Exhibit 10.2

 

CHANGE OF CONTROL AND TRANSITION AGREEMENT

 

This Change of Control Agreement (the “Agreement”) is made and entered into
effective as of November 9, 2004 (the “Effective Date”), by and between Jack A.
Giles (the “Executive”) and REMEC, Inc. (the “Company”).

 

R E C I T A L S

 

A. It is expected that the Company from time to time will consider the
possibility of a Change of Control. The Board of Directors of the Company (the
“Board”) recognizes that such consideration can be a distraction to the
Executive and can cause the Executive to consider alternative employment
opportunities.

 

B. The Board believes that it is in the best interest of the Company and its
shareholders to provide the Executive with an incentive to continue his
employment and to maximize the value of the Company upon a Change of Control for
the benefit of its shareholders.

 

C. In order to provide the Executive with enhanced financial security and
sufficient encouragement to remain with the Company notwithstanding the
possibility of a Change of Control, the Board believes that it is imperative to
provide the Executive with certain benefits upon a Change of Control.

 

AGREEMENT

 

In consideration of the mutual covenants herein contained and the continued
employment of Executive by the Company, the parties agree as follows:

 

1. Definition of Change of Control. “Change of Control” shall mean the
occurrence of any of the following events:

 

(a) Merger or Consolidation: The completion of a merger or consolidation of the
Company with any other corporation or entity, other than a merger or
consolidation that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation;

 

(b) Sale. The sale or other disposition of all or substantially all (that is,
not less than 95% of the net book value) of the assets of the Company, or its
wholly owned subsidiary REMEC Defense & Space, Inc., to an unrelated corporation
or entity;

 

(c) Liquidation: Any approval by the shareholders of the Company of a plan of
complete liquidation of the Company;

 

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(d) Acquisition of Fifty Percent Voting Power: Any “person” (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the total voting power represented by the Company’s
then outstanding voting securities; or

 

(e) Change in Composition of the Board: A change in the composition of the
Board, as a result of which less than a majority of the directors are incumbent
directors. “Incumbent Directors” shall mean directors who either: (i) are
directors of the Company as of the date hereof; or (ii) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of those directors whose election or nomination was not in connection
with any transaction described in subsections (a), (b), (c) or (d) or in
connection with an actual or threatened proxy contest relating to the election
of directors of the Company.

 

2. Term of Agreement. This Agreement shall terminate upon the date that all
obligations of the parties hereto under this Agreement have been satisfied.

 

3. At-Will Employment. The Company and the Executive acknowledge that the
Executive’s employment is and shall continue to be at-will, as defined under
applicable law. If the Executive’s employment terminates for any reason, the
Executive shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
established under the company’s then existing employee benefit plans or policies
at the time of termination.

 

  4. Option Acceleration and Change of Control Benefits.

 

(a) Option Acceleration. Upon a Change of Control, all unvested options,
restricted stock units and other forms of equity compensation granted to the
Executive by the Company prior to such Change of Control shall immediately vest
and become fully exercisable.

 

(b) Change of Control Benefits.

 

(i) Benefits. Upon a Change of Control, the Executive shall be entitled to
receive as benefits (“Change of Control Benefits”) a sum equal to: (1) eighteen
(18) months of his annualized base salary as in effect immediately prior to the
Change of Control; and (2) one and one-half times the average of any annual
bonuses received from the Company during the two years prior to such Change of
Control. Such Change of Control Benefits shall be paid in equal monthly
installments in accordance with the Company’s normal payroll practices. In
addition, during the period of payment of such Change of Control Benefits, the
Company shall continue to make available to the Executive and Executive’s spouse
and dependents all group medical, dental or other health plans, any disability
or life insurance plans and other similar insurance plans in which Executive or
Executive’s spouse or dependents participate on the date of the Executive’s
termination on the same basis as before such termination.

 

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(c) Other Termination. If the Executive’s employment with the Company terminates
prior to a Change of Control, then the Executive shall not be entitled to
receive Change of Control Benefits hereunder, but may be eligible for those
benefits (if any) as may then be established under the Company’s then existing
severance and benefits plans and policies at the time of such termination.

 

(d) Health-Related Benefits. Upon the termination of the Change of Control
Benefits under this Agreement, or at the time the Executive’s employment with
the Company terminates for any other reason, the Company shall continue for
Executive and for Executive’s spouse, medical, dental and vision insurance upon
the payment to the Company of the same monthly premiums for such insurance as
are being paid from time to time by the Company’s corporate executives, until
the death of both the Executive and Executive’s spouse.

 

(e) Accrued Wages and Vacation; Expenses and Equipment. Without regard to the
reason for, or the timing of, Executive’s termination of employment: (i) the
Company shall pay the Executive any unpaid base salary due for periods prior to
the date of termination; (ii) the Company shall pay the Executive all of the
Executive’s accrued and unused vacation through the date of termination; and
(iii) following submission of proper expense reports by the Executive, the
Company shall reimburse the Executive for all expenses reasonably and
necessarily incurred by the Executive in connection with the business of the
Company prior to the date of termination. These payments shall be made promptly
upon termination and within the period of time mandated by law. In addition,
Executive may retain all his office furniture, computers, copiers, fax machines,
and similar items currently at his home.

 

  5. Successors.

 

(a) Company’s Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company’s business and/or assets
shall assume the Company’s obligations under this Agreement and agree expressly
to perform the Company’s obligations under this Agreement in the same manner and
to the same extent as the Company would be required to perform such obligations
in the absence of a succession. For all purposes under this Agreement, the term
“Company” shall include any successor to the Company’s business and/or assets
which executes and delivers the assumption agreement described in this
subsection (a) or which become bound by the terms of this Agreement by operation
of law.

 

(b) Executive’s Successors. Without the written consent of the Company,
Executive shall not assign or transfer this Agreement or any right or obligation
under this Agreement to any other person or entity. Notwithstanding the
foregoing, the terms of this Agreement and all rights of Executive hereunder
shall inure to the benefit of, and be enforceable by, Executive’s personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

 

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  6. Notices.

 

(a) General. Notices and all other communications contemplated by this Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered or when mailed by U.S. registered or certified mail, return receipt
request and postage prepaid. In the case of the Executive, mailed notices shall
be addressed to him at the home address that he most recently communicated to
the Company in writing. In the case of the Company, mailed notices shall be
addressed to its corporate headquarters, and all notices shall be directed to
the attention of its Secretary.

 

(b) Notice of Termination. Any termination by the Company or by the Executive
shall be communicated by a notice of termination to the other party hereto given
in accordance with this Section. Such notice shall indicate the specific
termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated. The failure by the Executive to
include in the notice any fact or circumstance which contributes to a showing of
Involuntary Termination shall not waive any right of the Executive hereunder or
preclude the Executive from asserting such fact or circumstance in enforcing his
rights hereunder.

 

7. Nonsolicitation Of Employees. For a period of eighteen (18) months following
the termination of the Executive’s employment with the Company, for any reason,
the Executive will not, directly or indirectly, induce any employee of the
Company or any of its subsidiaries to terminate employment with such entity, and
shall not, directly or indirectly, either individually or as owner, agent,
employee, consultant, or otherwise, employ or offer employment to any person who
is or was employed by the Company or a subsidiary thereof.

 

  8. Excise Tax Adjustments.

 

(a) Effect of Application of Excise Tax. In the event that the Executive becomes
entitled to Change of Control Benefits under Section 4(b)(i) herein, and the
Company determines that the Change of Control Benefits or the benefit of the
acceleration provided in Section 4(a) (with the Change of Control Benefits, the
“Total Payments”) will be subject to the tax (the “Excise Tax”) imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or
any similar tax that may hereafter be imposed, the Company shall compute the
“Net After-Tax Amount,” and the “Reduced Amount,” and shall adjust the Total
Payments as described below. The Net After-Tax Amount shall mean the present
value of all amounts payable to the Executive hereunder, net of all federal
income, excise and employment taxes imposed on the Executive by reason of such
payments. The Reduced Amount shall mean the largest aggregate amount of the
Total Payments that if paid to the Executive would result in the Executive
receiving a Net After-Tax Amount that is equal to or greater than the Net
After-Tax Amount that the Executive would have received if the Total Payments
had been made. If the Company determines that there is a Reduced Amount, the
Total

 

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Payments will be reduced to the Reduced Amount. Such reduction shall be made by
the Company with respect to benefits in the order and in the amounts suggested
by the Executive, except to the extent that the Company determines that a
different reduction or set of reductions would significantly reduce the costs or
administrative burdens of the Company.

 

(b) Tax Computation. For purposes of determining whether the Total Payments will
be subject to the Excise Tax and the amounts of such Excise Tax and for purposes
of determining the Reduced Amount and the Net After-Tax Amount:

 

(i) Any other payments or benefits received or to be received by the Executive
in connection with a Change in Control of the Company or the Executive’s
termination of employment (whether pursuant to the terms of this Plan or any
other plan, arrangement, or agreement with the Company, or with any individual,
entity, or group of individuals or entities (individually and collectively
referred to in this subsection (b) as “Persons”) whose actions result in a
change in control of the Company or any Person affiliated with the Company or
such Persons) shall be treated as “parachute payments” within the meaning of
Section 280G(b)(2) of the Code, and all “excess parachute payments” within the
meaning of Section 280G(b)(1) of the Code shall be treated as subject to the
Excise Tax, unless in the opinion of a tax advisor selected by the Company and
reasonably acceptable to the Executive (“Tax Counsel”), such other payments or
benefits (in whole or in part) should be treated by the courts as representing
reasonable compensation for services actually rendered (within the meaning of
Section 280G(b)(4)(B) of the Code), or otherwise not subject to the Excise Tax;

 

(ii) The amount of the Total Payments that shall be treated as subject to the
Excise Tax shall be equal to the lesser of (i) the total amount of the Total
Payments; or (ii) the amount of excess parachute payments within the meaning of
Section 280G(b)(1) of the Code (after applying clause (i) above);

 

(iii) In the event that the Executive disputes any calculation or determination
made by the Company, the matter shall be determined by Tax Counsel. All fees and
expenses of Tax Counsel shall be borne solely by the Company.

 

(iv) The Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made, and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Executive’s residence
on the effective date of employment, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes, taking into account the reduction in itemized deduction under Section 68
of the Code.

 

  9. Arbitration.

 

(a) Disputes or Controversies. Except as provided in Section 8, above, any
dispute or controversy arising out of, relating to, or in connection with this

 

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Agreement, or the interpretation, validity, construction, performance, breach,
or termination thereof, shall be settled by binding arbitration to be held in
San Diego, California, in accordance with the National Rules for the Resolution
of Employment Disputes then in effect of the American Arbitration Association
(the “Rules”). The arbitrator may grant injunctions or other relief in such
dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator’s decision in any court having jurisdiction.

 

(b) Governing Law. The arbitrator(s) shall apply California law to the merits of
any dispute or claim, without reference to conflicts of law rules. The
arbitration proceedings shall be governed by federal arbitration law and by the
Rules, without reference to state arbitration law. Executive hereby consents to
the personal jurisdiction of the state and federal courts located in California
for any action or proceeding arising from or relating to this Agreement or
relating to any arbitration in which the parties are participants.

 

(c) At-Will Employment Status. Executive understands that nothing in this
Section modifies Executive’s at-will employment status. Either Executive or the
Company can terminate the employment relationship at any time, with or without
cause.

 

(d) ACKNOWLEDGEMENT. EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH
DISCUSSES ARBITRATION. EXECUTIVE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING
OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE
INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION
THEREOF TO BINDING ARBITRATION TO THE EXTENT PERMITTED BY LAW, AND THAT THIS
ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE ‘S RIGHT TO A JURY TRIAL
AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING
CLAIMS:

 

(i) ANY AND ALL CLAIMS OF WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT,
BOTH EXPRESS AND IMPLIES; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING,
BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL
DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR INTENTIONAL
INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.

 

(ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL STATUTE,
INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE
CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE
AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE
CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, et seq.;

 

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(iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING
TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

 

  10. Miscellaneous Provisions.

 

(a) No Duty to Mitigate. The Executive shall not be required to mitigate the
amount of any payment contemplated by this Agreement, nor shall any such payment
be reduced by any earnings that the Executive may receive from any other source.

 

(b) Waiver. No provision of this Agreement may be modified, waived or discharged
unless the modification, waiver or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by the Executive and by an
authorized officer of the Company (other than the Executive). No waiver by
either party of any breach of, or of compliance with, any condition or provision
of this Agreement by the other party shall be considered a waiver of any other
condition or provision or of the same condition or provision at another time.

 

(c) Integration. This Agreement and the stock option agreements representing the
Options represents the entire agreement and understanding between the parties as
to the subject matter herein and supersedes all prior or contemporaneous
agreements, whether written or oral.

 

(d) Choice of Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the internal substantive laws, but not the
conflicts of law rules, of the State of California.

 

(e) Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.

 

(f) Employment Taxes. All payments made pursuant to this Agreement shall be
subject to withholding of applicable income and employment taxes.

 

(g) Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together will constitute one and
the same instrument.

 

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written.

 

COMPANY:

 

EXECUTIVE

By:

 

/s/ THOMAS H. WAECHTER

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/s/ JACK A. GILES

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Thomas H. Waechter

 

Jack A. Giles

   

President and CEO

   

 

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