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EXHIBIT 10.17
EMPLOYMENT AGREEMENT
This
Agreement, dated October 1, 2007 is between JDS Uniphase
Corporation (the "Company") and Kevin J. Kennedy
("Employee").
PREMISES
WHEREFORE,
1.
Employee
serves as President and Chief Executive Officer of Company;
and
2.
Employee
and Company are parties to an Employment Agreement dated August 20,
2003 (the “2003 Agreement”); and
3.
Company
and Employee wish to revise and memorialize the terms of
Employee’s employment relationship in a new agreement
intended to supersede all other written and oral representations
regarding Employee’s employment with Company;
AGREEMENT
NOW,
THEREFORE, based on the foregoing premises and in
consideration of the commitments set forth below, Employee and
Company agree as follows:
1.
Definitions .
As
used herein, the following terms are defined as
follows:
a.
“Cause”
means:
(i)
willful
malfeasance by Employee, which has a material adverse effect
on the Company;
(ii)
substantial
and continuing willful refusal by Employee to perform duties
ordinarily performed by an employee in the same position and
having similar duties as Employee;
(iii)
conviction
of Employee for a felony or misdemeanor which would have a
material adverse effect on the Company’s goodwill if
Employee is retained as an employee of the
Company;
(iv)
willful
failure by Employee to comply with material policies and procedures
of the Company including but not limited to the JDS Uniphase
Corporation Code of Business Conduct and Policy Regarding Inside
Information and Securities Transactions.
b.
“Good
Reason” means the occurrence of any of the events or
conditions described in subsections (i) through (iv) below,
provided however ,
that with respect to subsections (i) through (iii) below only,
Employee provides the Company with thirty (30) days notice of
termination for “Good Reason” pursuant to the
provisions of Section 7 below, during which time the Company shall
have an opportunity to cure the occurrence or condition claimed to
constitute “Good Reason”; and
provided further ,
that such notice of resignation is submitted by Employee no later
than sixty (60) days after the occurrence of the event or condition
that Employee claims as the basis for termination for “Good
Reason”:
(i)
a
material reduction in Employee’s base salary or target
bonus without Employee’s prior written consent;
or
(ii)
a
material adverse change in Employee’s position, duties
or responsibilities without Employee’s prior written
consent; or
(iii)
an
actual change in Employee’s principal work location by more
than 50 kilometers without Employee’s prior written consent;
or
(iv)
failure
by the Company to obtain from any successor company the assumption
of the Company’s obligations under this
Agreement.
c.
"Change
of Control" means: (i) a change in the ownership of the
corporation, (ii) a change in effective control of the corporation,
or (iii) a change in the ownership of a substantial portion of the
assets of the corporation, as those terms are used and defined in
Section 409A(a)(2)(A)(v) of the Internal Revenue Code of 1986, as
amended (the “Code”), and the regulations thereunder,
and where the word “corporation” used above and in such
provisions is taken to refer to the Company. This provision is
intended to incorporate the definition of those terms in such
section and such regulations, and shall be interpreted
accordingly .
d.
“Disabled”
shall mean “disabled” as defined in section
409A(a)(2)(C) of the Code and any regulations thereunder, and
“Disability has a corresponding meaning.
e.
“Effective
Date” means:
(i)
in
the event the Company terminates the employment of Employee,
the date designated by the Company as the last day of
Employee’s employment;
(ii)
in
the event Employee resigns his or her employment with the
Company, the date designated by the Company as the effective
date of resignation;
(iii)
in
the event Employee dies, the date of death;
(iv)
in
the event Employee becomes Disabled, the date designated by
the Company as the last day of Employee’s
employment.
2.
Position, Duties, Responsibilities
a.
Position :
Employee is and will continue to be employed by Company to render
services to the Company in the position of President and Chief
Executive Officer, subject to the provisions of Section 3 below.
Employee shall perform such duties as are customarily required by
such position and such other responsibilities as may be assigned by
the Company’s Board of Directors from time to time.
Additionally, Employee shall continue to serve as a member of the
Company’s Board of Directors during the Term of this
Agreement.
b.
Other Activities :
Except upon the prior written consent of the Company, Employee will
not (i) accept any other employment, or (ii) engage,
directly or indirectly, in any other business activity (whether or
not pursued for pecuniary advantage) that is or may be in conflict
with, or that might place Employee in a conflicting position to
that of, the Company.
In
consideration of the services to be rendered under this
Agreement, and subject to the approval of the Compensation
Committee of the Company’s Board of
Directors:
a.
The
Company shall pay Employee a base annual salary of $800,000,
retroactive to September 1, 2007 and payable in accordance with the
Company’s standard payroll practices.
b.
Employee
shall be entitled to participate in the Company’s established
incentive plan(s) for senior executives with a target bonus of 100%
of Employee’s base salary and a maximum bonus of up to 125%
of Employee’s base salary. Notwithstanding the preceding
sentence, employee also shall be entitled to participate in an
individual performance-based bonus program (the “CEO
Incentive Plan”) with performance targets as shall be
established by the Company’s Board of Directors and
reasonably agreed upon by Employee (the “CEO Bonus
Targets”). Subject to Employee’s achievement of such
minimum threshold performance targets as shall be established
within the CEO Performance Targets, Employee shall be entitled to a
minimum bonus of 50% of Employee’s base salary, and upon
exceeding the CEO Performance Targets Employee shall be entitled to
a bonus of up to 125% of base salary, the actual bonus to be
determined by the Board of Directors based upon results achieved
against such CEO Performance Targets. Any bonus paid to Employee
under the Company’s established incentive plan(s) for senior
executives referred to in the first sentence of this Section 3.b.
shall be a credit against and shall be deducted from any obligation
of the Company to Employee under the CEO Incentive Plan. In
addition, Employee shall be eligible to participate in the
Company’s benefit plans and to receive perquisites of
employment as established by Company for all regular, full-time
employees in the United States, as may be amended from time to time
in Company’s sole discretion;
c.
No
later than thirty (30) days from the date of this Agreement,
Employee shall be awarded a grant of 175,000 Deferred Stock
Units under the Company’s then effective equity
incentive plan(s) and award agreement as such plans and
agreements may be approved from time to time by the
Company’s shareholders and Board of Directors (the
“Deferred Stock Units Award”). The Deferred Stock
Units Award be fully vested upon the date of grant and shall
be settled in shares but such shares shall be delivered to
Employee and transferred in the records of the Company only
upon the sooner to occur of: (i) the date upon which
Employee’s service to the Company terminates for any
reason; (ii) upon a Change of Control, or (iii) on the second
anniversary of the date of the grant of the Deferred Stock
Units Award;
d.
No
later than thirty (30) days from the date of this Agreement,
Employee shall be awarded a grant of 200,000 Restricted Stock
Units (“RSUs”) under the Company’s then
effective equity incentive plan(s) as such plans may be
approved from time to time by the Company’s shareholders
and Board of Directors (the “New Contract RSU
Award”). The New Contract RSU Award shall vest in equal
installments on each of the first and second anniversaries of
the date of grant.
e.
No
later than the last business day of the first fiscal quarter of the
Company’s 2009 fiscal year, Employee shall be awarded a grant
of a minimum of 375,000 RSUs under the Company’s then
effective equity incentive plan(s) as such plans may be approved
from time to time by the Company’s shareholders and Board of
Directors (the “Minimum RSU Award”). The Minimum RSU
Award shall be subject to the following conditions of
vesting:
(i)
60%
of the Minimum RSU Award (the “Minimum RSU Award Time-Based
Units”) shall vest in three equal annual installments on the
first, second and third anniversaries of the grant date;
and
(ii)
40%
of the Minimum RSU Award (the “Minimum RSU Award
Performance Units”) shall vest at the rate of
1/4
th of
the Minimum RSU Award Performance Units per half fiscal year (for
clarity, 37,500 RSUs per half fiscal year), which such vesting
shall occur upon the date of the Company’s public release on
Form 8-K of its fiscal results every other fiscal quarter,
commencing with release of quarterly financial results for the
second fiscal quarter of the Company’s 2009 fiscal year, and
subject to the achievement of performance criteria (the
“Minimum RSU Award Performance Criteria”) to be
established by the Board of Directors in its sole discretion from
time to time.
f.
As
soon as reasonably practicable following the execution of this
Agreement, Company shall procure at Company expense a policy
of insurance which at a minimum shall provide that in the
event Employee’s employment is terminated during the
term of this Agreement as the result of the Death or
Disability of Employee, a benefit equivalent to three
years’ salary, at Employee’s annual salary in
effect on the Effective Date, plus three years’ bonus
(calculated based upon Employee’s “at
target” bonus under the CEO Incentive Plan), shall be
paid to Employee and/or Employee’s estate or heirs as
may be designated by Employee in Employee’s sole
discretion from time to time. For clarity, such policy of
insurance shall be in addition to, and not in place of, any
policies of insurance as may be made available by the Company
to Company employees as part of the Company’s standard
package of employee benefits.
Nothing
in this Section 3 shall be interpreted as precluding the Board
of Directors, in its sole discretion, subject only to
compliance with applicable law and exchange listing
requirements, from awarding Employee additional equity
incentives, cash bonuses and/or other
compensation.
The
term (the “Term”) of this Agreement shall commence
on September 1, 2007 and shall expire on August 31, 2009
unless sooner terminated as provided herein (the date of
termination of this Agreement, the “Expiration
Date”). Notwithstanding the foregoing, on the second
anniversary of the date of this Agreement, and on the
anniversary date of each one year period thereafter (a
“Renewal Date”) the Term will be automatically
extended for an additional one-year period unless, not later
than 60 days prior to such a Renewal Date, the Company
provides written notice to Employee that it has elected not to
extend the Term of this Agreement.
a.
Termination Benefits Under Certain Circumstances
.
If Employee’s employment is terminated, prior to the
expiration of the Term, by Employee for Good Reason, or by the
Company for reasons other than for Cause, the Death or the
Disability of the Employee, and conditioned upon Employee executing
and delivering to the Company a release of claims, reasonably
acceptable to the Company, Employee will be entitled as of the
effective date of such release of claims, to the following benefits
in full satisfaction of any statutory, contractual or common law
entitlements which Employee has or could have as a result of the
termination of the Term:
(i)
three
years’ salary, at Employee’s annual salary in effect on
the Effective Date, plus three years’ bonus (calculated based
upon Employee’s “at target” bonus under the CEO
Incentive Plan). All amounts paid to Employee pursuant to the terms
of this Section 5.a.(i) shall be reduced by any amounts to which
Employee is otherwise entitled under any statutory or Company long
or short term disability plan and any required withholdings or
deductions;
(ii)
Employee’s
right, title and entitlement to any unvested options, restricted
stock units, or any other securities or similar incentives which
have been granted or issued to Employee as of the Effective Date,
which would have otherwise vested in the three year period
immediately following the Effective Date, shall immediately vest,
free from any restrictions other than those imposed by applicable
state and federal securities laws, provided that all such
securities shall continue to be exercisable (if applicable) for one
(1) year from the Effective Date or until the term such options,
restricted stock units or other securities would have otherwise
expired (if applicable), whichever is earlier; and
(iii)
should
Employee elect COBRA benefits continuation following termination of
employment the Company shall pay the full cost to Employee for the
full 18 month COBRA period and the Company shall thereafter provide
Employee, in one lump sum, an amount equal to the cost of
reasonably comparable health insurance benefits for Employee and
Employee dependents for a period of six (6) months.
All
amounts payable pursuant to this Section 5.a.(iii) shall be
grossed- up
to the extent such amounts are determined to be a taxa
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