EXHIBIT 10.23
-------------
Change-in-Control Agreement
---------------------------
THIS CHANGE-IN-CONTROL AGREEMENT by and between OPNET Technologies, Inc., a
Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxx (the "Executive") is
made as of June __, 2000 (the "Effective Date").
As an inducement for and in consideration of the Executive remaining in its
employ, the Company agrees that the Executive shall receive the severance
benefits set forth in this Agreement in the event the Executive's employment
with the Company is terminated under the circumstances described below
subsequent to a Change in Control (as defined in Section 1.1).
1. Key Definitions.
As used herein, the following terms shall have the following respective
meanings:
1.1 "Change in Control" means an event or occurrence set forth in any
-----------------
one or more of subsections (a) through (c) below (including an event or
occurrence that constitutes a Change in Control under one of such subsections
but is specifically exempted from another such subsection):
(a) the acquisition by an individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership of
any capital stock of the Company if, after such acquisition, such Person
beneficially owns (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) more than 30% of either (i) the then-outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then-outstanding securities of the Company entitled
to vote generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection (a), the
-------- -------
following acquisitions shall not constitute a Change in Control: (i) any
acquisition directly from the Company (excluding an acquisition pursuant to the
exercise, conversion or exchange of any security exercisable for, convertible
into or exchangeable for common stock or voting securities of the Company,
unless the Person exercising, converting or exchanging such security acquired
such security directly from the Company or an underwriter or agent of the
Company), (ii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company, or (iii) any acquisition by any corporation pursuant to a Business
Combination (defined below) which complies with clauses (i) and (ii) of
subsection (c) of this Section 1.1 or (iv) any acquisition by Xxxx X. Xxxxx or
Xxxxx X. Xxxxx (each such party is referred to herein as an "Exempt Person") of
any shares of capital stock of the Company;
(b) such time as the Continuing Directors (as defined below) do
not constitute a majority of the Board of Directors of the Company (the "Board")
(or, if applicable, the Board of Directors of a successor corporation to the
Company), where the term "Continuing Director" means at any date a member of the
Board (i) who was a member of the Board on the date of the execution of this
Agreement or (ii) who was nominated or elected subsequent to such
date by at least a majority of the directors who were Continuing Directors at
the time of such nomination or election or whose election to the Board was
recommended or endorsed by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election; provided,
--------
however, that there shall be excluded from this clause (ii) any individual whose
-------
initial assumption of office occurred as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents, by or on behalf of a
person other than the Board; or
(c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving the Company or a sale or
other disposition of all or substantially all of the assets of the Company (a
"Business Combination"), unless, immediately following such Business
Combination, each of the following two conditions is satisfied: (i) all or
substantially all of the individuals and entities who were the beneficial owners
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the then-outstanding shares of common
stock and the combined voting power of the then-outstanding securities entitled
to vote generally in the election of directors, respectively, of the resulting
or acquiring corporation in such Business Combination (which shall include,
without limitation, a corporation which as a result of such transaction owns the
Company or substantially all of the Company's assets either directly or through
one or more subsidiaries) (such resulting or acquiring corporation is referred
to herein as the "Acquiring Corporation") in substantially the same proportions
as their ownership, immediately prior to such Business Combination, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
respectively; and (ii) no Person (excluding Exempt Persons, the Acquiring
Corporation or any employee benefit plan (or related trust) maintained or
sponsored by the Company or by the Acquiring Corporation) beneficially owns,
directly or indirectly, 30% or more of the then outstanding shares of common
stock of the Acquiring Corporation, or of the combined voting power of the then-
outstanding securities of such corporation entitled to vote generally in the
election of directors (except to the extent that such ownership existed prior to
the Business Combination).
1.2 "Change in Control Date" means the first date during the Term
----------------------
(as defined in Section 2) on which a Change in Control occurs. Anything in this
Agreement to the contrary notwithstanding, if (a) a Change in Control occurs,
(b) the Executive's employment with the Company is terminated prior to the date
on which the Change in Control occurs and (c) it is reasonably demonstrated by
the Executive that such termination of employment (i) was at the request of a
third party who has taken steps reasonably calculated to effect a Change in
Control or (ii) otherwise arose in connection with or in anticipation of a
Change in Control, then for all purposes of this Agreement the "Change in
Control Date" shall mean the date immediately prior to the date of such
termination of employment.
1.3 "Cause" means:
-----
(a) the Executive's willful and continued failure to
substantially perform his reasonable assigned duties (other than any such
failure resulting from incapacity due to physical or mental illness or any
failure after the Executive gives notice of termination for Good Reason), which
failure is not cured within 30 days after a written demand for substantial
-2-
performance is received by the Executive from the Board which specifically
identifies the manner in which the Board believes the Executive has not
substantially performed the Executive's duties; or
(b) the Executive's willful engagement in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the Company.
For purposes of this Section 1.3, no act or failure to act by the Executive
shall be considered "willful" unless it is done, or omitted to be done, in bad
faith and without reasonable belief that the Executive's action or omission was
in the best interests of the Company.
1.4 "Good Reason" means the occurrence, without the Executive's
-----------
written consent, of any of the events or circumstances set forth in clauses (a)
through (g) below. Notwithstanding the occurrence of any such event or
circumstance, such occurrence shall not be deemed to constitute Good Reason if,
prior to the Date of Termination specified in the Notice of Termination (each as
defined in Section 3.2(a)) given by the Executive in respect thereof, such event
or circumstance has been fully corrected and the Executive has been reasonably
compensated for any losses or damages resulting therefrom (provided that such
right of correction by the Company shall only apply to the first Notice of
Termination for Good Reason given by the Executive).
(a) the assignment to the Executive of duties inconsistent in
any material respect with the Executive's position (including status, offices,
titles and reporting requirements), authority or responsibilities in effect
immediately prior to the earliest to occur of (i) the Change in Control Date,
(ii) the date of the execution by the Company of the initial written agreement
or instrument providing for the Change in Control or (iii) the date of the
adoption by the Board of a resolution providing for the Change in Control (with
the earliest to occur of such dates referred to herein as the "Measurement
Date"), or any other action or omission by the Company which results in a
diminution in such position, authority or responsibilities;
(b) a reduction in the Executive's annual base salary as in
effect on the Measurement Date or as the same was or may be increased from time
to time;
(c) the failure by the Company to (i) continue in effect any
material compensation or benefit plan or program (including without limitation
any life insurance, medical, health and accident or disability plan and any
vacation program or policy) (a "Benefit Plan") in which the Executive
participates or which is applicable to the Executive immediately prior to the
Measurement Date, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan or
program, (ii) continue the Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of the Executive's
participation relative to other participants, than the basis existing
immediately prior to the Measurement Date or (iii) award cash bonuses to the
Executive in amounts and in a manner substantially consistent with past practice
in light of the Company's financial performance;
-3-
(d) a change by the Company in the location at which the
Executive performs his principal duties for the Company to a new location that
is both (i) outside a radius of 50 miles from the Executive's principal
residence immediately prior to the Measurement Date and (ii) more than 50 miles
from the location at which the Executive performed his principal duties for the
Company immediately prior to the Measurement Date; or a requirement by the
Company that the Executive travel on Company business to a substantially greater
extent than required immediately prior to the Measurement Date;
(e) the failure of the Company to obtain the agreement, in a
form reasonably satisfactory to the Executive, from any successor to the Company
to assume and agree to perform this Agreement, as required by Section 6.1;
(f) a purported termination of the Executive's employment which
is not effected pursuant to a Notice of Termination satisfying the requirements
of Section 3.2(a), which purported termination shall not be effective for
purposes of this Agreement; or
(g) any failure of the Company to pay or provide to the
Executive any portion of the Executive's compensation or benefits due under any
Benefit Plan within seven days of the date such compensation or benefits are
due, or any material breach by the Company of any employment agreement with the
Executive.
The Executive's right to terminate his employment for Good Reason shall not
be affected by his incapacity due to physical or mental illness.
1.5 "Disability" means the Executive's absence from the full-time
----------
performance of the Executive's duties with the Company for 180 consecutive
calendar days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company
or its insurers and reasonably acceptable to the Executive or the Executive's
legal representative.
2. Term of Agreement. This Agreement, and all rights and obligations of
-----------------
the parties hereunder, shall take effect upon the Effective Date and shall
expire upon the first to occur of (a) the expiration of the Term (as defined
below) if a Change in Control has not occurred during the Term, (b) the date 12
months after the Change in Control Date, if the Executive is still employed by
the Company as of such later date, or (c) the fulfillment by the Company of all
of its obligations under Sections 4 and 5.2 if the Executive's employment with
the Company terminates within 12 months following the Change in Control Date.
"Term" shall mean the period commencing as of the Effective Date and continuing
in effect through March 31, 2003; provided, however, that commencing on April 1,
--------
2003 and each April 1 thereafter, the Term shall be automatically extended for
one additional year unless, not later than 90 days prior to the scheduled
expiration of the Term (or any extension thereof), the Company shall have given
the Executive written notice that the Term will not be extended.
3. Employment Status; Termination Following Change in Control.
----------------------------------------------------------
3.1 Not an Employment Contract. The Executive acknowledges that this
--------------------------
Agreement does not constitute a contract of employment or impose on the Company
any obligation to retain the Executive as an employee and that this Agreement
does not prevent the
-4-
Executive from terminating employment at any time. If the Executive's employment
with the Company terminates for any reason and subsequently a Change in Control
shall occur, the Executive shall not be entitled to any benefits hereunder
except as otherwise provided pursuant to Section 1.2.
3.2 Termination of Employment.
-------------------------
(a) If the Change in Control Date occurs during the Term, any
termination of the Executive's employment by the Company or by the Executive
within 12 months following the Change in Control Date (other than due to the
death of the Executive) shall be communicated by a written notice to the other
party hereto (the "Notice of Termination"), given in accordance with Section 8.
Any Notice of Termination shall: (i) indicate the specific termination provision
(if any) of this Agreement relied upon by the party giving such notice, (ii) to
the extent applicable, set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) specify the Date of
Termination (as defined below). The effective date of an employment termination
(the "Date of Termination") shall be the close of business on the date specified
in the Notice of Termination (which date may not be less than 15 days or more
than 120 days after the date of delivery of such Notice of Termination), in the
case of a termination other than one due to the Executive's death, or the date
of the Executive's death, as the case may be.
(b) The failure by the Executive or the Company to set forth in
the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or
the Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting any such fact or circumstance in enforcing the
Executive's or the Company's right hereunder.
(c) Any Notice of Termination for Cause given by the Company
must be given within 90 days of the occurrence of the event(s) or
circumstance(s) which constitute(s) Cause. Prior to any Notice of Termination
for Cause being given (and prior to any termination for Cause being effective),
the Executive shall be entitled to a hearing before the Board at which he may,
at his election, be represented by counsel and at which he shall have a
reasonable opportunity to be heard. Such hearing shall be held on not less than
15 days prior written notice to the Executive stating the Board's intention to
terminate the Executive for Cause and stating in detail the particular event(s)
or circumstance(s) which the Board believes constitutes Cause for termination.
(d) Any Notice of Termination for Good Reason given by the
Executive must be given within 90 days of the occurrence of the event(s) or
circumstance(s) which constitute(s) Good Reason.
4. Benefits to Executive.
---------------------
4.1 Compensation. If the Change in Control Date occurs during the
------------
Term and the Executive's employment with the Company terminates within 12 months
following the Change in Control Date, the Executive shall be entitled to the
following benefits:
-5-
(a) Termination Without Cause or for Good Reason. If the
--------------------------------------------
Executive's employment with the Company is terminated by the Company (other than
for Cause, Disability or death) or by the Executive for Good Reason within 12
months following the Change in Control Date, then the Executive shall be
entitled to the following benefits:
(i) the Company shall pay to the Executive in a lump sum
in cash within 30 days after the Date of Termination the aggregate of the
following amounts:
(1) the sum of (A) the Executive's base salary
through the Date of Termination, (B) the product of (x) the annual bonus paid or
payable (including any bonus or portion thereof which has been earned but
deferred) for the most recently completed fiscal year and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365, and (C) the amount of
any compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued vacation pay, in each case to the
extent not previously paid (the sum of the amounts described in clauses (A),
(B), and (C) shall be hereinafter referred to as the "Accrued Obligations"); and
(2) the amount equal to the sum of (x) the
Executive's highest annual base salary while employed by the Company during the
five-year period prior to the Change in Control Date and (y) the Executive's
highest annual bonus while employed by the Company during the five-year period
prior to the Change in Control Date.
(ii) for 12 months after the Date of Termination, or such
longer period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue to provide benefits to the
Executive and the Executive's family at least equal to those which would have
been provided to them if the Executive's employment had not been terminated, in
accordance with the applicable Benefit Plans in effect on the Measurement Date
or, if more favorable to the Executive and his family, in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies; provided, however, that if the Executive becomes
--------
reemployed with another employer and is eligible to receive a particular type of
benefits (e.g., health insurance benefits) from such employer on terms at least
as favorable to the Executive and his family as those being provided by the
Company, then the Company shall no longer be required to provide those
particular benefits to the Executive and his family;
(iii) to the extent not previously paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is eligible to
receive following the Executive's termination of employment under any plan,
program, policy, practice, contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be hereinafter
referred to as the "Other Benefits"); and
(iv) for purposes of determining eligibility (but not the
time of commencement of benefits) of the Executive for retiree benefits to which
the Executive is entitled, the Executive shall be considered to have remained
employed by the Company until 12 months after the Date of Termination.
-6-
(b) Resignation without Good Reason; Termination for Death or
---------------------------------------------------------
Disability. If the Executive voluntarily terminates his employment with the
----------
Company within 12 months following the Change in Control Date, excluding a
termination for Good Reason, or if the Executive's employment with the Company
is terminated by reason of the Executive's death or Disability within 12 months
following the Change in Control Date, then the Company shall (i) pay the
Executive (or his estate, if applicable), in a lump sum in cash within 30 days
after the Date of Termination, the Accrued Obligations and (ii) timely pay or
provide to the Executive (or his estate, if applicable) the Other Benefits.
(c) Termination for Cause. If the Company terminates the
---------------------
Executive's employment with the Company for Cause within 12 months following the
Change in Control Date, then the Company shall (i) pay the Executive, in a lump
sum in cash within 30 days after the Date of Termination, the sum of (A) the
Executive's annual base salary through the Date of Termination and (B) the
amount of any compensation previously deferred by the Executive, in each case to
the extent not previously paid, and (ii) timely pay or provide to the Executive
the Other Benefits.
4.2 Mitigation. The Executive shall not be required to mitigate the
----------
amount of any payment or benefits provided for in this Section 4 by seeking
other employment or otherwise. Further, except as provided in Section
4.1(a)(ii), the amount of any payment or benefits provided for in this Section 4
shall not be reduced by any compensation earned by the Executive as a result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company or otherwise.
5. Disputes.
--------
5.1 Settlement of Disputes; Arbitration. All claims by the Executive
-----------------------------------
for benefits under this Agreement shall be directed to and determined by the
Board and shall be in writing. Any denial by the Board of a claim for benefits
under this Agreement shall be delivered to the Executive in writing and shall
set forth the specific reasons for the denial and the specific provisions of
this Agreement relied upon. The Board shall afford a reasonable opportunity to
the Executive for a review of the decision denying a claim. Any further dispute
or controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in Washington, D.C., in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction.
5.2 Expenses. The Company agrees to pay as incurred, to the full
--------
extent permitted by law, all legal, accounting and other fees and expenses which
the Executive may reasonably incur as a result of any claim or contest
(regardless of the outcome thereof) by the Company, the Executive or others
regarding the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive regarding the amount of any payment or benefits
pursuant to this Agreement), plus in each case interest on any delayed payment
at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the
Internal Revenue Code of 1986, as amended; provided that the Company shall have
no obligation under this Section 5.2 with respect to any such claims or contests
by the Executive or others that are determined to be frivolous, with such
determination to be made by the Board acting reasonably and in good faith.
-7-
6. Successors.
----------
6.1 Successor to Company. The Company shall require any successor
--------------------
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Company expressly to
assume and agree to perform this Agreement to the same extent that the Company
would be required to perform it if no such succession had taken place. Failure
of the Company to obtain an assumption of this Agreement at or prior to the
effectiveness of any succession shall be a breach of this Agreement and shall
constitute Good Reason if the Executive elects to terminate employment, except
that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used in
this Agreement, "Company" shall mean the Company as defined above and any
successor to its business or assets as aforesaid which assumes and agrees to
perform this Agreement, by operation of law or otherwise.
6.2 Successor to Executive. This Agreement shall inure to the benefit
----------------------
of and be enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be payable to
the Executive or his family hereunder if the Executive had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the executors, personal representatives or
administrators of the Executive's estate.
7. Nondisclosure, Noncompete, Nonsolicitation and Ownership of Inventions
----------------------------------------------------------------------
Agreement. The Employee shall execute, simultaneously with the execution of this
---------
Agreement, or otherwise upon the request of the Company, the Company's customary
form of nondisclosure, noncompete, nonsolicitation and ownership of inventions
agreement.
8. Notice. All notices, instructions and other communications given
------
hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) prepaid via a reputable
nationwide overnight courier service, in each case addressed to the Company, at
0000 Xxxxxxxxxxxxx Xxxxx, X.X., Xxxxxxxxxx, X.X. 00000, and to the Executive at
his address as set forth in the records of the Company (or to such other address
as either the Company or the Executive may have furnished to the other in
writing in accordance herewith). Any such notice, instruction or communication
shall be deemed to have been delivered five business days after it is sent by
registered or certified mail, return receipt requested, postage prepaid, or one
business day after it is sent via a reputable nationwide overnight courier
service. Either party may give any notice, instruction or other communication
hereunder using any other means, but no such notice, instruction or other
communication shall be deemed to have been duly delivered unless and until it
actually is received by the party for whom it is intended.
9. Miscellaneous.
-------------
9.1 Employment by Subsidiary. For purposes of this Agreement, the
------------------------
Executive's employment with the Company shall not be deemed to have terminated
solely as a result of the Executive continuing to be employed by a wholly-owned
subsidiary of the Company.
-8-
9.2 Severability. The invalidity or unenforceability of any provision
------------
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9.3 Injunctive Relief. The Company and the Executive agree that any
-----------------
breach of this Agreement by the Company is likely to cause the Executive
substantial and irrevocable damage and therefore, in the event of any such
breach, in addition to such other remedies which may be available, the Executive
shall have the right to specific performance and injunctive relief.
9.4 Governing Law. The validity, interpretation, construction and
-------------
performance of this Agreement shall be governed by the internal laws of the
District of Columbia, without regard to conflicts of law principles.
9.5 Waivers. No waiver by the Executive at any time of any breach of,
-------
or compliance with, any provision of this Agreement to be performed by the
Company shall be deemed a waiver of that or any other provision at any
subsequent time.
9.6 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.
9.7 Tax Withholding. Any payments provided for hereunder shall be
---------------
paid net of any applicable tax withholding required under federal, state or
local law.
9.8 Entire Agreement. This Agreement sets forth the entire agreement
----------------
of the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein is
hereby terminated and cancelled.
9.9 Amendments. This Agreement may be amended or modified only by a
----------
written instrument executed by both the Company and the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first set forth above.
OPNET TECHNOLOGIES, INC.
By:________________________________
Xxxx X. Xxxxx
Chairman and Chief Executive Officer
____________________________________
Xxxxxx X. Xxxxxx
-9-
