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EXHIBIT 10.1
AGREEMENT
This Agreement, made as of the 30th day of May, 1996 by and between
TOLLGRADE COMMUNICATIONS, INC., a Pennsylvania corporation (the "Corporation")
and SARA M. ANTOL, an individual residing in the Commonwealth of Pennsylvania
and an employee of the Corporation (the "Executive").
WITNESSETH:
WHEREAS, the Board of Directors of the Corporation has determined that
it is in the best interests of the Corporation to enter into this Agreement
with the Executive to provide for compensation of the Executive upon
termination of employment under certain circumstances relating to a change in
control of the Corporation; and
WHEREAS, the Executive desires to obtain such benefits in the event
the Executive's employment is terminated under the circumstances provided
herein.
NOW, THEREFORE, in consideration of the covenants and premises
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. DEFINITION OF TERMS. The following terms when used in this
Agreement shall have the meaning hereafter set forth:
"ANNUAL SALARY ADJUSTMENT PERCENTAGE" shall mean the mean average
percentage increase in base salary for all elected officers of the
Corporation during the two full calendar years immediately preceding
the time to which such percentage is being applied; provided however,
that if after a Change-in-Control, as hereinafter defined, there
should be a significant change in the number of elected officers of
the Corporation or in the manner in which they are compensated, then
the foregoing definition shall be changed by substituting for the
phrase "elected officers of the Corporation" the phrase "persons then
performing the functions formerly performed by the elected officers of
the Corporation."
"CAUSE FOR TERMINATION" shall mean:
(a) the deliberate and intentional failure by the Executive to
devote substantially her entire business time and best
efforts to the performance of her duties (other than any such
failure resulting from the Executive's incapacity due to
physical or mental illness or disability) after a demand for
substantial performance is delivered to the Executive by the
Board of Directors which specifically identifies the manner
in which the Board of Directors believes that the Executive
has not substantially performed her duties,
or
(b) wilfully engaging by the Executive in conduct which
constitutes a fraud against the Corporation or a material
breach of this Agreement,
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or
(c) the Executive's conviction of any crime which constitutes a
felony.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be considered "deliberate and intentional" or
"willfully" unless done, or omitted to be done, by the Executive not
in good faith and without reasonable belief that her action or
omission was in the best interests of the Corporation.
"CHANGE-IN-CONTROL" shall mean the determination (which may be made
effective as of a particular date specified by the Board of Directors
of the Corporation) by the Board of Directors of the Corporation, made
by a majority vote that a change in control has occurred, or is about
to occur. Such a change shall not include, however, a restructuring,
reorganization, merger, or other change in capitalization in which the
Persons who own an interest in the Corporation on the date hereof (the
"Current Owners")(or any individual or entity which receives from a
Current Owner an interest in the Corporation through will or the laws
of descent and distribution) maintain more than a sixty-five percent
(65%) interest in the resultant entity. Regardless of the Board's vote
or whether or not the Board votes, a Change-in-Control will be deemed
to have occurred as of the first day any one (1) or more of the
following subparagraphs shall have been satisfied:
(a) Any Person (other than the Person in control of the
Corporation as of the date of this Agreement, or other than a
trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation, or a corporation
owned directly or indirectly by the stockholders of the
Corporation in substantially the same proportions as their
ownership of stock of the Corporation), becomes the
beneficial owner, directly or indirectly, of securities of
the Corporation representing more than thirty five percent
(35%) of the combined voting power of the Corporation's then
outstanding securities; or
(b) The stockholders of the Corporation approve:
(i) A plan of complete liquidation of the Corporation;
(ii) An agreement for the sale or disposition of all
or substantially all of the Corporation's assets;
or
(iii) A merger, consolidation, or reorganization of the
Corporation with or involving any other
corporation, other than a merger, consolidation,
or reorganization that would result in the voting
securities of the Corporation outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being
converted into voting securities of the surviving
entity) at least sixty-five percent (65%) of the
combined voting power of the voting securities of
the Corporation (or such surviving entity)
outstanding immediately after such merger,
consolidation, or reorganization.
However, in no event shall a Change in Control be deemed to have
occurred, with respect to the Executive, if the Executive is part of a
purchasing group which consummates the Change-in- Control transaction.
The Executive shall be deemed "part of the purchasing group" for
purposes
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of the preceding sentence if the Executive is an equity participant or
has agreed to become an equity participant in the purchasing company
or group (except for (i) passive ownership of less than five percent
(5%) of the voting securities of the purchasing company; or (ii)
ownership of equity participation in the purchasing company or group
which is otherwise deemed not to be significant, as determined prior
to the Change-in-Control by a majority of the non-employee continuing
Directors of the Board of Directors of the Corporation).
"DATE OF TERMINATION" shall mean:
(a) if the Executive's employment is terminated for Disability,
the date that a Notice of Termination is given to the
Executive;
(b) if the Executive terminates due to her death or Retirement,
the date of death or Retirement, respectively;
(c) if the Executive decides to terminate employment upon Good
Reason for Termination, the date following such decision
specified by the Corporation after it has been notified of
the Executive's decision to terminate employment; or
(d) if the Executive's employment is terminated for any other
reason, the date on which such termination becomes effective
pursuant to a Notice of Termination.
"DISABILITY" shall mean such incapacity due to physical or mental
illness or injury as causes the Executive to be unable to perform
herduties with the Corporation during 180 consecutive days.
"GOOD REASON FOR TERMINATION" shall mean the occurrence of:
(a) without the Executive's express written consent, the
assignment to the Executive of any duties materially and
substantially inconsistent with her positions, duties,
responsibilities and status with the Corporation immediately
prior to a Change-in-Control, or a material change in her
reporting responsibilities, titles or offices as in effect
immediately prior to a Change-in-Control, or any removal of
the Executive from or any failure to re-elect the Executive
to any of such positions, except in connection with the
termination of the Executive's employment due to Cause for
Termination, Disability or Retirement (as hereinafter
defined) or as a result of the Executive's death;
(b) (i) a reduction by the Corporation prior to a
Change-in-Control in the Executive's base salary unless such
reduction is the result of the Board of Directors of the
Corporation determining that the Executive has not adequately
discharged herduties;
(ii) a reduction by the Corporation after a Change-in-Control
in the Executive's base salary as in effect immediately prior
to any Change-in-Control or a failure by the Corporation
after a Change-in-Control to increase the Executive's base
salary by the Annual Salary Adjustment Percentage;
(c) a failure by the Corporation to continue to provide incentive
compensation comparable to that provided by the Corporation
immediately prior to any Change-in-Control;
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(d) a failure by the Corporation after a Change-in-Control to
continue in effect any benefit or compensation plan, stock
option plan, pension plan, life insurance plan, health and
accident plan or disability plan in which the Executive is
participating immediately prior thereto (provided, however,
that there shall not be deemed to be any such failure if the
Corporation substitutes for the discontinued plan, a plan
providing the Executive with substantially similar benefits)
or the taking of any action by the Corporation which would
adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any of such
plans or deprive the Executive of any material fringe benefit
enjoyed by the Executive immediately prior to a
Change-in-Control (provided, however, that any act or failure
to act by the Corporation that is on a plan-wide basis, i.e.,
it similarly affects all employees of the Corporation or all
employees eligible to participate in any such plan, as the
case may be, shall not constitute Good Reason for
Termination);
(e) the failure of the Corporation to obtain the assumption of
this Agreement by any successor as contemplated in SECTION
10(C) hereof;
(f) any purported termination of the employment of the Executive
by the Corporation which is not (i) due to the Executive's
Disability, Retirement (as hereinafter defined) or Cause for
Termination, or (ii) effected as a Notice of Termination, as
defined herein; or
(g) the Corporation's requiring the Executive to be based
anywhere other than the Corporation's executive offices at
which the Executive has her principal office immediately
prior to a Change-in-Control or executive offices located
within 50 miles of the location of the Corporation's
executive offices immediately prior to a Change-in-Control,
except for required travel on the Corporation's business to
an extent substantially consistent with the Executive's
present business travel obligations.
"NOTICE OF TERMINATION" shall mean a written statement which sets
forth the specific reason for termination and, if such is claimed to
be a Cause for Termination or Good Reason for Termination, in
reasonable detail the facts and circumstances which indicate that such
is Cause for Termination or Good Reason for Termination.
"OPTIONS" shall mean any stock options issued pursuant to any present
or future stock option plan of the Corporation.
"PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Securities Exchange Act of 1934, as in effect on the
date hereof and used in Sections 13(d) and 14(d) thereof, including a
"group" as defined in Section 13(d) thereof.
"RETIREMENT" shall mean the termination of the Executive's employment
after age 65 or in accordance with any mandatory retirement
arrangement with respect to an earlier age agreed to by the Executive.
"STOCK APPRECIATION RIGHT" shall mean any stock appreciation rights
issued pursuant to any stock option plan of the Corporation or any
future stock appreciation rights plan.
2. TERMS OF EMPLOYMENT. The Executive acknowledges that this
Agreement does not constitute an employment contract and that the Executive's
employment relationship with the
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Corporation is at-will and not for any particular period. Rather, this
Agreement is only intended to set forth certain liquidated damages to be paid
in the event of termination of the Executive upon the terms and conditions
specified herein.
3. TERM OF AGREEMENT. The initial term of this Agreement shall be for
a period of four (4) years. Upon expiration of the initial term, the Company
shall, in its sole discretion, determine whether this Agreement shall be
renewed upon such terms it deems advisable.
4. PAYMENTS FOLLOWING TERMINATION OF EMPLOYMENT UPON A
CHANGE-IN-CONTROL.
(a) If the Executive's employment with the Corporation shall be
terminated:
(i) due to the Executive's death,
(ii) by the Executive other than the Executive's having
terminated for Good Reason for Termination following
a Change-in-Control, or
(iii) by the Corporation due to Cause for Termination or
for Disability or Retirement, then the Corporation
shall have no obligations to the Executive other
than to pay the Executive any unpaid portion of base
salary due until the Date of Termination and any
other sums due in accordance with the then various
policies, practices and benefit plans of the
Corporation.
(b) If the Executive's employment with the Corporation shall have
terminated during the period commencing six months prior to
the date of a Change-in-Control and ending on the third
anniversary of a Change-in-Control other than in the
circumstances described in subsection (a) above, then the
Corporation shall pay on or before the fifth day following
the Date of Termination (or if the Date of Termination
preceded the date of the Change-in-Control, on or before the
fifth day following the date of the Change-in-Control), to
the Executive the following sums:
(i) in cash any unpaid portion of the Executive's full
base salary for the period from the last period for
which the Executive was paid to the Date of
Termination, or the date of the Change-in-Control,
as the case may be; and
(ii) an amount in cash as liquidated damages for lost
future renumeration equal to the product obtained by
multiplying
(A) the lesser of
(1) two, or
(2) a number equal to the number of calendar
months remaining from the Date of
Termination to the date on which the
Executive is 65 years of age (or, if
earlier, the age agreed to by the Executive
pursuant to any prior arrangement) divided
by twelve, or
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(3) a number equal to the greater of (i) one
(1.0) and (ii) thirty six (36) less the
number of completed months commencing after
the date of the Change-in-Control during
which the Executive was employed by the
Corporation and did not have Good Reason
for Termination times (iii) one-twelfth
(1/12) times
(B) the sum of
(1) the greater of
(i) the Executive's annual base salary
for the year in effect on the Date
of Termination (provided that in
the case of Termination for Good
Reason by the Executive the date
immediately preceding the date of
the earliest event which gave rise
to the Termination for Good Reason
by the Executive shall be used
instead of the Date of Termination)
or
(ii) the Executive's annual base salary
for the year in effect on the date
of the Change-in-Control;
plus
(2) the greater of
(i) the average annual cash award
received by the Executive as
incentive compensation or bonus for
one calendar year immediately
preceding the Date of Termination
(provided that in the case of
Termination for Good Reason by the
Executive the date immediately
preceding the date of the event
which gave rise to the Termination
for Good Reason by the Executive
shall be used instead of the Date
of Termination)
or
(ii) the average annual cash award
received by the Executive as
incentive compensation or bonus for
one calendar year immediately
preceding the date of the
Change-in-Control.
5. OUTPLACEMENT SERVICES. If the Executive's employment with the
Corporation should terminate under circumstances as to entitle the Executive to
receive payment hereunder, the Corporation shall reimburse the Executive for
any reasonable fees or other costs incurred by the Executive during the two (2)
years following the Date of Termination in retaining executive placement
agencies, up to a maximum dollar amount not to exceed fifteen percent (15%) of
the Executive's base salary at the time of such termination. Such reimbursement
shall be made within five (5) days following
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the Executive's presentment of bills or other evidence of the costs incurred
with executive placement agencies.
6. TAX IMPLICATIONS. If any payment due to the Executive pursuant to
this Agreement result in a tax being imposed on the Executive pursuant to
Section 4999 of the Internal Revenue Code of 1954, as amended, or any successor
provision ("Section 4999"), then the Corporation shall, at the Executive's
option, either (i) reduce the total payments payable to the Executive to the
maximum amount payable without incurring the Section 4999 tax, or (ii) pay to
the Executive the total amount payable, with the understanding that Section
4999 tax will be due on that total amount.
7. BENEFITS. If the Executive's employment with the Corporation should
terminate under circumstances as to entitle the Executive to receive payment
hereunder, the Executive shall also be deemed, for purposes of medical
insurance, pension and other benefits of the Corporation, to have remained in
the continuous employment of the Corporation for the two (2) year period
following the Date of Termination and shall be entitled to all of the medical
insurance, pension or other benefits provided by the Corporation as if the
Executive had so remained in the employment of the Corporation. If, for any
reason, whether by law or provisions of the Corporation's employee medical
insurance, pension or other benefit plans, or otherwise any benefits which the
Executive would be entitled to under this SECTION 6 cannot be paid pursuant to
such employee benefit plans, then the Corporation contractually agrees to pay
the Executive the difference between the benefits which the Executive would
have received in accordance with this Section if the relevant employee medical
insurance, pension or other benefit plan could have paid such benefit and the
amount of benefits, if any, actually paid by such employee medical insurance,
pension or other benefit plan. The Corporation shall not be required to fund
its obligation to pay the foregoing difference.
8. OTHER EMPLOYMENT. In the event of termination under the
circumstances contemplated in SECTION 4(B) hereunder, the Executive shall have
no duty to seek any other employment after termination of her employment with
the Corporation and the Corporation hereby waives and agrees not to raise or
use any defense based upon the position that the Executive had a duty to
mitigate or reduce the amounts due her hereunder by seeking other employment
whether suitable or unsuitable and should the Executive obtain other
employment, then the only effect of such on the obligations of the Corporation
shall be that the Corporation shall be entitled to credit against any payments
that would otherwise be made pursuant to SECTION 7 hereof, any comparable
payments to which the Executive is entitled under the employee benefit plans
maintained by the Executive's other employer or employers in connection with
services to such employer or employers after termination of this employment
with the Corporation.
9. STOCK APPRECIATION RIGHTS AND OPTIONS. If the Executive's
employment should terminate under circumstances as to entitle the Executive to
receive payment hereunder, then with respect to any standing Stock Appreciation
Rights and/or Options which did not immediately become exercisable upon the
occurrence of a Change-in-Control, such Stock Appreciation Right or Option
shall be automatically vested and remain outstanding in accordance with its
terms and be exercisable thereafter until the stated expiration date of such
Stock Appreciation Right or Option.
10. MISCELLANEOUS.
(a) This Agreement shall be construed under the laws of the
Commonwealth of Pennsylvania.
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(b) This Agreement constitutes the entire understanding of the
parties hereto with respect to the subject matter hereof and
may only be amended or modified by written agreement signed
by the parties hereto.
(c) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the
Corporation, by agreement in form and substance satisfactory
to the Executive, to expressly assume and agree to perform
this Agreement in the same manner required of the Corporation
and to perform it as if no such succession had taken place.
As used in this Agreement, "Corporation" shall mean the
Corporation as hereinbefore defined and any successor to its
business and/or assets as aforesaid which executes and
delivers the agreement provided for in this subsection (c) or
which otherwise becomes bound by all of the terms and
provisions of this Agreement by operation of law.
(d) This Agreement shall inure to the benefit of and be
enforceable by the Executive and the Corporation and their
respective legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If
the Executive should die while any amounts would still be
payable to her hereunder if she had continued to live, all
such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to her
devisee, legatee or other designee or, if there be no such
designee, to her estate.
(e) Any notice or other communication provided for in this
Agreement shall be in writing and, unless otherwise expressly
stated herein, shall be deemed to have been duly given if
mailed by United States registered mail, return receipt
requested, postage prepaid, addressed in the case of the
Executive to her office at the Corporation with a copy to her
residence and in the case of the Corporation to its principal
executive offices, attention to the Chief Executive Officer.
(f) No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and approved by
resolution of the Board of Directors of the Corporation. No
waiver by either party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not
set forth expressly in this Agreement.
(g) The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or unenforceability
of any other provision of this Agreement, which shall remain
in full force and effect. If any provision hereof shall be
deemed invalid or unenforceable, either in whole or in part,
this Agreement shall be deemed amended to delete or modify,
as necessary, the offending provision and to alter the bounds
thereof in order to render it valid and enforceable.
(h) This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of
which taken together will constitute one and the same
instrument.
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(i) If litigation should be brought to enforce, interpret or
challenge any provision contained herein, the prevailing
party shall be entitled to its reasonable attorney's fees and
disbursements and other costs incurred in such litigation
and, if a money judgment be rendered in favor of the
Executive, to interest on any such money judgment obtained
calculated at the prime rate of interest in effect from time
to time at Mellon Bank, N.A., from the date that the payment
should have been made or damages incurred under this
Agreement.
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IN WITNESS WHEREOF, this Agreement has been executed on the date first
above written.
ATTEST: TOLLGRADE COMMUNICATIONS, INC.
By:
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WITNESS:
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Sara M. Antol
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SCHEDULE 10.1
Change in Control Agreements were entered into between the Company and Robert
Cornelia, Ruth Dilts, Herman Flaminio, Rocco Flaminio, Mark Frey, Joseph
Giannetti, Douglas Halliday, Fred Kiko, Samuel Knoch, Goeffrey Lea, Gregory
Nulty, Matthew Rosgone and Kristee Williams, which were substantially identical
to that filed as Exhibit 10.1.
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