EXHIBIT 10
AGREEMENT
AGREEMENT made as of this 22nd day of July, 2009 by and between HERLEY
INDUSTRIES, INC., a Delaware corporation, with its principal office located at
101 North Pointe Boulevard, Lancaster, Pennsylvania 17601 (the "Company") and
MYRON LEVY, residing at 807 Bent Creek Drive, Lititz, Pennsylvania 17543
("Levy").
WHEREAS, Levy has been Chairman of the Company since June 2006 and Chief
Executive Officer since August 2001, culminating a period of employment with the
Company that began in October 1988 with his employment as Vice President for
Business Operations and Treasurer; and
WHEREAS, the Company and Levy entered into an employment agreement dated as
of July 29, 2002, as modified on December 9, 2003 (the "Employment Agreement")
which amended and restated in its entirety his prior employment agreements; and
WHEREAS, the Board of Directors of the Company, after consideration and
evaluation of the Company's result of operations, on a Company wide and
operating unit basis, has determined that it is planning to reorganize the
Company's management structure; and
WHEREAS, a Special Committee of the Board of Directors, consisting solely
of independent directors, has been appointed to evaluate Mr. Levy's existing
Employment Agreement and its proposed termination; and
WHEREAS, the Special Committee has retained independent counsel to assist
in this evaluation; and
WHEREAS, under the Employment Agreement, the only basis for termination by
the Company of Levy's employment, would be "without cause" which would result in
an immediate lump sum payment to Levy of $8,355,958 in addition to other
substantial benefits; and
WHEREAS, after negotiations between the Special Committee and Levy, Levy
has agreed to accept termination of the Employment Agreement on terms more
beneficial to the Company than otherwise mandated under its terms, including a
long-term payout without interest.
WHEREAS, this agreement shall be effective at 12:01 A.M. Eastern time on
July 22, 2009 ("Effective Date").
NOW, THEREFORE, based upon the mutual covenants contained herein and for
other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the Company and Levy agree as follows:
1. In full satisfaction of all prior, current and future obligations to
Levy under the Employment Agreement or otherwise, whether accrued or otherwise
(except for rights of, or obligations to, Levy or his affiliates in connection
with his or their ownership of the Company's equity securities "Ownership
Rights") the parties hereby agree as follows:
(a) On the Effective Date, Levy shall receive a lump sum payment in the sum
of $4,705,000 and shall thereafter receive the monthly sum of $100,000
commencing on September 1, 2009 and continuing thereafter on the first day of
each month for thirty-five (35) consecutive months through July 1, 2012, as more
fully set forth in the non-interest bearing promissory note annexed hereto as
"Exhibit A" and incorporated by reference herein ("Promissory Note").
(b) Levy shall receive his annual bonus, if any, for the fiscal year ended
August 2, 2009 in accordance with the terms of paragraph 4 of the Employment
Agreement.
(c) Levy and his spouse shall continue to receive medical care
reimbursement and insurance, in accordance with the terms of paragraphs 9(b) and
10(f)(ii)(C) of the Employment Agreement.
(d) With respect to any outstanding options previously issued to Levy, it
is hereby acknowledged that all of such options are currently vested and
exercisable and that such options shall continue to be exercisable by him or,
following his death, by his designated beneficiaries, on or before the
expiration date of the specific option, i.e., all five (5) year options shall be
exercisable on or before five years from date of grant and all ten (10) year
options shall be exercisable on or before ten years from date of grant.
2. In the event of a "change of control" of the Company as defined in
paragraph 1(d) of the Employment Agreement (with the exception that each
reference to 20% shall be amended so as to be deemed a reference to 50.1%), all
remaining payments under the Promissory Note shall immediately become due and
payable.
3. (a) Levy covenants, represents and agrees that the provisions of
paragraph 14 of the Employment Agreement shall survive this agreement and
continue in full force and effect.
(b) Levy covenants, represents and agrees that during the period he
receives payments hereunder and for a period of one year thereafter, and
provided the Company is not in breach of this agreement, he shall abide by and
fully comply with the provisions of paragraph 15 of the Employment Agreement,
which is hereby modified by deleting subsection (c)(i) thereof.
(c) The provisions of Paragraphs 16 (Remedies/Sanctions), 17
(Beneficiaries/References), 19 (Indemnification and Liability Insurance) and 21
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(Assignability; Binding Nature) of the Employment Agreement shall survive this
agreement and are fully incorporated by reference herein and made applicable to
the provisions herein.
(d) The provisions of Paragraph 12 (Parachutes) of the Employment Agreement
shall survive this agreement and are fully incorporated by reference herein and
made applicable to all or any portion of the payments to be made to Levy under
this agreement and/or any other payments and benefits that Levy receives or is
entitled to receive from the Company.
(e) The provisions of the Indemnification Agreement between the Company and
Levy made and entered into on May 21, 2003 (the "Indemnification Agreement")
shall survive this agreement and shall apply to Levy after termination of his
employment with the Company, and are fully incorporated by reference herein.
(f) The provisions of Section 13 (Consulting Period) of the Employment
Agreement (other than Sections 13(b)(i), 13(c) and 13(d)) shall survive this
Agreement and are fully incorporated by reference herein and are made applicable
to the provisions herein except that, (i) the Consulting Period shall be a
period of three years commencing on the Effective Date, (ii) Levy shall not be
obligated to provide any minimum amount of consulting services to the Company,
(iii) Levy shall receive the sum of $50,000 annually, payable annually
commencing September 1, 2009 for the performance of any consulting services; and
(iv) Section 13(f) shall apply only to payments made pursuant to Sections 7, 8
and 9(b) of the Employment Agreement, and perquisites and expense reimbursement
shall not include a Company provided telephone, secretarial and similar support
services.
4. (a) Subject only to the performance of and compliance by the Company
with the provisions of this agreement, and except for the Company's continuing
indemnification obligations under applicable law, the Employment Agreement and
the Indemnification Agreement, Levy hereby waives, remits, releases and forever
discharges the Company, its past, present and future Board members, officers,
directors, stockholders, employees, agents, attorneys, subsidiaries, servants,
successors, insurers, affiliates and their successors and assignees, from any
and all manner of action, claims, liens, demands, liabilities, causes of action,
charges, complaints, suits (judicial, administrative, or otherwise), damages,
debts, demands, obligations of any other nature, past or present, known or
unknown, whether in law or in equity, whether founded upon contract (expressed
or implied), tort (including, but not limited to, defamation), statute or
regulation (State, Federal or local), common law and/or any other theory or
basis, from the beginning of the world to the date hereof, including, but not
limited to, any claim that Levy has asserted, now asserts or could have
asserted. This includes, but is not limited to, claims for compensation or
benefits, tortious claims arising out of the consulting relationship, claims of
an expressed or implied contract of employment, claims under the Family and
Medical Leave Act, claims arising under Federal, State or local laws prohibiting
employment or other discrimination or claims growing out of any legal
restrictions on the Company's rights to terminate its employees, including
without limitation any claims arising under Title VII of the United States Code,
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and the Age Discrimination in Employment Act. It is expressly understood by Levy
that among the various rights and claims being waived by him in this release are
those arising under the Age Discrimination in Employment Act of 1967 (29 U.S.C.
ss. 621, et seq.).
(b) Subject only to the performance of, and compliance with, the provisions
of this agreement, and except as prohibited under applicable law, the Company,
hereby waives, remits, releases and forever discharges Levy and his successors
and assignees, from any and all manner of action, claims, liens, demands,
liabilities, causes of action, charges, complaints, suits (judicial,
administrative, or otherwise), damages, debts, demands, obligations of any other
nature, past or present, known or unknown, whether in law or in equity, whether
founded upon contract (expressed or implied), tort (including, but not limited
to, defamation), statute or regulation (State, Federal or local), common law
and/or any other theory or basis, from the beginning of the world to the date
hereof.
5. The Company and Levy respectively represent and warrant that each is
fully authorized and empowered to enter into this agreement and that the
performance of its or his obligations, as the case may be, under this agreement
will not violate any agreement between such party and any other person, firm or
organization. The Company represents and warrants that this agreement has been
duly authorized by all necessary corporate action and is valid, binding and
enforceable in accordance with its terms.
6. Except to the extent otherwise provided herein, this agreement contains
the entire understanding and agreement between the Company and Levy concerning
the subject matter hereof and supersedes any prior agreements, whether written
or oral, between the parties concerning the subject matter hereof, including
without limitation the Employment Agreement.
7. No provision in this agreement may be amended unless such amendment is
agreed to in writing and signed by both Levy and an authorized officer of the
Company. No waiver by either party of any breach by the other party of any
condition or provision contained in this agreement to be performed by such other
party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent time. Any waiver must be in writing and
signed by the party to be charged with the waiver. No delay by either party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof.
8. In the event that any provision or portion of this agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
9. This agreement shall be governed by and construed and interpreted in
accordance with the laws of Delaware, without regard to its governing conflicts
of law principles.
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10. Any notice given to either party including notice under the Promissory
Note, shall be in writing and shall be deemed to have been given when delivered
either personally, by overnight delivery service (such as Federal Express) or
sent by certified or registered mail postage prepaid, return receipt requested,
duly addressed to the party concerned at the address indicated below or to such
changed address as the party may subsequently give notice of.
If to Herley or the Board:
Herley Industries, Inc.
101 North Pointe Boulevard
Lancaster, Pennsylvania 17601-4133
Fax No. 717-297-9503
Attn: David H. Lieberman, Chairman
With a copy to:
Beckman, Lieberman & Barandes, LLP
116 John Street, Suite 1313
New York, New York 10038
Attn: Michael Beckman, Esq.
Fax No. 212-608-9687
If to Levy:
807 Bent Creek Drive
Lititz, Pennsylvania 17543
11. The headings of the sections contained in this agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this agreement.
12. This agreement may be executed in counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this agreement as of July
22, 2009.
HERLEY INDUSTRIES, INC.
By: /s/ Richard F. Poirier
----------------------------
Richard F. Poirier
Chief Executive Officer
/s/ Myron Levy
----------------------------
Myron Levy
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Exhibit "A"
PROMISSORY NOTE
$3,500,000 Lancaster, Pennsylvania
July 22, 2009
FOR VALUE RECEIVED, the undersigned, HERLEY INDUSTRIES, INC. (the
"Company"), promises to pay to MYRON LEVY, or his assigns ("Levy"), at 807 Bent
Creek Drive, Lititz, Pennsylvania 17543, or at such other place as the holder of
this Note may designate in writing from time to time, the principal sum of Three
Million Five Hundred Thousand DOLLARS ($3,500,000).
1. The Company shall pay this Note, without interest, in monthly
installments of ONE HUNDRED THOUSAND DOLLARS ($100,000) commencing on September
1, 2009 and continuing thereafter on the 1st day of each month for thirty-five
(35) consecutive months through July 1, 2012. Notwithstanding the foregoing,
this Note shall immediately become due and payable, without notice, in the event
of a "change in control" of the Company as defined in the Agreement by and
between the Company and Levy dated as of July 22, 2009.
2. Under this Note, failure of the Company to pay any amount due and
payable within thirty days after written demand is received by the Company shall
constitute a default. Upon default, Levy (a) may declare this Note immediately
due and payable in full; and (b) be entitled to exercise against the Company any
and all rights and remedies that may otherwise be available to him hereunder and
at law or in equity.
3. By his acceptance of this Note, Levy represents and warrants that he is
acquiring this Note for investment, and not with a view to the distribution of
the Note.
4. This Note shall be governed by and construed in accordance with the laws
of the State of Delaware, excluding therefrom any principles of conflicts of
law; this Note may not be amended or modified except pursuant to a written
instrument executed by each of Levy (or his assigns upon his death) and the
Company.
5. The Company shall have the right to prepay this Note at any time or from
time to time, in whole or in part, without penalty.
6. This Note is subject to and governed by the terms and conditions of the
Agreement by and between the Company and Levy dated as of July 22, 2009.
HERLEY INDUSTRIES, INC.
By: _________________________
Richard F. Poirier
Chief Executive Officer