by the Company only (i)
for an act of moral turpitude materially adversely affecting the
financial condition of the Company, or (ii) breach of the terms of this
Agreement which shall materially adversely affect the financial
condition of the Company.
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b) If the Company terminates Employee's employment hereunder for any
reason other than as set forth in paragraph 8 (a) hereof, Employee's
compensation shall continue to be paid to him as provided in paragraph
5 hereunder for the remainder of the term of this Agreement. Employee
shall have no duty to mitigate the Company's damages hereunder.
Therefore, no deduction shall be made by the Company for any
compensation earned by Employee from other employment or for monies or
property otherwise received by Employee subsequent to such termination
of his employment hereunder. Employee and the Company acknowledge that
the foregoing provisions of this paragraph 8(b) are reasonable and are
based upon the facts and circumstances of the parties at the time of
entering into this Agreement, and with due regard to future
expectations.
9. CONSOLIDATION OR MERGER. In the event of any consolidation or merger of
the Company into or with any other corporation during the term of this
Agreement, or the sale of all or substantially all of the assets of the
Company to another corporation during the term of this Agreement, such
successor corporation shall assume this Agreement and become obligated to
perform all of the terms and provisions hereof applicable to the Company,
and Employee's obligations hereunder shall continue in favor of such
successor corporation.
10. INDEMNIFICATION. The Company agrees to indemnify the Employee to the
fullest extent permitted by applicable law consistent with the Company's
Certification of Incorporation and By-Laws as in effect on the effective
date of this Agreement with respect to any action or failure to act on his
part while he was an officer, director and/or employee (a) of the Company
or any subsidiary thereof or (b) of any other entity if his service with
such entity was at the request of the Company. This provision shall survive
the termination of this Agreement.
11. NOTICES. Notice is to be given hereunder to the parties by telegram or
by certified or registered mail, addressed to the respective parties at the
addresses herein below set forth or to such addresses as may be hereinafter
furnished, in writing:
TO: Lee N. Blatt
481 North Arrowhead Trail
Vero Beach, FL 32963
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TO: HERLEY INDUSTRIES, INC.
10 Industry Drive
Lancaster, PA 17603
Attention: Myron Levy, President
12. CHANGE OF CONTROL In the event there shall be a change in the present
control of the Company as hereinafter defined, or in any person directly or
indirectly presently controlling the Company, as hereinafter defined,
Employee shall have the right to immediately receive as a lump sum payment
an amount equal to (i) two (2) times his "base amount", within the meaning
of Section 280G of the Internal Revenue Code of 1954, as amended
(hereinafter "the Code"), reduced by (ii) $100.00.
For purposes of this Agreement, a change in control of the Company, or
in any person directly or indirectly controlling the Company, shall
mean:
a) a change in control as such term is presently defined in
Regulation 240.12b-2 under the Securities Exchange Act of 1934
("Exchange Act"); or
b) if any "person" (as such term is used in Section 13(d) and 14
(d) of the Exchange Act) other than the Company or any "person"
who on the date of this Agreement is a director or officer of the
Company, becomes the "beneficial owner" (as defined in Rule
13(d)-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing thirty percent (30%) of
the voting power of the Company's then outstanding securities; or
c) if during any period of two (2) consecutive years during the
term of this Agreement, individuals who at the beginning of such
period constitute the Board of Directors cease for any reason to
constitute at least a majority thereof, unless the election of
each director who is not a director at the beginning of such
period has been approved in advance by directors representing at
least two-thirds (2/3) of the directors then in office who were
directors at the beginning of the period.
13. SUCCESSORS AND ASSIGNS. This agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company. Unless
clearly inapplicable, reference herein to the Company shall be deemed to
include such other successor. In addition, this Agreement shall be binding
upon and inure to the benefits of the Employee and his heirs, executors,
legal
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representatives and assigns, provided, however, that the obligations of
Employee hereunder may not be delegated without the prior written approval
of Directors of the company.
14.AMENDMENTS. This agreement may not be altered, modified, amended
or terminated except by a written instrument signed by each of the
parties hereto.
15. GOVERNING LAW. This agreement shall be governed by and construed
and interpreted in accordance with the laws of Delaware, without reference
to principles of conflict of laws. IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the day and year first above written.
HERLEY INDUSTRIES, INC.
BY: ______________________________
MYRON LEVY, President
BY: ______________________________
LEE N BLATT, Employee
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