EXHIBIT 10.2
CHANGE IN CONTROL AGREEMENT
This Change In Control Agreement (the "Agreement") is made and entered into as
of ______________ (the "Effective Date"), by and between Sycamore Networks,
Inc., a Delaware corporation (the "Company") and ___________________________
("Executive").
RECITALS
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The Company recognizes that the possibility of a change of control or other
event which may change the nature and structure of the Company and that
uncertainty regarding the consequences of such events may adversely affect the
Company's ability to retain its key employees. The Company also recognizes that
Executive possesses an intimate and essential knowledge of the Company upon
which the Company may need to draw for objective advice and continued services
in connection with any acquisition of the Company or other change of control
that is potentially advantageous to the Company's stockholders. The Company
believes that the existence of this Agreement will serve as an incentive to
Executive to remain in the employ of the Company and will enhance its ability to
call on and rely upon Executive in connection with a change of control.
The Company and Executive desire to enter into this Agreement in order to
provide additional compensation and benefits to Executive and to encourage
Executive to continue to devote his full attention and dedication to the Company
and to continue his employment with the Company.
1. Definitions. As used in this Agreement, unless the context requires a
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different meaning, the following terms shall have the meanings set forth herein:
1.1. "Cause" means:
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1.1.1. The willful engaging by the Executive in illegal conduct or
gross misconduct which is materially injurious to the Company.
1.2. "Change of Control" means the occurrence, as the result of a single
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transaction or through a series of transactions, of any of the following events:
1.2.1. any Person becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding voting securities.
"Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
amended, as modified and used in Sections 13(d) and 14(d) thereof, except that
such term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its subsidiaries, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities or (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company;
or
1.2.2. Incumbent Directors cease at any time and for any reason to
constitute a majority of the number of directors then serving on the Board.
"Incumbent Directors" shall mean directors who either (A) are directors of the
Company as of date hereof or (B) are elected, or nominated for election, to the
Board with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall not include an
individual whose election or nomination is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors to the Board); or
1.2.3. there is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other corporation,
other than (i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof (the "Acquiror")) at least a majority of the combined voting power of
the securities of the Company or the Acquiror outstanding immediately after such
merger or consolidation as appropriate, or (ii) a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no Person becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company's then outstanding voting securities; or
1.2.4. the stockholders of the Company approve a plan of liquidation
or dissolution of the Company or an agreement for the sale or disposition by the
Company of all or a substantial portion of the Company's assets, other than a
sale or disposition by the Company of all or a substantial portion of the
Company's assets to an entity, at least a majority of the combined voting power
of the voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company immediately
prior to such sale.
1.3. "Constructive Termination" means the occurrence of any of the
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following conditions, without Executive's written consent:
1.3.1. Any diminution in the Executive's position, title or
responsibilities; or
1.3.2. Any required relocation of the Executive; or
1.3.3. Any diminution in the Executive annual salary or bonus
potential from that in effect immediately prior to the Change in Control.
1.4 "Subsequent Acquisition" means:
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1.4.1. A merger or consolidation which results in the voting securities
of the Acquiror (as defined in Section 1.2 of this Agreement) outstanding
immediately prior thereto representing immediately thereafter (either by
remaining outstanding or by being converted into voting securities of the
surviving or acquiring entity (the "Subsequent Acquiror") less than a majority
of the combined voting power of the voting securities of the Acquiror or such
Subsequent Acquiror, as the case may be, outstanding immediately after such
merger or consolidation;
1.4.2. The sale of all or substantially all of the assets of the
Acquiror or of the subsidiary or unit of the Acquiror formed by or to effect the
Change of Control; or
1.4.3. The sale of shares of capital stock of the Acquiror, or of the
subsidiary or unit of the Acquiror formed by or to effect the Change of Control,
in a single transaction or series of related transactions, representing at least
80% of the voting power of the voting securities of the Acquiror or of the
subsidiary or unit of the Acquiror formed by or to effect the Change of Control.
1.5. "Termination Upon a Change of Control" means:
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1.5.1. Any termination of the employment of Executive by the Company
without Cause during the period commencing thirty (30) days prior to the date of
the Company's first public announcement that the Company has entered into a
definitive agreement that would result in a Change of Control (even though still
subject to approval by the Company's stockholders and other conditions and
contingencies);
1.5.2. Any termination of the employment of Executive by the Company
without Cause following a Change of Control;
1.5.3. Any resignation by Executive upon the occurrence of a
Constructive Termination after the date of any Change of Control.
1.5.4. "Termination Upon Change of Control" shall not include any
termination of Executive's employment (a) by the Company for Cause; or (b) as a
result of the voluntary termination of employment by Executive for a reason
other than Constructive Termination.
2. Position and Duties. Executive shall continue to be an at-will
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employee of the Company employed in his/her current position at his/her then
current salary rate. Executive shall also be entitled to continue to participate
in and to receive benefits on the same basis as other executive or senior staff
members under any of the Company's employee benefit plans as in effect from time
to time. In addition, Executive shall be entitled to the benefits afforded to
other employees similarly situated under the Company's vacation, holiday and
business expense reimbursement policies. Executive
agrees to devote his/her full business time, energy and skill to his/her duties
at the Company. These duties shall include, but not be limited to, any duties
consistent with Executive's position which may be assigned to Executive from
time to time.
3. Option and Restricted Stock Vesting Upon Change of Control
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3.1. All options or restricted stock granted by the Company to the
Executive and held by the Executive shall, immediately prior to the
effectiveness of the Change of Control, become vested and exercisable (and no
longer subject to repurchase by the Company) as to an additional number of
shares or options equal to the number of shares or options as to which would
have become vested and exercisable (and no longer subject to repurchase by the
Company) on the date twelve months after the effectiveness of the Change of
Control.
4. Termination Upon Change of Control
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4.1. In the event of Executive's Termination Upon Change of Control,
Executive shall be entitled to the following severance benefits:
4.1.1. Executive shall be entitled to receive all salary, accrued
vacation earned through the date of Executive's termination and Executive's
annual incentive bonus for the year in which termination occurs, pro rated
through the date of Executive's termination, all less applicable withholding;
4.1.2. Executive shall be entitled to receive an additional eighteen
months' of Executive's base salary as in effect on the date of such termination,
plus an additional amount equal to 150% of Executive's annual incentive bonus
for the year in which the termination occurs, all less applicable withholding,
paid in a lump sum within thirty (30) days of termination of employment;
4.1.3. Executive shall be entitled to receive reimbursement for all
expenses that Executive reasonably and necessarily incurred by Executive in
connection with the business of the Company prior to Executive's termination of
employment, within ten (10) days of submission of proper expense reports by
Executive;
4.1.4. Executive and/or Executive's dependents shall be entitled to
elect continued group health plan coverage in accordance with the applicable
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA") and the Health Insurance Portability and Accountability Act of 1996
("HIPAA"). The Company will pay the full premium for continuation coverage for
Executive and/or Executive's dependents for a period of 18 months following the
date of Executive's Termination Upon Change of Control. Notwithstanding the
above, Company shall cease providing continued group health plan coverage for
Executive and/or Executive's dependents in the event that, at any juncture
during the period of continuation coverage provided for herein, Executive and/or
Executive's dependents become(s) covered under another employer's group health
plan that (i) has no preexisting condition exclusions or (ii) has a preexisting
condition exclusion that does not apply to Executive and/or Executive's
dependents or is satisfied by the creditable coverage of Executive and/or
Executive's dependents in accordance with HIPAA;
4.1.5. Executive payments received under this Section 4 shall be
entitled to receive the benefits, if any, under the Company's 401(k) Plan,
qualified deferred compensation plan, employee stock purchase plan and other
Company benefit plans to which he may be entitled pursuant to the terms of such
plans; and
4.1.6. Executive shall be entitled to receive outplacement services
and Career Counseling at the Company's expense for a period of 12 months after
the date of the Termination Upon Change of Control.
4.1.7. All options or restricted stock granted by the Company to the
Executive and held by the Executive shall become vested and exercisable (and no
longer subject to repurchase by the Company) in full, effective upon the
Executive's Termination Upon Change of Control.
5. Subsequent Acquisition
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5.1. In the event of a Subsequent Acquisition, Executive shall be entitled
to the following benefits:
5.1.1 All options or restricted stock granted by the Company to the
Executive and held by the Executive shall, immediately prior to the
effectiveness of the Subsequent Acquisition, become vested and exercisable (and
no longer subject to repurchase by the Company) in full.
6. 280G. If, due to the benefits provided under this Agreement, Executive
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is subject to any excise tax due to characterization of any amounts payable or
benefits provided hereunder as excess parachute payments pursuant to Section
4999 of the Internal Revenue Code, the Company agrees to reimburse Executive in
an amount up to $1,000,000 (one million dollars) of such excise tax; provided,
however, that, no reimbursement shall be made for any excise tax payable with
respect to the reimbursement made pursuant to this section 6. The excise tax
reimbursement made pursuant to this section 6 shall be subject to all applicable
withholding. The foregoing shall be conditioned upon Executive cooperating with
the Company in such manner as may be reasonably requested (other than reducing
amounts payable hereunder) so as to minimize the amount of such excise tax.
Unless the Company and Executive otherwise agree in writing, any determination
required under this Section 6 shall be made in writing by independent public
accountants agreed to by the Company and Executive (the "Accountants"), whose
determination shall be conclusive and binding upon Executive and the Company for
all purposes. For purposes of making the calculations required by this Section
6, the Accountants may rely on reasonable, good faith interpretations concerning
the application of Sections 280G and 4999 of the Code. The Company and
Executive shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination under this
Section 6. The Company shall bear all costs the Accountants may reasonably
incur in connection with any calculations contemplated by this Section 6.
7. Exclusive Remedy. Under any claim for breach of this Agreement or
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wrongful termination, the payments and benefits provided for in Sections 3, 4, 5
and 6 shall constitute Executive's sole and exclusive remedy for any alleged
injury or other damages arising out of the cessation of the employment
relationship between Executive and the Company in the event of Executive's
termination. Except as expressly set forth herein, Executive shall be entitled
to no other compensation, benefits, or other payments from the Company as a
result of any termination of employment with respect to which the payments
and/or benefits described in Sections 3, 4, 5 and 6 have been provided to
Executive.
8. Proprietary and Confidential Information. Executive agrees to continue
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to abide by the terms and conditions of the Company's confidentiality and/or
proprietary rights agreement between Executive and the Company.
9. Conflict of Interest. Executive agrees that for a period of one (1)
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year after termination of his/her employment with the Company, he/she will not,
directly or indirectly, solicit the services of or in any other manner persuade
employee or customers of the Company to discontinue that person's or entity's
relationship with or to the Company as an employee or customer, as the case may
be.
10. Arbitration. Any claim, dispute or controversy arising out of this
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Agreement, the interpretation, validity or enforceability of this Agreement or
the alleged breach thereof shall be submitted by the parties to binding
arbitration by the American Arbitration Association in Middlesex County in
Massachusetts; provided, however, that this arbitration provision shall not
preclude the Company from seeking injunctive relief from any court having
jurisdiction with respect to any disputes or claims relating to or arising out
of the misuse or misappropriation of the Company's trade secrets or confidential
and proprietary information. Both parties hereby waive any right to a jury
trial to resolve such claims, disputes, or controversies. All costs and
expenses of arbitration or litigation, including but not limited to attorneys
fees and other costs reasonably incurred by Executive, shall be paid by the
Company. Judgment may be entered on the award of the arbitration in any court
having jurisdiction.
11. Interpretation. Executive and the Company agree that this Change in
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Control Agreement shall be interpreted in accordance with and governed by the
laws of the State of Massachusetts.
12. Conflict in Benefits. This Agreement shall supersede all prior
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arrangements, whether written or oral, and understandings regarding the subject
matter of this Agreement and shall be the exclusive agreement for the
determination of any payments and accelerated option vesting due upon
Executive's termination of employment upon a Change of Control; provided,
however, that this Agreement is not intended to and shall
not affect, limit or terminate (i) any plans, programs, or arrangements of the
Company that are regularly made available to a significant number of employees
of the Company, (ii) any agreement or arrangement with Executive that has been
reduced to writing and which does not relate to the subject matter hereof, or
(iii) any agreements or arrangements hereafter entered into by the parties in
writing, except as otherwise expressly provided herein.
13. Release of Claims. No severance benefits shall be paid to Executive
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under this Agreement unless and until Executive shall, in consideration of the
payment of such severance benefit, execute a release of claims in a form
satisfactory to the Company; provided however that such release shall not apply
to any right of Executive to be indemnified by the Company.
14. Successors and Assigns.
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14.1. Successors of the Company. The Company will require any successor
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or assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession or assignment had
taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession transaction shall be a breach of this
Agreement and shall entitle Executive to terminate his or her employment with
the Company within three months thereafter and to receive the benefits provided
under of this Agreement in the event of Termination Upon Change of Control. As
used in this Agreement, "Company" shall mean the Company as defined above and
any successor or assign to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 14 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
14.2. Heirs of Executive. This Agreement shall inure to the benefit of
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and be enforceable by Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devises and legatees.
15. Notices. For purposes of this Agreement, notices and all other
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communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
if to the Company: Sycamore Networks, Inc.
00 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: General Counsel
and if to Executive at the address specified at the end of this Agreement.
Notice may also be given at such other address as either party may have
furnished to the other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
16. No Representations. Executive acknowledges that he/she is not relying
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and has not relied on any promise, representation or statement made by or on
behalf of the Company which is not set forth in this Agreement.
17. Validity. If any one or more of the provisions (or any part thereof) of
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this Agreement shall be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions (or any
part thereof) shall not in any way be affected or impaired thereby.
18. Modification. This Agreement may only be modified or amended by a
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supplemental written agreement signed by Executive and the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year written below.
"Company"
SYCAMORE NETWORKS, INC.
Date: By:
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Title:
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"Executive"
Print Name:
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Date:
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Executive's Signature
Address for Notice:
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