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EXHIBIT 10.31
October 11, 1999
Mr. Bart F. Petrini
5N936 Castle Drive
St. Charles, IL 60175
Dear Bart:
I am pleased to confirm our offer to you to join Communications & Power
Industries (CPI) as Chief Executive Officer and President reporting to the Board
of Directors. You will be appointed to the Board of Directors at the first Board
Meeting after you start employment.
The specific components making up this offer are as follows:
- - Base Salary
Initial bi-Weekly base salary will be $9,615.38, which approximates to
$250,000 per year for the Fiscal year ending 2000, since we base our
payroll on 26 pay periods per year. Fiscal year ending September 2001:
$262,500. Fiscal year ending September 2002 and remainder of three year
guaranteed base salary period: $275,000
- - Bonus
Participation in the annual plan as approved by the Board of Directors
with target bonus of 50% of base salary at budget. $125,000 bonus
guaranteed for the fiscal year ended September 2000. Paid upon approval of
annual audited financial statements by Board of Directors.
- - Relocation Bonus:
$60,000 at closing of purchase of permanent residence within reasonable
daily driving distance of CPI headquarters at Palo Alto, CA. In addition,
the Company will pay the real estate fees on the sales of your Illinois
home, plus $3,000 towards closing costs on a residence in California.
- - Moving Costs
CPI will pay reasonable and customary moving costs as more specifically
outlined in company policy. The 30-day limitation in the policy on
Temporary Living Expenses shall be extended to a maximum of 90 days.
- - Executive Car Program:
Participation in the country's Executive Car Program at the current level
of $32,500 with the added feature of annual maintenance. Executive may
also add up to $32,500, or lease equivalent, at his own expense to upgrade
the choice of vehicle.
- - Equity Program
Purchase 1,000 shares for $100.00 per share for $20,000 in cash and
$80,000 note with annual interest rate set initially at the applicable
federal rate and adjusted annually and principal due in three equal
installments on the earlier of 12/31/00, 12/31/01 and third anniversary of
your start date or the payment of the bonus for the fiscal year ending
prior to the respective dates.
Eligible to further participate in CPI Stock Option Plan: 4,000 shares at
exercise price of $100.000 per share, vest 25% year.
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October 11, 1999
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- - Severance Agreement
If terminated other than for cause:
Base
Guaranteed (after 3 years) 12 months
Benefits Full coverage at normal employee
contribution rates COBRA benefit
coverage as applicable
Car Retain through severance period
Outplacement Maximum of $10,000 of outplacement
service
In addition, you will be eligible to participate in all of the CPI benefits
programs, which are outlined below and detailed in an informational brochure
which we can provide. You shall be granted prior service credit under CPI's
benefit programs based on the service date that would recognize any prior
Varian/Electron Devices Business service time.
1. Group Insurance Plans:
a) Health Care Programs
b) Dental Plan
c) CPI Disability Plan
d) Life insurance in the amount of $5,000 basic coverage provided at no
cost to you. Additionally, you have a choice of the amount of
supplemental life insurance you may carry. You may select one, two,
or three times your annual salary, at a minimal cost to you,
depending upon your age, per $1,000. Accidental death and
dismemberment insurance is provided equal to your life insurance to a
maximum of $20,000.
e) Travel accident insurance of three times annual salary while
traveling on Company business by non-air methods, and six times
annual salary while traveling by air, with a maximum benefit of
$1,000,000.
f) Special Death Benefit of two times weekly earnings plus one day for
each complete year of service
g) Dependent Care spending account can be used to contribute up to
$5000 annually on a pre-tax basis
h) Health Care spending account (effective January 1, 2000) can be used
to contribute up to $2400 annually on a pre-tax basis
2. Personal Paid Leave (PPL) will accrue at a rate of twenty-five days per year
during your first three years of employment, and accelerates every several
years, subject to a maximum accrual rate.
3. Ten paid holidays per year.
4. Immediate participation in the CPI 401K Plan:
a) Participation in a defined contribution plan (Qualified and
Non-Qualified)
b) Employee contribution rate of 0-18% Base Pay pre-post tax, up to
maximum legal dollar limits
c) Company contribution rate of 4.75% of base salary to the Qualified
Plan
d) Company contribution rate of an additional 4.75% of employee base
over social security wage base to the Non-Qualified plan - made
annually at calendar year-end (plan details to follow)
5. Executive Physical
Eligible to participate in the Executive Physical Program with
reimbursement of up to $600 annually
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October 11, 1999
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Our offer is contingent upon your ability to meet the physical requirements of
the position, pass a drug screening, provide proof of employment eligibility
and, if necessary, obtain a security clearance.
Please review the enclosed CPI Policy titled Drug-Free Workplace. Upon your
acceptance of this offer, an appointment for a drug screening will be scheduled
for you. Upon your successful completion of the drug screening, we will discuss
an appropriate start date.
While we hope your employment relationship with CPI will be long and mutually
beneficial, this relationship between you and the company is "at will". This
means that you and the company each have the right to terminate the employment
relationship at any time with or without cause and without advance notice.
Bart, we realize this is a very important decision for you. We sincerely believe
that CPI will provide the challenges and opportunities that you seek. This offer
will remain open for your consideration until October 15, 1999.
Sincerely,
COMMUNICATIONS & POWER INDUSTRIES
HOLDING CORPORATION
By: /s/ Gregory J. Annick, Director
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Gregory J. Annick, Director
CC: Bill Rutledge, Director
John Danhakl, Director
Your signature will indicate your understanding of the terms of Employment set
forth in this letter. Please sign both copies and Return one copy in the
envelope provided.
/s/ Bart Petrini October 15, 1999
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