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EXHIBIT 10.9
OPTICAL MICRO-MACHINES INCORPORATED
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (this "Agreement") is made and entered
into effective as of May 26, 2000 (the "Effective Date"), by and between Xxxxxx
Xxxxx (the "Officer") and Optical Micro-Machines Incorporated, a Delaware
corporation (the "Company"). Certain capitalized terms used in this Agreement
are defined in Section 1 below.
RECITALS
A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other Change of Control. The
Board of Directors of the Company (the "Board") recognizes that such
consideration can be a distraction to the Officer and can cause the Officer to
consider alternative employment opportunities.
B. The Board believes that it is in the best interests of the Company
and its shareholders to provide the Officer 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 Officer with 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 Officer with certain
benefits upon the Officer's termination of employment following a Change of
Control.
AGREEMENT
In consideration of the mutual covenants herein contained and the
continued employment of Officer by the Company, the parties agree as follows:
1. Definition of Terms. The following capitalized terms referred to in
this Agreement shall have the following meanings:
(a) Cause. "Cause" shall mean (A) willful and material
misconduct, including willful and material failure to perform the Officer's
duties as an officer or employee of the Company or a material breach of this
Agreement, any stock option or stock purchase agreement between the Officer and
the Company or the Employment, Confidential Information, Invention Assignment
and Arbitration Agreement between the Officer and the Company, (B) any act of
personal dishonesty taken by the Officer in connection with his responsibilities
as an officer or employee and intended to result in his substantial personal
enrichment, (C) gross negligence or breach of fiduciary duty, (D) the commission
of an act which constitutes unfair competition with the Company or any of its
subsidiaries, (E) conviction of a felony that is injurious to the Company, (F) a
willful act by the Officer which constitutes gross misconduct and which is
injurious to the Company (G) continued
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failure by the Employee to follow lawful instructions of the Board of Directors
of the Company consistent with Employee's duties as a executive or (v) drug or
alcohol abuse..
Change of Control. "Change of Control" shall mean
i. When any "person," as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than the Company, a subsidiary of the Company or a
Company employee benefit plan, including any trustee of such plan acting as
trustee, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting power of the
Company's then outstanding securities entitled to vote generally in the election
of directors; provided, however, that sales by the Company of its equity
securities shall not constitute a Change of Control; or
(ii) The effective date of a merger or consolidation of
the Company with any other Company, other than a merger or consolidation which
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 or the entity
that controls such surviving entity) at least fifty percent (50%) of the total
voting power represented by the voting securities of the Company, such surviving
entity or the entity that controls such surviving entity outstanding immediately
after such merger or consolidation, or the stockholders of the Company approve
an agreement for the sale or disposition by the Company of all or substantially
all the Company's assets.
(b) Disability. "Disability" shall mean that the Officer has been
unable to perform his duties under this Agreement as the result of his
incapacity due to physical or mental illness, and such inability, at least 26
weeks after its commencement, is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the Officer
or the Officer's legal representative (such agreement as to acceptability not to
be unreasonably withheld).
(c) Reduced Position. "Reduced Position" of a person shall mean,
(i) without Officer's express written consent, a significant reduction of
Officer's duties, position, compensation, or responsibilities in the Surviving
Entity following the Change of Control, unless such Reduced Position is of equal
or greater organizational level, duties, authority, compensation, and status as
the position held by such Officer immediately prior to the date of such
reduction in position; provided however, that a reduction in duties or
responsibilities solely by virtue of the Company being acquired and made part of
a larger entity (as, for example, when the Chief Financial Officer of Company
remains the principal financial officer of the Company following a Change of
Control and is not made the Chief Financial Officer of the acquiring
corporation) shall not constitute a "Reduced Position" (ii) without the
Officer's express written consent, a substantial reduction, without good
business reasons, of the facilities and perquisites (including office space and
location) available to the Officer immediately prior to such reduction; (iii) a
significant reduction in the salary of the Officer as in effect immediately
prior to such reduction; (iv) a material
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reduction in the kind or level of employee benefits to which the Officer is
entitled immediately prior to such reduction with the result that the Officer's
overall benefits package is significantly reduced; (v) without the Officer's
express written consent, the relocation of the Officer to a facility or a
location more than 50 miles from the Officer's then present location; (vi) any
purported termination of the Officer's employment with the Company or the
Subsidiary which is not effected for Disability or for Cause, or any purported
termination 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 8(a) below
(d) Surviving Entity. "Surviving Entity" shall mean the acquiring
or resulting entity following the Change of Control.
(e) Termination Date. "Termination Date" shall mean the effective
date of any notice of termination delivered by one party to the other hereunder.
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 Officer acknowledge that the
Officer's employment is and shall continue to be at-will, as defined under
applicable law. If the Officer's employment terminates for any reason, the
Officer 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 established employee benefit plans or policies
at the time of termination.
4. Termination, Relocation or Reduced Position.
(a) Termination or Reduced Position Following a Change of
Control. If within twelve (12) months after a Change of Control, (i) the
Officer's employment with the Company is terminated without Cause by the
Surviving Entity or the Company or (ii) the Officer is relegated without Cause
to a Reduced Position in the Surviving Entity or Company (each an "Acceleration
Event"), then the Officer's vesting of stock options or lapsing of the right of
repurchase by the Company or Surviving Entity shall, subject to Section 5 below,
immediately vest with respect to 100% of the total number of shares which are
unvested as of the date of the Acceleration Event and shall become fully
exercisable for the period prescribed by the terms of such options, provided,
however, that if it is determined by the Company's independent public
accountants that such acceleration would preclude accounting for the Change of
Control as a pooling of interests for financial accounting purposes, and it is a
condition to the closing of the Change of Control that the transaction be
accounted for as a pooling of interests, then the vesting and exercisability of
Officer's stock options, if any, shall not accelerate pursuant to this Section
4(a).
(b) Voluntary Resignation; Termination For Cause. If the
Officer's employment terminates by reason of the Officer's voluntary resignation
(and not in connection with a demotion to
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a Reduced Position), or if the Officer is terminated for Cause, then the Officer
shall not be entitled to acceleration of his option(s) or other benefits, except
for those (if any) as may then be established under the Company's then existing
severance and benefits plans and policies at the Termination Date.
(c) Disability; Death. If the Company terminates the Officer's
employment as a result of the Officer's Disability, or such Officer's employment
is terminated due to the death of the Officer, then the Officer shall not be
entitled to acceleration of his or her option(s) or other benefits, except for
those (if any) as may then be established under the Company's then existing
severance and benefits plans and policies at the time of such Disability or
death.
(d) Accrued Wages and Vacation; Expenses. Without regard to the
reason for termination of the Officer's employment upon a termination for any
reason: (i) the Company shall pay the Officer any unpaid base salary due for
periods prior to the Termination Date; (ii) the Company shall pay the Officer
all of the Officer's accrued and unused vacation through the Termination Date;
and (iii) following submission of proper expense reports by the Officer, the
Company shall reimburse the Officer for all expenses reasonably and necessarily
incurred by the Officer in connection with the business of the Company prior to
the Termination Date. These payments shall be made promptly upon termination and
within the period of time mandated by law.
(e) Termination on No Change of Control and for No Cause: If the
Officer's employment is terminated by the Board within the first 12 months of
employment for (i) No Cause and (ii) there is no Change of Control, then the
Officer's vesting of stock options or lapsing of the right of repurchase by the
Company or Surviving Entity shall, subject to section 5 below, immediately vest
up to 1/8th of the shares granted at time of hire. In addition, the Officer will
receive monthly severance payments from the Company for a period of 6 (six)
months.
5. Limitation on Payments. In the event that the option acceleration
provided for in this Agreement or benefits otherwise payable to the Officer (i)
constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") and (ii) but for this
Section 5, would be subject to the excise tax imposed by Section 4999 of the
Code, then the Officer's options shall either be accelerated
(a) to the full extent provided herein, or
(b) to such lesser extent as would result in no portion of such
benefit being subject to excise tax under Section 4999 of the Code, whichever of
the foregoing amounts, taking into account the applicable federal, state, and
local income taxes and the excise tax imposed by Section 4999, results in the
receipt by the Officer, on an after-tax basis, of the greatest benefit from the
acceleration of his option(s) pursuant to Section 4(a)(i), notwithstanding that
all or some portion of such benefits may be taxable under Section 4999 of the
Code. Unless the Company and the Officer otherwise agree in writing, any
determination required under this Section 5 shall be made in writing by the
Company's independent public accountants (the "Accountants"), whose
determination shall be conclusive and binding upon the Officer and the Company
for all purposes. For purposes of
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making the calculations required by this Section 5, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. The Company and the Officer shall furnish to
the Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section 5. The Company shall
bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 5.
6. Severance. If within twelve (12) months after a Change of Control,
(i) the Officer's employment with the Company is terminated without Cause by the
Surviving Entity or the Company or (ii) the Officer is relegated without Cause
to a Reduced Position in the Surviving Entity or the Company, then subject to
Section 5 above, the Officer shall receive monthly severance payments from the
Company or the Surviving Entity for a period of six (6) months following such
date of termination. Severance payments shall be equivalent to Officer's salary
and cost of benefit continuation for those periods, provided that the Officer
elects his COBRA rights upon termination. Notwithstanding the above, monthly
severance and benefit payments shall cease immediately upon the Officer's
obtaining employment with comparable or greater salary, position, perquisites,
and benefits as Officer's position with the Company immediately prior to such
termination.
7. Prior Agreements. This Agreement represents the entire agreement and
understanding between the parties hereto with respect to the acceleration of
vesting of capital stock, and all prior agreements and understandings, written
and oral, with respect to the matters set forth in this Agreement are hereby
superseded and replaced in their entirety with this Agreement.
8. 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 becomes bound by the terms of this
Agreement by operation of law.
(b) Officer's Successors. The terms of this Agreement and all
rights of the Officer hereunder shall inure to the benefit of, and be
enforceable by, the Officer's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees.
9. 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 requested and postage
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prepaid. In the case of the Officer, mailed notices shall be addressed to him at
the home address which 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 Officer 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 9. 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, and shall specify the Termination
Date (which shall be not more than 30 days after the giving of such notice). The
failure by the Officer to include in the notice any fact or circumstance which
contributes to a showing of Involuntary Termination shall not waive any right of
the Officer hereunder or preclude the Officer from asserting such fact or
circumstance in enforcing his rights hereunder.
10. Arbitration.
(a) At the option of either party, 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, may be settled by binding arbitration to be held in San Diego County,
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 arbitration. Judgment may be entered on the
arbitrator's decision in any court having jurisdiction.
(b) The arbitrator(s) shall apply California law to the merits of
any dispute or claim, without reference to rules of conflicts of law. The
arbitration proceedings shall be governed by federal arbitration law and by the
Rules, without reference to state arbitration law. Officer 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) The Company and Officer shall each pay one-half of the costs
and expenses of such arbitration, and each shall separately pay its counsel fees
and expenses.
(d) Officer understands that nothing in this Section 10 modifies
Officer's at-will employment status. Either Officer or the Company can terminate
the employment relationship at any time, with or without cause.
(e) OFFICER HAS READ AND UNDERSTANDS SECTION 10, WHICH DISCUSSES
ARBITRATION. OFFICER UNDERSTANDS THAT ELECTING TO SUBMIT ANY CLAIMS ARISING OUT
OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION,
VALIDITY, CONSTRUCTION,
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PERFORMANCE, BREACH, OR TERMINATION THEREOF TO BINDING ARBITRATION, CONSTITUTES
A WAIVER OF OFFICER'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 FOR WRONGFUL DISCHARGE OF
EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; 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.
11. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Officer 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 Officer may receive from any
other source.
(b) Waiver. No provision of this Agreement shall be modified,
waived, or discharged unless the modification, waiver, or discharge is agreed to
in writing and signed by the Officer and by an authorized officer of the Company
(other than the Officer). 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) Whole Agreement. No agreements, representations, or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof.
(d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the internal substantive laws
of the State of California, without regard to such State's conflicts of law
rules.
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(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) No Assignment of Benefits. The rights of any person to
payments or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment, or
other creditor's process, and any action in violation of this subsection (f)
shall be void.
(g) Employment Taxes. All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.
(h) Assignment by Company. The Company may assign its rights and
obligations under this Agreement to an affiliate, and an affiliate may assign
its rights and obligations under this Agreement to another affiliate of the
Company or to the Company; provided, however, that no assignment shall be made
if the net worth of the assignee is less than the net worth of the Company at
the time of assignment. In the case of any such assignment, the term "Company"
when used in a Section of this Agreement shall mean the corporation that
actually employs the Officer.
(i) 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.
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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: OPTICAL MICRO-MACHINES
INCORPORATED
By: /s/ Hus Tigli
Title: President & CEO
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OFFICER: By: /s/ Xxxxxx Xxxxx
Name:
Address:
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