Exhibit 10.3
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
MYRON LEVY residing at 147 Deer Ford Drive, Lancaster PENNSYLVANIA 17603
(hereinafter called the "Employee").
WITNESSETH
WHEREAS, the Employee has been employed by the Company under an employment
agreement dated October 3, 1988 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 PRIOR AGREEMENTS SUPERSEDED.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 the Agreement shall be comprised of a
"period of active employment" commencing on January 1, 1997 and ending on
December 31, 2002 (subject to extension by agreement of the Company and
Employee) and a "consulting period" commencing at the end of the period of
active employment (as the same may be extended) and continuing for a period
of five (5) years. On January 1 of each year, 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.
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4. DUTIES AND EXTENT OF SERVICES DURING PERIOD OF EMPLOYMENT
(a) During the period of active employment, Employee shall be employed as an
executive of the Company. In such capacity, Employee agrees that he shall
serve the Company under the direction of the Chief Executive Officer of the
Company to the best of his ability, shall devote full time during normal
business hours to such employment, 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 Chief Executive Officer of
the Company.
(b) Effective with the termination of the period of active employment, Employee
shall cease to be an employee of the Company. However, in recognition of
the continued value to the Company of Employee's extensive knowledge and
expertise, Employee shall serve as a consultant to the Company during the
consulting period. In such capacity, Employee shall consult with the
Company and its respective senior executive officers with respect to its
respective businesses and operations. Such consulting services shall not
require more than fifty (50) days in any one year, it being understood and
agreed that during the consulting period Employee shall have the right to
undertake full time or part time employment with any business enterprise
which is not a competitor of the Company. Employee's services as a
consultant to the Company shall be required at such times and such places
as shall result in the least inconvenience to Employee, having in mind his
other business commitments which may obligate him to perform services prior
to the performance of his services hereunder. To the end that there shall
be a minimum of interference with Employees other commitments, his
consulting services shall be rendered by personal consultation at his
residence or office wherever maintained, or by correspondence through mail,
telegram or telephone, or other similar modes of communications at times,
including weekends and evenings, most convenient to him. During the
consulting period, Employee shall not be obligated to serve as a member of
the Board of Directors of the Company or to occupy any office on behalf of
the Employer or any of its subsidiaries or affiliates.
5. REMUNERATION
(a) During the period of active 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
TWO HUNDRED SEVENTY-FIVE THOUSAND ($275,000) DOLLARS commencing
January 1, 1997, payable in weekly installments, or in such other
manner as shall be agreeable to the Company and Employee.
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(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.
(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 three (3%) 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."
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(b)During the consulting period, Employee shall be entitled to a
consulting fee at the rate of SIXTY THOUSAND ($60,000) dollars per
annum, paid on a monthly basis.
6. EMPLOYEE BENEFITS - EXPENSES
a) During the period of active employment, Employee shall receive all
fringe benefits in the nature of health, medical, life and/or
other insurance, a Company car and related expenses as received by
other officers of the Company.
b) The Company shall reimburse Employee for all proper expenses
incurred by him, including disbursements made in the performance
of his duties to the Company; provided, however that no
extraordinary expenses and/or disbursements shall be incurred by
Employee without the prior approval of the Chief Executive Officer
or the Board of Directors of the Company.
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.
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) 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 two 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).
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f) Disability for Employee shall occur if he becomes unable, for
twelve consecutive 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: Myron Levy
147 Deer Ford Drive
Lancaster, PA 17601
TO: HERLEY INDUSTRIES, INC.
10 Industry Drive
Lancaster, PA 17603
Attention: Lee N. Blatt, Chairman
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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
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.
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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: ______________________________
Lee Blatt, Chairman and CEO
BY: ______________________________
Myron Levy, Employee
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