Exhibit 10.14
SEVERANCE COMPENSATION AGREEMENT
dated as of May 1, 1996, between
NEWPORT CORPORATION, a Nevada corporation (the
"Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Executive").
The Company's Board of Directors has determined that it is appropriate to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including the Executive, to their assigned duties without
distraction in potentially disturbing circumstances arising from the possibility
of a change in control of the Company.
This Agreement sets forth the severance compensation which the Company
agrees it will pay to the Executive if the Executive's employment with the
Company terminates under one of the circumstances described herein following a
Change in Control of the Company (as defined in Section 2).
1. Term. The term of this Agreement shall commence on the date hereof and
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shall end on the later of (i) the second anniversary of the date of this
Agreement or (ii) two (2) years following the date on which notice of non-
renewal or termination of this Agreement is given by either the Company or
Executive to the other. Thus, this Agreement shall be renewable automatically on
a daily basis so that the outstanding term is always two (2) years following any
effective notice of non-renewal or of termination given by the Company or
Executive.
2. Change in Control. Except as set forth in Section 4 below, no
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compensation shall be payable under this Agreement unless and until (a) there
has been a Change in Control of the Company while the Executive is still an
employee of the Company and (b) the Executive's employment by the Company
terminates in the circumstances specified in Section 3. For purposes of this
Agreement, a "Change in Control" of the Company shall be deemed to have occurred
if (i) there shall be consummated (x) any consolidation or merger of the Company
in which the Company is not the continuing or surviving corporation or pursuant
to which shares of the Company's Common Stock would be converted into cash,
securities or other property, other than a merger of the Company in which the
holders of the Company's Common Stock immediately prior to the merger have the
same proportionate ownership of at least 80% of common stock of the surviving
corporation immediately after the merger, or (y) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Company, or (ii) the stockholders of
the Company approve any plan or proposal for the liquidation or dissolution of
the Company, or (iii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), shall become the beneficial owner (within the meaning of Rule 13d-3 under
the Exchange Act) of 20% or more of the Company's outstanding Common Stock
(other than any such person who is the record owner of at least 15% of the
Company's outstanding Common Stock on the date hereof, other than nominees), or
(iv) during any period of two consecutive years during the term of this
Agreement, individuals who at the beginning of the two year period constituted
the entire Board of Directors do not for any reason constitute a majority
thereof unless the election, or the nomination for election by the Company's
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period, or (v) an event constituting a "Business Combination" under the
Company's Articles of Incorporation as amended to date.
3. Termination Following Change in Control. (a) If a Change in Control of
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the Company shall have occurred while the Executive is still an employee of the
Company, the Executive shall be entitled to the compensation provided in Section
5 upon the subsequent termination of the Executive's employment with the Company
by the Executive or by the Company unless such termination is as a result of (i)
the Executive's death; (ii) the Executive's Disability (as defined in Section
(3)(b) below); (iii) the Executive's Retirement (as defined in Section 3(c)
below); (iv) the Executive's termination by the Company for Cause
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(as defined in Section 3(d) below); or (v) the Executive's decision to terminate
employment other than for Good Reason (as defined in Section 3(e) below).
(b) Death or Disability. If, as a result of the Executive's incapacity
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due to physical or mental illness, the Executive is absent from his duties with
the Company on a full-time basis for six months and does not return to the full-
time performance of duties within 30 days after written notice of termination,
the Company may terminate this Agreement immediately for "Disability" without
further notice. However, in addition to any applicable insurance payable as
Executive has designated, in the event of death of Executive during the term
hereof, the Company shall pay Executive's estate all salary due as of his death,
together with a final payment equal to 12 months' of salary at the rate in
effect at the time of his death.
(c) Retirement. The term "Retirement" as used in this Agreement shall
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mean termination by the Company or the Executive of the Executive's employment
based on the Executive's having reached age 65 or such other age as shall have
been fixed in any arrangement established with the Executive's consent with
respect to the Executive.
(d) Cause. The Company may terminate the Executive's employment for
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Cause. For purposes of this Agreement only, the Executive shall be deemed
terminated for "cause" only if Executive has engaged in fraud, misappropriation
or embezzlement on the part of the Executive. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the entire
membership of the Company's Board of Directors at a meeting of the Board called
and held for that purpose (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's counsel, to be
heard before the Board), finding that in the good faith opinion of the Board the
Executive was guilty of conduct set forth in the second sentence of this Section
3(d) and specifying the particulars thereof in detail.
(e) Good Reason. The Executive may terminate the Executive's employment
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for Good Reason at any time during the term of this Agreement. For purposes of
this Agreement "Good Reason" shall mean any of the following (without the
Executive's express written consent):
(i) the Company has materially changed the Executive's position,
duties, responsibilities, status, or offices as in effect immediately prior
to a Change in Control of the Company, or removed the Executive from or any
failure to reelect the Executive to any of such positions, except in
connection with the termination of his employment for Disability,
Retirement or Cause or as a result of the Executive's death;
(ii) a reduction by the Company in the Executive's base salary as in
effect on the date hereof or as the same may be increased from time to time
during the term of this Agreement or the Company's failure to increase
(within 12 months of the Executive's last increase in base salary) the
Executive's base salary after a Change in Control of the Company in an
amount which at least equals, on a percentage basis, the average percentage
increase in base salary for all officers of the Company effected in the
preceding 12 months;
(iii) any failure by the Company to continue in effect any benefit
plan or arrangement (including, without limitation, the Company's life
insurance, accident, disability and health insurance plans, 401(k) and
bonus plans, stock options, monthly automobile allowance, and all other
similar plans which are from time to time made generally available to
senior executives of the Company) and in which the Executive is
participating at the time of a Change in Control of the Company (or any
other plan providing the Executive with substantially similar benefits)
(hereinafter referred to as "Benefit Plans"), or the taking of any action
by the Company which would adversely affect the Executive's participation
in or materially reduce the Executive's
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benefits under any such Benefit Plan or deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time of a Change in
Control of the Company;
(iv) any failure by the Company to continue in effect any incentive
plan or arrangement (including, without limitation, the Company's plans
enumerated in subparagraph (iii) above and similar incentive compensation
benefits) in which the Executive is participating at the time of a Change
in Control of the Company (or any other plans or arrangements providing him
with substantially similar benefits) (hereinafter referred to as "Incentive
Plans") or the taking of any action by the Company which would adversely
affect the Executive's participation in any such Incentive Plan or reduce
the Executive's potential benefits under any such Incentive Plan, expressed
as a percentage of his base salary, by more than 10 percentage points in
any fiscal year as compared to the immediately preceding fiscal year.
(v) any failure by the Company to continue in effect any plan or
arrangement to receive securities of the Company (including, without
limitation, the Company's stock option and purchase plans and any other
plan or arrangement to receive and exercise stock options, stock
appreciation rights, restricted stock or grants thereof) in which the
Executive is participating at the time of a Change in Control of the
Company (or plans or arrangements providing him with substantially similar
benefits) hereinafter referred to as "Securities Plans") or the taking of
any action by the Company which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under any
such Securities Plan;
(vi) a relocation of the Company's principal executive offices to a
location outside of Orange County, California, or the Executive's
relocation to any place other than the location at which the Executive
performed the Executive's duties prior to a Change in Control of the
Company, except for required travel by the Executive on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations at the time of a Change of Control of the
Company;
(vii) any failure by the Company to provide the Executive with the
number of paid vacation days to which the Executive is entitled at the time
of a Change of Control of the Company;
(viii) any material breach by the Company of any provision of this
Agreement;
(ix) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company; or
(x) any purported termination of the Executive's employment which
is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(f), and for purposes of this Agreement, no such
purported termination shall be effective.
(f) Notice of Termination. Any termination by the Company pursuant to
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Section 3(b), 3(c) or 3(d) shall be communicated by a Notice of Termination.
For purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provisions so indicated. For purposes of this Agreement,
no such purported termination by the Company shall be effective without such
Notice of Termination.
(g) Date of Termination. "Date of Termination" shall mean (i) if this
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Agreement is terminated by the Company for Disability, 30 days after Notice of
Termination is given to the Executive (provided that the Executive shall not
have returned to the performance of the Executive's duties on a full-time basis
during such 30-day period) or (ii) if the Executive's employment is terminated
by the Company for any other reason, the date on which a Notice of Termination
is given; provided that if within 30 days after any
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Notice of Termination is given to the Executive by the Company the Executive
notifies the Company that a dispute exists concerning the termination, the Date
of Termination shall be the date the dispute is finally determined, whether by
mutual agreement by the parties or upon final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
4. Certain Terminations not Following a Change in Control. Regardless of
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the occurrence or non-occurrence of a Change in Control, Executive shall be
entitled to one-half the compensation provided in Section 5(a) and the
compensation provided in Section 5(b) if the the Executive's employment has been
terminated by the company for reasons other than Cause.
5. Severance Compensation upon Termination of Employment. If the Company
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shall terminate the Executive's employment other than pursuant to Section 3(b),
3(c) or 3(d) or if the Executive shall terminate his employment for Good Reason
in all such cases only in the event of a Change in Control then:
(a) The Company shall pay to the Executive as severance pay a lump sum, in
cash, in full on the fifth day following the Date of Termination an amount equal
to the Executive's highest biweekly base salary then in effect during the 12-
month period immediately preceding the Date of Termination multiplied by 52.
(b) A lump sum payment of the Executive's incentive compensation bonus
paid under the Company's Bonus Plan then in effect during the year of the Date
of Termination assuming one hundred percent (100%) satisfaction of all
performance goals established under such Bonus Plan for the Executive, subject
to United States income taxes, provided, however, that if the lump sum severance
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payment under this Section 5 either alone or together with other payments which
the Executive has the right to receive from the Company, would constitute a
"parachute payment" (as defined in Section 280G of the Internal Revenue Code of
1986, as amended (the "Code")), such lump sum severance payment shall be
increased to an amount as will result in the receipt by Executive of the full
lump sum severance payment under this Section 4 net of any excise tax imposed by
Section 4999 of the Code. The determination of any increase in the lump sum
severance payment under this Section 5 pursuant to the foregoing provision shall
be made by a nationally recognized public accounting firm chosen by the Company
in good faith, and such determination shall be conclusive and binding on the
Company and the Executive.
(c) The Company shall pay in cash to the Executive an amount equal to the
difference between the exercise price and the fair market price (based upon the
average NASDAQ trading price of the Company's stock for the twenty business days
preceding the Change in Control) of those shares of capital stock of the Company
subject to all stock options held by the Executive as of the Date of
Termination, and the Company shall withhold all appropriate taxes related to
such payment.
(d) All restrictions on restricted stock held by the Executive as of the
Date of Termination shall be removed.
(e) The Company shall continue for a period of two (2) years from the Date
of Termination to provide the following benefits to the Executive on the same
terms as provided to the Executive on the Date of Termination:
(i) Participation in the Company's medical, dental and vision plans;
and
(ii) Long-term disability insurance.
Provided however, that any benefits payable under this subsection 5(e) shall
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terminate at such time as the Executive becomes eligible for similar benefits
from any subsequent employer.
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6. No Obligation to Mitigate Damages; No Effect on Other Contractual
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Rights. (a) The Executive shall not be required to mitigate damages or the
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amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor, except as set forth in subsection 5(e), shall the
amount of any payment provided for under this Agreement be reduced by any
compensation earned by the Executive as the result of employment by another
employer after the Date of Termination, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, employment agreement or other contract, plan or arrangement.
7. Successor to the Company. (a) The Company will require any successor
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or assignee (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Executive,
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. Any
failure of the Company to obtain such agreement prior to the effectiveness of
any such succession or assignment shall be a material breach of this Agreement
and shall entitle the Executive to terminate the Executive's employment for Good
Reason. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor or assignee to its business and/or assets
as aforesaid which executes and delivers the agreement provided for in this
Section 7 or which otherwise becomes bound by all of the terms and provisions of
this Agreement by operation of law. If at any time during the term of this
Agreement the Executive is employed by any corporation a majority of the voting
securities of which is then owned by the Company, "Company" as used in Sections
3, 5, 13 and 14 hereof shall in addition include such employer. In such event,
the Company agrees that it shall pay or shall cause such employer to pay any
amounts owed to the Executive pursuant to Section 5 hereof.
(b) This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to him hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive's devisee, legatee, or other designee or, if
there be no such designee, to the Executive's estate.
8. Release of Claims. The obligation of this Agreement shall constitute
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the only obligations of the Company arising from the Company's termination of
Executive's employment for any reason. Upon the Company's tender of payment
hereunder the Company shall have no obligation to Executive by reason of the
terms of employment other than those set forth herein, and the Executive agrees
that receipt of such payment shall constitute a full and final settlement and
release of all claims or rights against the Company, and Executive shall execute
all appropriate agreements reflecting such settlement and release.
9. Notice. 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:
Chief Executive Officer
Newport Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Executive:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or 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.
10. Miscellaneous. No provisions of this Agreement may be modified,
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waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
11. Validity. The invalidity or unenforceability of any provisions of this
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Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
12. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
13. Arbitration, Legal Fees and Expenses. In the event of any controversy,
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claim or dispute between the parties hereto arising out of or relating to this
Agreement, the matter shall be determined by arbitration, which shall take place
in Orange County, California, under the rules of the American Arbitration
Association; and a judgment upon such award may be entered in any court having
jurisdiction thereof. Any decision or award of such arbitrator shall be final
and binding upon the parties and shall not be appealable. The parties hereby
consent to the jurisdiction of such arbitrator and of any court having
jurisdiction to enter judgment upon and enforce any action taken by such
arbitrator. The Company shall pay all legal fees and expenses which the
Executive may incur as a result of the Company's contesting the validity,
enforceability or the Executive's interpretation of, or determinations under,
this Agreement.
14. Confidentiality. The Executive shall retain in confidence any and all
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confidential information known to the Executive concerning the Company and its
business so long as such information is not otherwise publicly disclosed.
15 Entire Agreement. This Agreement contains all of the terms agreed upon
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between the Executive and the Company with respect to the subject matter hereof
and replaces and supersedes all prior Severance Compensation Agreements between
the Executive and the Company; and the Executive and the Company agree that no
term, provision or condition of this Agreement shall be held to be altered,
amended, changed or waived in any respect except by subsequent written agreement
of the Executive and the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
"COMPANY" "EXECUTIVE"
NEWPORT CORPORATION
By:___________________ By:______________________
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman of the Board President
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