EXHIBIT 10.14

 

CHANGE OF CONTROL AGREEMENT

 

This Change of Control Agreement (the “Agreement”) is made and entered into
effective as of October 21, 2002 (the “Effective Date”), by and between [NAME]
(the “Executive”) and REMEC, Inc. (the “Company”). Certain capitalized terms
used in this Agreement are defined in Section 1 below.

 

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 severance benefits upon the Executive’s
termination of the employment following 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 Terms. The following terms referred to in this Agreement shall
have the following meanings:

 

        (a) Cause. “Cause” shall mean: (i) any act of personal dishonesty taken
by the Executive in connection with his responsibilities as an employee which is
intended to result in substantial personal enrichment of the Executive, (ii)
Executive’s conviction of a felony which the Board reasonably believes has had
or will have a material detrimental effect on the Company’s reputation or
business, (iii) a willful act by the Executive which constitutes misconduct and
is injurious to the Company, and (iv) continued willful violations by the
Executive of the Executive’s obligations to the Company after there has been
delivered to the Executive a written demand for performance from the Company
which describes the basis for the Company’s belief that the Executive has not
substantially performed his duties.

 

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(b) Change of Control. “Change of Control” shall mean the occurrence of any of
the following events:

 

        (i) 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;

 

        (ii) Liquidation: Any approval by the shareholders of the Company of a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all (that is, not less than
95% of the net book value) of the assets of the Company;

 

        (iii) 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

 

        (iv) 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) or (c) or in connection
with an actual or threatened proxy contest relating to the election of directors
of the Company.

 

(c) Involuntary Termination. “Involuntary Termination” shall mean: (i) without
the Executive’s express written consent, a significant reduction of the
Executive’s duties, position or responsibilities relative to the Executive’s
duties, position or responsibilities in effect immediately prior to such
reduction, or the removal of the Executive from such position, duties and
responsibilities, unless the Executive is provided with comparable duties,
position and responsibilities; (ii) without the Executive’s express written
consent, a substantial reduction, without good business reasons, of the
facilities and perquisites (including office space and location) available to
the Executive immediately prior to such reduction; (iii) a reduction by the
Company of the Executive’s base salary or target bonus as in effect immediately
prior to such reduction; (iv) a material reduction by the Company in the kind or
level of employee benefits to which the Executive is entitled immediately prior
to such reduction with the result that the Executive’s overall benefits package
is significantly reduced; (v) without the Executive’s express written consent,
the relocation of the Executive to a facility or location more than thirty-five
(35) miles from his current location; (vi) any purported

 

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termination of the Executive by the Company which is not effected for Cause or
for which the grounds relied upon are not valid; or (vii) the failure of the
Company to obtain the assumption of this Agreement by any successors
contemplated in Section 5 below.

 

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. Change of Control and Severance Benefits.

 

        (a) Option Acceleration. Upon a Change of Control, all unvested options
granted to the Executive by the Company prior to such Change of Control that are
scheduled to vest within one (1) year from the date of such Change of Control
shall immediately vest and become fully exercisable. If the Executive’s
employment with the Company terminates as a result of an Involuntary Termination
within two (2) years after a Change of Control, all outstanding options granted
prior to the Change of Control shall immediately vest and become exercisable,
subject to the approval of the Board of Directors.*

 

* Note: the italicized clause above is not contained in the agreements executed
by Messrs. Ragland and Morash.

 

        (b) Involuntary Termination Following A Change of Control.

 

                (i) Severance Benefits. If the Executive’s employment with the
Company terminates as a result of an Involuntary Termination within two (2)
years after a Change of Control, then the Executive shall be entitled to receive
as severance benefits (“Severance 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 Severance 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 Severance 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. For an additional eighteen (18) months after
the termination of the Severance Benefits payments, the Company shall continue
to make available to the Executive and Executive’s spouse and dependents all
group medical, dental or other

 

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health plans upon payment by the Executive of the amount that would be payable
under the Consolidated Omnibus Budget Reconciliation Act (COBRA).

 

        (c) Other Termination. If the Executive’s employment with the Company
terminates other than as a result of an Involuntary Termination after a Change
of Control, such as by the Company for Cause or by the Executive as a result of
a voluntary resignation, then the Executive shall not be entitled to receive
severance or other 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.

 

        (c) Accrued Wages and Vacation; Expenses. 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.

 

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.

 

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

 

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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 for Cause or
by the Executive as a result of a voluntary resignation or an Involuntary
Termination 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 Severance Benefits under Section 4(b)(i) herein, and the
Company determines that the Severance Benefits or the benefit of the
acceleration provided in Section 4(a) (with the Severance 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 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.

 

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        (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 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

 

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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.;

 

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

 

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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.

 

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:

 

 

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Schedule of Parties to the Change of Control Agreement

 

Name

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Date of Agreement

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1.

  

Ronald E. Ragland

  

10/21/02

2.

  

David L. Morash

  

10/21/02

3.

  

H. Clark Hickock

  

10/21/02

4.

  

William Sweeney

  

10/21/02

5.

  

Denney E. Morgan

  

10/21/02

6.

  

Jon E. Opalski

  

10/21/02

7.

  

Jack A. Giles

  

10/21/02

 

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