Exhibit 10.34
April 30, 2007
Xxxxxxx X. Xxxx
Dear Xx. Xxxx:
On behalf of Color Kinetics Incorporated (the "Company"), I am pleased to
modify certain terms of your employment relationship with the Company as set
forth below. This letter agreement replaces and supersedes the sections in each
of your current Stock Option Agreements dealing with "Acceleration of Vesting
Upon Change-in Control." Moreover, from and after a Change in Control, this
letter agreement replaces and supersedes your current Severance Agreement with
the Company, dated September 17, 2001 ("Existing Agreement"); prior to the
occurrence of a Change in Control, your Existing Agreement will remain in full
force and effect.
For purposes of clarity, your Nondisclosure, Non-Competition and
Developments Agreement with the Company continues in full force and effect in
accordance with its terms.
1. Severance/Retention Benefits. In the event of a Change in Control you will be
entitled to receive, on the Separation Date, and upon the conditions specified
below, the following severance benefits (the "Retention Benefits"): (i) two
times your base salary at your then-current annual rate, plus (ii) two times
your bonus, determined at the higher of (x) the bonus amount you received for
the last fiscal year or (y) the pro-rated bonus for the current fiscal year
through the Separation Date, assuming you would be paid at 100% of the bonus you
would have been eligible to receive had you remained employed and the Company's
Board of Directors agreed to pay all of your bonus, paid by the Company in each
case (i) and (ii) in a single lump sum payment within 10 days of the Separation
Date, plus (iii) if you are eligible for and elect coverage under COBRA, the
Company will pay your COBRA premium (equal to the amount the Company paid during
your employment) until the earlier of (x) two years from the Separation Date, or
(y) the date on which you become ineligible to receive benefits under COBRA.
During the period in which the Company pays your COBRA premium, you will be
responsible for paying the portion of the premiums required for active employees
(which, if possible, will be deducted from the severance payments that you will
receive pursuant to this Section), if any; thereafter, you will be responsible
for all premium payments under COBRA.
Your right to receive the Retention Benefits will be conditioned upon the
following:
(a) if the Company shall on or before the date of the Change in Control
have requested in writing that you do so (a "Transition Request"), you
shall have remained employed by the Company, such employment to be at your
current rate of compensation, through the Separation Date; and
(b) you shall on the Separation Date have signed the Release Agreement
attached hereto as Exhibit A and the revocation period specified therein
shall have elapsed.
Your duties in your employment, if any, pursuant to any Transition Request
described in paragraph (a) above shall be consistent with those of a senior
executive or senior advisor, and
shall entail advisory and/or managerial assignments broadly consistent with your
previous role at the Company. By way of example, such assignments might include,
but are not limited to (1) continuing on as interim CEO, (2) advising the new
senior management of the Company as requested concerning matters such as general
business and strategic issues and relations with key customers, employees and
vendors, (3) assisting in the completion and handoff of major projects, (4)
bridging a gap caused by the departure of a senior line manager, or (5)
assisting in an integration or restructuring in which the Company is combined
with a unit of the acquiring company.
Notwithstanding the foregoing, if at the time of payment of (i) and (ii)
above, the Company in good faith determines that such payment must be delayed
for six months in order to satisfy the requirements of Section 409A of the
Internal Revenue Code, then the lump sum benefit provided by this Section 1
shall be paid to you six months and one day following termination of employment.
Except as noted herein, all payments set forth in this Agreement shall be
subject to all applicable federal, state and/or local withholding and/or payroll
taxes, and the Company may withhold from any amounts payable to you (including
any amounts payable pursuant to this Agreement) in order to comply with such
withholding obligations. You further agree that, if the Company does not
withhold an amount sufficient in all respects to satisfy the withholding
obligations of the Company, you will make prompt reimbursement on demand, in
cash, for the amount underwithheld.
2. Acceleration of Vesting. Upon a Change in Control, then, provided you sign
the Release Agreement attached hereto as Exhibit A, the vesting of your option
shares, whether granted prior to or after the date hereof, shall be fully
accelerated on the date of such Change in Control (after giving effect to any
applicable revocation periods in the Release Agreement). For purposes of
clarity, in the case of a Change in Control in which the consideration received
by holders of the Company's common stock consists entirely of cash, options
vesting at or post the Change in Control are cash settlement instruments,
payable at the difference between the Change in Control purchase price and the
exercise price.
3. Certain Definitions. For purposes of this Agreement:
A "Change of Control" with respect to a party means (a) the direct or indirect
acquisition, whether in one or a series of transactions, by any person or
related person constituting a group, of (i) beneficial ownership of issued and
outstanding shares of stock of such party, the result of which is that such
person or such group possesses in excess of fifty percent (50%) of the combined
voting power of all then-issued and outstanding stock of such party, or (ii) the
power to elect, appoint, or cause the election or appointment of at least a
majority of the members of the board of directors (or equivalent governing body)
of such party; (b) a merger or consolidation of a party with a person, or a
reorganization or recapitalization of a party, provided that the result of such
transaction, whether in one or a series of related transactions, is that the
holders of the outstanding voting stock of such party immediately prior to such
consummation do not possess in excess of fifty percent (50%) of the combined
voting power of all of the then-issued and outstanding stock of such party or
surviving person of such party, whether directly or indirectly,
immediately after the consummation of such transaction; or (c) the sale or
disposition, whether directly or indirectly, in one or a series of related
transactions, of substantially all of the assets of a party. For purposes of the
preceding sentence, the terms "person," "group" and "beneficial ownership" shall
have the meanings given to such terms under the Securities Exchange Act of 1934,
as amended; and
The "Separation Date" shall mean the earliest to occur of:
(a) the date specified by the Company in a timely Transition Request,
provided that such date shall in no event be later than three months after
the date of the Change in Control; or
(b) if the Company shall have made a timely Transition Request, the date on
which your employment by the Company shall be terminated for any reason,
other than voluntarily by you; or
(c) if no Transition Request is timely made, the date of the Change in
Control.
4. Term. The term of this Agreement shall be two years from the date hereof.
Thereafter, this Agreement shall automatically renew for additional one year
periods unless the Company provides you with written notice of intent not to
renew no less than 180 days prior to its then scheduled termination date.
5. At-Will Employment. This letter does not constitute a guarantee of
employment, create any other contractual obligations by the Company, or
constitute an employment contract for any specified period of time. You will be
an employee-at-will, meaning that, subject to the terms of this Agreement,
either you or the Company may terminate your employment relationship at any
time, without notice, for any reason or no reason.
6. Successors and Assigns. In the event of a Change in Control, then, and in
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of the Company assume all the obligations of the Company
under this Agreement.
7. No Set Off or Mitigation. Other than as set forth in Section 1, the Company's
obligations to provide the benefits and payments provided for in this Agreement
and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense, or other claim, right or action
which the Company may assert against you or others. In no event shall you be
obligated to seek other employment or take any other action by way of mitigation
of the benefits payable to you under any of the provisions of this Agreement and
such amounts shall not be reduced whether or not you obtain other employment.
The Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which you may incur as a result of any contest or
rejection by the Company of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee or performance thereof.
8. Counterparts. This Agreement may be executed in duplicate and both copies
will have the same force and effect of an original. Facsimile copies will be
treated as originals.
9. Governing Law. This Agreement, its interpretation, performance or any breach
thereof, will be construed in accordance with, governed by, and all questions
with respect thereto will be determined by, the laws of the Commonwealth of
Massachusetts applicable to contracts entered into and wholly to be performed
within said state. Each party hereby consents to the personal jurisdiction of
the Commonwealth of Massachusetts, acknowledges that venue is proper in any
state or Federal court in the Commonwealth of Massachusetts, agrees that any
action arising out of or related to this Agreement must be brought exclusively
in a state or Federal court in the Commonwealth of Massachusetts, and waives any
objection it has or may have in the future with respect to any of the foregoing.
10. Amendment. This Agreement may only be amended with the written consent of
the Company and you.
11. Severability. Each provision of this Agreement shall be severable from every
other provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.
12. IRC Section 4999. Notwithstanding anything in this Agreement to the
contrary, in the event that any payment by the Company to or for your benefit,
whether paid or payable pursuant to the terms of this Agreement or otherwise
(the "Severance Payments"), would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the
following provisions shall apply: (A) If the Severance Payments, reduced by the
sum of (1) the Excise Tax (as defined below) and (2) the total of the Federal,
state, and local income and employment taxes payable by you on the amount of the
Severance Payments which are in excess of the Threshold Amount (as defined
below), are greater than or equal to the Threshold Amount, you shall be entitled
to the full benefits payable under this Agreement. (B) If the Threshold Amount
is less than (x) the Severance Payments, but greater than (y) the Severance
Payments reduced by the sum of (1) the Excise Tax and (2) the total of the
Federal, state, and Local income and employment taxes on the amount of the
Severance Payments which are in excess of the Threshold Amount, then the
benefits payable under this Agreement shall be reduced (but not below zero) to
the extent necessary so that the maximum Severance Payments shall not exceed the
Threshold Amount. To the extent that there is more than one method of reducing
the payments to bring them within the Threshold Amount, you shall determine
which method shall be followed; provided that if you fail to make such
determination within 45 days after the Company has sent you written notice of
the need for such reduction, the Company may determine the amount of such
reduction in its sole discretion. For the purposes of this Section, "Threshold
Amount" shall mean three times your "base amount" within the meaning of Section
280G(b)(3) of the Code and the regulations promulgated thereunder less one
dollar ($1.00); and "Excise Tax" shall mean the excise tax imposed by Section
4999 of the Code, and any interest or penalties incurred by you with respect to
such excise tax.
This offer expires as of the close of business on May 4, 2007. This offer
supersedes all prior offers, both verbal and written. Please send your paperwork
by mail or fax to: Xxxxx Xx Xxxxx, VP Human Resources, at 00 Xxxx Xxxxxx,
Xxxxxx, XX 00000, fax 000-000-0000.
Sincerely,
COLOR KINETICS INCORPORATED
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
Senior VP and CFO
ACCEPTED AND AGREED:
/s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
Date: May 1, 2007
