EXHIBIT 10.1
CHANGE OF CONTROL AGREEMENT
AGREEMENT made at ________ on _____________, 1997, by and between
Sunrise Technologies International, Inc., (the "Company") and ______________
(the "Executive").
Recitals
A. The Executive is currently employed by the Company as
President and Chief Executive Officer.
B. The Executive and the Company agree that it is desirable that
the Company provide greater employment security to the
Executive, and, to that end, the parties hereby enter into
this Agreement.
C. It is in the Company's best interests to attract and retain
its executives.
In consideration of the mutual agreements herein set forth and for good
and valuable consideration, receipt of which is hereby acknowledged the parties
agree as follows:
1. Term of Agreement. Subject to the provisions of paragraphs 2
and 3 of this Agreement, the term of this Agreement (the "Three-Year Term")
shall be for the period which commences on the date hereof and which terminates
on __________, 2000.
2. Definitions. For purposes of this Agreement, the following
definitions apply:
(a) "Cause" shall mean (i) an act or acts of personal dishonesty by
Executive which results in personal enrichment of Executive at the expense of
the Company, (ii) violation by Executive of Executive's obligations under
paragraphs 5 or 6 of this Agreement which are willful on the Executive's part
and which are not remedied to the reasonable satisfaction of the Company in a
reasonable period of time after receipt of written notice from the Company, or
(iii) the conviction of the Executive of a felony. Any termination of this
Agreement for Cause shall be communicated by the Company to the Executive in a
notice of termination which shall set forth in reasonable detail the facts and
circumstances, if any, claimed to provide a basis for termination of this
Agreement.
(b) "Change of Control" shall mean the occurrence of any of the
following events:
(i) The "acquisition" after the date hereof by any "Person"
(as such term is defined below) or "Beneficial Ownership" (within the meaning of
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended
(the "1934 Act"), as in effect on the date hereof) of any securities of the
Company which generally entitles the holder thereof to vote for the election of
directors of the Company (the "Voting Securities") which, when added to the
Voting Securities then "Beneficially Owned" by such Person, would result in such
Person "Beneficially Owning" 50% or more (the "Requisite Percentage") of the
combined voting power of the Company's then outstanding Voting Securities;
provided, however, that for purposes of
this paragraph (i) a Person shall not be deemed to have made an acquisition of
Voting Securities if such Person: (A) acquires Voting Securities as a result of
a stock split, stock dividend or other corporate restructuring in which all
security holders of the class of such Voting Securities are treated on a pro
rata basis; (B) acquires the Voting Securities directly from the Company; (C)
becomes the Beneficial Owner of more than the Requisite Percentage of Voting
Securities solely as a result of the acquisition of Voting Securities by the
Company which, by reducing the number of Voting Securities outstanding,
increases the proportional number of shares Beneficially owned by such Person;
(D) is the Company or any corporation or other Person of which a majority of its
voting power or its equity securities or equity interest is owned directly or
indirectly by the Company (a "Subsidiary"), (E) acquires Voting Securities in
connection with a "Non-Control Transaction" (as defined in paragraph (iii)
below) or (F) acquires Voting Securities upon the exercise or conversion of
Voting Securities of another class which does not increase the percentage of
Voting Securities Beneficially Owned by such Person; or
(ii) The individuals who, as of the date of this Agreement,
are members of the Board (the "Incumbent Board"), cease for any reason to
constitute at least two thirds of the Board; provided, however, that if either
the election of any new director or the nomination for election of any new
director by the Company's stockholders was approved by a vote of at least
two-thirds of the Incumbent Board, such new director shall be considered as a
member of the Incumbent Board; provided further, however, that no individual
shall be considered a member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened "Election Contest"
(as described in Rule 14a-11 promulgated under the 1934 Act, as in effect on the
date hereof) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board of Directors (a "Proxy
Contest"), including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(iii) Approval by security holders of the Company of:
(A) A merger, consolidation or reorganization
involving the Company (a "Business Combination"), unless
(1) the security holders of the Company,
immediately before the Business Combination, own, directly or indirectly
immediately following the Business Combination, at least 75% of the combined
voting power for the election of directors generally of the outstanding
securities of the corporation resulting from the Business Combination (the
"Surviving Corporation") in substantially the same proportion as their ownership
of the Voting Securities immediately before the Business Combination, and
(2) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement providing
for the Business Combination constitute at least two-thirds of the members of
the Board of Directors of the Surviving Corporation, and
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(3) no Person (other than the Company or any
Subsidiary, a trustee or other fiduciary holding securities under one or more
employee benefit plans or arrangements (or any trust forming a part thereof)
maintained by the Company, the Surviving Corporation or any Subsidiary, or any
Person who, immediately prior to the Business Combination, had Beneficial
Ownership of the Requisite Percentage of the then outstanding Voting Securities)
upon consummation of the Business Combination is the Beneficial Owner of the
Requisite Percentage of the combined voting power for the election of directors
generally of the Surviving Corporation's then outstanding securities (a
transaction described in clauses (1) through (3) shall be referred to as a
"Non-Control Transaction");
(B) A complete liquidation or dissolution of the
Company; or
(C) An agreement for the sale or other disposition of
all or substantially all of the assets of the Company to any Person (other than
a transfer to a Subsidiary).
If any of the foregoing transactions are approved by security holders
and not consummated within thirty (30) days after such approval is obtained (or
such longer period as may be determined by the then members of the Incumbent
Board), then the "Change of Control" shall be deemed void ab initio.
Voting Securities acquired by a Person that is not deemed to constitute
an "acquisition" of such Voting Securities by such Person by reason of either of
the provisos to paragraph (i) above shall nevertheless be deemed to be
Beneficially Owned by such Person for purposes of determining whether the
"acquisition" of any additional Voting Securities by such Person (which
subsequent "acquisition" is not covered by either proviso to paragraph (i) and,
therefore, is considered to be an "acquisition" of Voting Securities for
purposes of paragraph (i) would result in such Person exceeding the Requisite
Percentage of Voting Securities. The term "Person" shall mean any individual,
firm corporation, partnership, joint venture, association, trust or other entity
as well as any "Affiliate" or "Associate" thereof (as such terms are defined in
the 1934 Act).
Notwithstanding the foregoing, a Change of Control shall not be deemed
to occur solely because the Requisite Percentage of the then outstanding Voting
Securities is Beneficially Owned by (i) a trustee or other fiduciary holding
securities under one or more employee benefit plans or arrangements (or any
trust forming a part thereof) maintained by the Company or any Subsidiary or
(ii) any corporation which, immediately prior to its acquisition of such
interest, is owned directly or indirectly by the stockholders of the Company in
the same proportion as their ownership of stock in the Company immediately prior
to such acquisition. Furthermore, if the Executive's employment is terminated
and the Executive reasonably demonstrates that such termination (i) was at the
request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change of Control and who effectuates a Change
of Control or (ii) otherwise occurred in connection with, or in anticipation of,
a Change of Control shall be deemed to have occurred and the date of a Change of
Control with respect to the employment shall mean the date immediately prior to
the termination date.
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(c) A resignation for "Good Reason" shall mean the resignation of the
Executive from employment by the Company after (i) a material reduction or
adverse alteration in the nature of the Executive's position, responsibilities
or authorities, (ii) the Executive becoming the holder of a lesser office or
title than that held by him immediately prior to such change, (iii) any material
reduction of the Executive's compensation or benefits, (iv) the relocation of
the Executive's job more than fifty miles from his present location or (v) any
other material adverse change to the terms and conditions of the Executive's
employment or benefits, provided that, if the Executive shall consent in writing
to any event described in clauses (i) through (v) of this sentence, the
Executive's subsequent resignation shall not be treated as a resignation for
Good Reason, unless a subsequent event described in such clauses to which
Executive did not consent occurs.
(d) "Permanent Disability" shall mean any physical or mental disability
which shall have rendered Executive unable to perform his duties hereunder for
120 consecutive days, or which, in the opinion of a licensed physician
reasonably satisfactory to the company, is likely to render Executive unable to
perform his duties hereunder for such period.
(e) "Retirement" shall mean a termination of the Executive's employment
other than for Cause on or after the Executive's attainment of age 65.
3. Severance Benefit
If, during the term of this Agreement, (a) a Change of Control occurs,
and (b) within a two-year period from the date of such Change of Control, either
(i) the Executive's employment with the Company and its subsidiaries is
terminated by the Company other than for Cause or on account of the Executive's
death, Permanent Disability or Retirement, or (ii) the Executive resigns for
Good Reason, then the Company shall pay to the Executive a Severance Payment in
an amount, (net of excise taxes, if any) equal to one and one-half (1 1/2) times
the total of the Executive's annual salary plus the target bonus, if any, for
the year in which termination occurs; provided that in no event shall the total
amount of the Severance Payment exceed 2.99 times the five (5) year average W-2
income of the Executive. The Severance Payment shall be payable in a single lump
sum which shall be paid within thirty (30) days of the termination of employment
or resignation.
In addition to the Severance Payment, the Company shall provide health,
disability and life insurance in accordance with the plans maintained by the
Company for executives for a period of one and one-half (1 1/2) years from the
date of termination of the Executive's employment, provided that health,
disability and life insurance benefits shall cease if Executive becomes employed
during such period and receives similar benefits in connection with such
employment.
4. No Reductions or Mitigation. The amounts payable pursuant to
paragraph 3 of this Agreement shall be paid without reduction, other than as
provided in said paragraph, regardless of any amounts of salary, compensation or
other amounts which may be paid or payable to the Executive from any source or
which the Executive could have obtained upon
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seeking other employment; provided that the Company shall be permitted to make
all such payments net of any legally required tax withholdings.
5. Non-Competition. The Executive agrees that during his employment and
for a period of one (1) year after the termination of his employment for any
reason, he shall not enter into or engage in or be connected with, or engage to
work for an individual, firm or corporation which is engaged in or connected
with, any business which is then in substantial competition with the Company in
the United States. The provisions of the last preceding sentence shall not apply
to the ownership of less than five percent (5%) of the shares of any corporation
listed on any recognized exchange or traded over-the-counter. The provisions of
this paragraph shall survive a termination of this Agreement.
6. Non-Disclosure. The Executive agrees not to disclose either during
the period of his employment or at any time thereafter to any person, firm, or
corporation any information concerning the business or affairs of the Company
which he may have acquired in the course of, or as incident to, his employment
with the Company for his own benefit or to the detriment or intended detriment
of the Company. The provisions of this paragraph shall survive a termination of
this Agreement.
7. Binding Effect; Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and the Executive's heirs and
legal representatives and the Company's successors and assigns. This Agreement
is assignable by the Company to any corporate or other entity which acquires,
directly or indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets of the Company. Upon any such assignment, and
the assumption by the assignee of all obligations hereunder, the Company shall
be released from all liability hereunder. This Agreement shall not be assignable
by the Executive.
8. Nonalienation of Benefits. Benefits payable under this Agreement
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, prior to actually being received by the
Executive; and any attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber, charge, garnish, execute on, levy or otherwise dispose of any
right to benefits payable hereunder, shall be void.
9. Severability. If all or any part of this Agreement is declared by
any court or governmental authority to be unlawful or invalid, such unlawfulness
or invalidity shall not serve to invalidate any portion of this Agreement not
declared to be unlawful or invalid. Any paragraph or part of a paragraph so
declared to be unlawful or invalid shall, if possible, be construed in a manner
which will give effect to the terms of such paragraph or part of a paragraph to
the fullest extent possible while remaining lawful and valid.
10. Entire Agreement; Amendment; Waiver. This Agreement represents the
entire agreement between the parties hereto with respect to the subject matter
hereof, and supersedes
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all prior or contemporaneous oral or written negotiations, understandings and
agreements between the parties hereto. This Agreement shall not be altered,
amended or modified except by written instrument executed by the Company and
Executive. A waiver of any term, covenant, agreement or condition contained in
this Agreement shall not be deemed a waiver of any other term, covenant,
agreement or condition, and any waiver of any default in any such term,
covenant, agreement or condition shall not be deemed a waiver of any later
default thereof or of any other term, covenant, agreement or condition.
11. Notices. All notices required by this Agreement shall be in writing
and delivered by hand or by first class registered or certified mail, postage
prepaid.
12. Legal Fees and Expenses. In the event that Executive undertakes
legal action against the Company to enforce its rights under the terms of this
Agreement and judgment is entered against the Company, the Company shall pay
legal fees and expenses incurred by the Executive.
13. Applicable Law. The provisions of this Agreement shall be
interpreted and construed in accordance with the laws of the State of
California, without regard to its choice of law principles.
14. Extension. This Agreement shall be automatically extended for
additional Three- Year Terms if the Company does not give Executive written
notice of termination of this Agreement on or before 120 days prior to the
expiration of the Three Year Term then in effect.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
Sunrise Technologies International, Inc.
By:_________________________________
President
EXECUTIVE:__________________________
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