Exhibit 10(a)
AGREEMENT FOR SEVERANCE UPON CHANGE IN CONTROL
This Agreement is made and entered into as of the [ ] day of [ ], 2004
by and among TRANSCAT, INC., an Ohio corporation (the "Company"), having its
principal place of business at 35 Vantage Point Drive, Rochester, New York
14624, and [ ] ("Employee").
In consideration of the mutual covenants herein contained, the Company
and Employee, intending to be legally bound, hereby agree as follows:
1. PURPOSE OF THIS AGREEMENT. Employee is a key officer and employee of
the Company. Although the Company does not presently anticipate a change in
control, it nevertheless desires to (i) assure the continued loyalty,
cooperation and services of certain key officers and employees of the Company if
one should occur, and (ii) provide for those individuals to receive compensation
under certain circumstances in connection with a change of control, if one
should occur.
2. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the following respective meanings:
a. A "Change in Control" shall have occurred if:
i. the Company is merged or consolidated with another entity
and as a result thereof, less than fifty percent (50%) of the outstanding voting
securities of the surviving or resulting entity shall then be owned in the
aggregate by the former shareholders of the Company; or
ii. as a result, or in connection with, any tender offer or
exchange offer, merger or other business combination, or sale or other
disposition of assets, or any combination of the foregoing transactions, the
individuals who constitute the Board of Directors of the Company before any such
transaction shall not constitute a majority of the board of directors of the
surviving or resulting entity; or
iii. a tender offer or exchange offer for the ownership of
securities of the Company representing over twenty-five percent (25%) of the
combined voting power of the Company's then outstanding voting securities is
made and consummated; or
iv. any "person," including a "group" within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, but
excluding any employee stock ownership plan or similar employee benefit plan of
the Company, is or becomes, directly or indirectly, the beneficial owner of
securities of the Company representing over twenty-five percent (25%) of the
combined voting power of the Company's then outstanding voting securities; or
v. the Company transfers substantially all of its assets to
another corporation that is not a wholly-owned subsidiary of the Company.
b. "Material Change" means any action by the Successor or the
Company during the Transition Period, without Employee's express written
consent, that has the effect of: (i)
downgrading Employee's title, or reducing the nature or scope of
Employee's authority and prerogative, or materially increasing the nature or
scope of his responsibilities and duties, from those applicable to him
immediately prior thereto; or (ii) reducing the base salary payable to Employee
from that payable to him by the Company immediately prior thereto; or (iii)
failing to provide Employee with a package of fringe benefits that, though one
ore more elements may vary from those in effect immediately prior thereto, is
substantially comparable to such fringe benefits; or (iv) changing the location
of Employee's principal place of employment to a location that is outside the
general metropolitan area of Rochester, New York.
c. "Severance Amount" means the obligation of the Successor to pay
and continue Employee's full salary, bonus and benefits set forth in Section 3
hereof.
d. "Successor" means any successor to the assets, rights or business
of the Company as a result of a Change in Control.
e. "Transition Period" means the time period beginning with the
agreement for or announcement of a proposed Change in Control and ending
twenty-four (24) months following the effective date of any Change in Control.
3. PAYMENT OF SEVERANCE AMOUNT.
a. If, during the term of Employee's employment as an officer of the
Company, there shall occur a Change in Control, and during the Transition
Period, Employee's employment with the Successor terminates for any reason,
then, subject to the qualifications set forth in Section 4 hereof, the Successor
shall be obligated to pay and continue Employee's full salary, bonus (at
standard) and benefits (to the extent that Employee's continued participation is
possible under the general terms and provisions of such plans and programs) as
were in effect immediately preceding the Change in Control, for a period of
twenty-four (24) months following the effective date of termination of
employment. Additionally, all Stock Grants, Option Grants, Stock Appreciation
Right's or similar equity arrangements shall be deemed to have immediately
vested and any option exercise periods shall be extended for the term of the
option.
b. Employee shall not be required to mitigate the Severance Amount
by seeking other employment or otherwise, nor shall the Severance Amount be
reduced or offset by any compensation earned by Employee as the result of his
employment by another employer subsequent to the effective date of termination
of his employment with the Successor.
4. EFFECT OF CERTAIN TERMINATIONS. Notwithstanding Section 3 hereof,
Employee shall not be entitled to receive, and the Successor shall have no
obligation to pay, the Severance Amount if, during the Transition Period:
a. Employee voluntarily terminates his employment with the Company
or the Successor. However, notwithstanding any resignation or other seemingly
voluntary departure, Employee's termination of employment shall not be deemed
voluntary for purposes of this Agreement if Employee's employment terminates in
consequence of a Material Change. In such case, Employee shall be entitled to
receive, and the Successor shall be obligated to pay, the Severance Amount.
2
b. The Company or the Successor terminates Employee's employment for
any of the following reasons: (i) Employee's continuing refusal to perform such
services (other than services constituting a Material Change) as may reasonably
be assigned to him by the Successor; or (ii) Employee's willful misconduct or
gross negligence in the performance of his employment duties; or (iii)
Employee's breach of his duty of loyalty to, or acts of unfair competition with,
the Successor; or (iv) Employee's conviction of any crime or offense involving
money, property or personnel of the Successor, or of any other crime which
constitutes a felony; or (v) Employee's illegal use, possession or being under
the influence of any narcotic, controlled substance or alcoholic beverage while
at work; or (vi) any conduct by Employee that, under applicable laws and
regulations, disqualifies him from serving as an officer or employee of the
Company.
c. His employment terminates by reason of Employee's death, total
disability, or normal retirement at or after age 65.
5. PAYMENT OF ACCRUED SALARY, ETC. This Agreement shall not affect
Employee's right to receive all earned but unpaid salary, accrued but unpaid
vacation pay, and submitted but outstanding travel or other expenses due and
owing from the Successor on the effective date of the termination of his
employment, or any incentive compensation earned but unpaid prior to or
coincidental with such date, all of which shall be paid by the Successor to
Employee in accordance with the terms of such obligations.
6. WITHHOLDING OF TAXES. The Successor may withhold from the Severance
Amount all Federal, state, city or other taxes as may be required under any law,
governmental regulation or ruling.
7. NOT AN EMPLOYMENT AGREEMENT. Nothing contained in this Agreement is
intended, nor shall it be deemed, to give Employee any rights (or impose any
obligations) to continued employment by the Company or the Successor, or give
the Company or the Successor any rights (or impose any obligations) for the
continued performance of duties by Employee, or otherwise alter Employee's
status as an employee at will.
8. AMENDMENT. This Agreement sets forth the entire understanding of the
parties with respect to its subject matter, and may not be modified or
terminated except upon written amendment executed by Employee and the Company
(or, if subsequent to the Change in Control, by Employee and the Successor).
9. NO ASSIGNMENT. Employee's right to receive the Severance Amount
hereunder shall not be assignable or transferable, whether by pledge, creation
of a security interest or otherwise, other than a transfer by will or by the
laws of descent or distribution. In the event of any attempted assignment or
transfer contrary to this Section, the Successor shall have no liability to pay
the Severance Amount or any portion thereof so attempted to be assigned or
transferred.
10. BENEFIT. This Agreement shall be binding upon, and shall inure to
the benefit of and be enforceable by, Employee and his personal or legal
representatives, executors, administrators, heirs and distributees. This
Agreement shall be binding upon, and shall inure to the benefit of and be
enforceable by, the Company and the Successor and their respective successors
and assigns.
3
11. NOTICES. Notices and all other communications under this Agreement
shall be in writing and shall be deemed given when personally delivered or when
mailed by United States registered or certified mail, return receipt requested,
postage prepaid, addressed to the Company or to the Successor (as the case may
be) at the address set forth in the first paragraph of this Agreement, and
addressed to Employee at his residence address as shown on the records of the
Company or the Successor (as the case may be), or to such other address as
either party may furnish to the other by like notice; provided, however, that
notices of changes of address shall be effective only upon receipt.
12. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio applicable to agreements made
and to be performed entirely within such State.
13. SEVERABILITY. If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the invalidity
or unenforceability of that provision shall not affect the validity or
enforceability or any other provision of this Agreement, and all other
provisions shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
TRANSCAT, INC.
By:
------------------------
EMPLOYEE
------------------------
4