Exhibit 10.51
December 6, 2007
Michael
W. Schradle
c/o Photon Dynamics, Inc.
5970 Optical Court
San Jose, CA 95138
Re: Separation and Release
Agreement
Dear
Mike:
You and the Company have decided that
it is in the best interests of both parties that you transition
from the Company. This letter agreement (this
“Agreement”) between you and Photon Dynamics
Inc. (the “Company”) sets forth the terms of
such separation in order to provide for an orderly transition
process, permit completion of the pending restatement, give the
Company time to identify a successor, and provide appropriate
incentives to you.
1. Separation. Your separation
from the Company will be effective on the earlier of
(a) March 31, 2008; (b) the commencement of service
by your successor as Chief Financial Officer; or (c) one business
day following the filing with the SEC of the Company’s fiscal
2007 Form 10-K (as applicable, the “Separation
Date”) . If the Separation Date occurs prior to
March 31, 2008, you will at the Company’s request
provide up to an additional ten business days of consulting
services (at a per diem rate equivalent to your current base
salary) to assist in the transition.
2. Separation
Payments.
(a) Upon effectiveness of this
Agreement and the expiration of the seven-day revocation period set
forth in Section 15 hereof, the Company will pay you
$50,000.
(b) If you have continued to serve as
the Company’s Chief Financial Officer through the Separation
Date or if you are terminated by the Company without Cause (as
defined in the Change of Control Addendum to your letter agreement
dated October 6, 2006 between you and the Company (the
“Offer Letter”)) prior to the Separation Date,
in either case subject to signing, on or within 10 days
following the Separation Date, and letting become effective the
Supplemental Release set forth on Exhibit A hereto (the
“Supplemental Release” ), you will receive the
following severance payments in consideration for such Supplemental
Release: (i) $75,000 which shall be paid in a lamp sum within
10 days following effectiveness of the Supplemental Release,
and (ii) subject to your continued compliance with the terms
of this Agreement, payments equal to your regular bi-weekly base
salary (at the rate in effect as of the dale hereof), payable on
the Company’s regular paydays, through the later of
(x) December 31,
2008 or
(y) nine months following the Separation Date (such applicable
period, the “Severance Period” ). During the
Severance Period (or, if earlier, until you become covered under
another employer’s group medical plan), should you elect to
continue your medical coverage under COBRA, the Company will pay
the premium for your continued health benefits coverage under COBRA
on the same basis as immediately prior to termination of
employment. If the Company terminates your employment for Cause, or
you resign, prior to the Separation Date, you will not he entitled
to receive any payments under this clause (b).
3. Stock Options. Your
Continuous Service (as defined under the Company’s 2005
Equity Incentive Plan) will end on the Separation Date, and
therefore all stock options you received from the Company will
cease vesting on the Separation Date and you will have three months
from the Separation Date to exercise your vested stock options as
set forth in the governing stock option agreement.
4. Accrued Salary And
Vacation. Upon termination of your employment, the Company will
pay you all accrued and unpaid salary, and all accrued and unused
paid time off, earned through the Separation Date, less required
payroll deductions and withholdings, as required by applicable law.
You are entitled to these payments regardless of whether you sign
this Agreement.
5. Other Compensation Or
Benefits. You acknowledge that, except as expressly provided in
this Agreement, you will not receive from the Company any
additional compensation, severance or benefits on or after the
Separation Date, with the sole exception of any benefit the right
to which has vested as of the Separation Date under the express
terms of a Company benefit plan document (other than any severance
plan or policy, regardless of its terms). Nothing herein changes
your existing Indemnification Agreement with the Company or any
coverage provided under the Company’s Directors and Officers
Insurance Policy in accordance with the terms of such policy in
effect from time to time.
6. Expense
Reimbursements. You agree that, within fifteen (15) days
after the Separation Date, you will submit your final documented
expense reimbursement statement reflecting all business expenses
you incurred through the Separation Date, if any, for which you
seek reimbursement with respect to your Company employment. The
Company will reimburse you for these expenses pursuant to its
regular business practices.
7. Information
Disclosure. During your continued employment with the Company,
you will continue to use good faith reasonable efforts to carry out
your responsibilities. Nothing in this Agreement will be construed
to require you to certify financial statements unless you believe
in good faith that the certification is correct. As of the date
hereof, you have raised all known concerns that you consider
appropriate with the Chief Executive Officer, the Company’s
Audit Committee and the Company’s independent auditors, and
during your employment, you will continue to have full access
2
to all
of those channels in the continuing exercise of your fiduciary
responsibilities as the Company’s Chief Financial
Officer.
8. Cooperation. You will
cooperate with the Company in responding to the reasonable requests
of the Company in connection with any and all existing or future
litigation, arbitrations, mediations or investigations initiated by
or against the Company, or its current or former affiliates,
agents, officers, directors or employees, of any nature, including
(without limitation) administrative, civil or criminal, in which
the Company reasonably deems your cooperation necessary or
desirable. For example, upon request by the Company or its counsel,
you will promptly and fully respond to all inquiries, will promptly
provide all information or documents relevant to the subject matter
of the inquiry, and will testify truthfully and with complete
candor in connection with any regulatory or administrative action,
or any lawsuit, including at a deposition, hearing, arbitration or
trial. The Company agrees to reimburse you for all reasonable
out-of- pocket expenses you incur in connection with the
performance of your obligations under this paragraph; provided,
however, that such expenses shall not include attorneys fees,
foregone wages or payment for services provided under this
paragraph, with the exception that you will be reimbursed on a per
diem basis, calculated at your last salary rate with the Company,
for time required to be expended after the Severance Period
pursuant to this Section 8.
9. Return Of Company
Property. You agree that not later than the Separation Date,
you will return to the Company, all documents of the Company and
its affiliated entities (collectively “Company
Entities” ), and all copies thereof, and other Company
Entities property in your possession or control, including, but not
limited to: Company Entities files, notes, memoranda,
correspondence, agreements, draft documents, notebooks, logs,
drawings, records, plans, proposals, reports, forecasts, financial
information, sales and marketing information, research and
development information, personnel information, specifications,
computer-recorded information, tangible property and equipment,
credit cards, entry cards, identification badges and keys; and any
materials of any kind that contain or embody any proprietary or
confidential information of the Company Entities (and all
reproductions thereof in whole or in part),
10. Proprietary Information
Obligations. You acknowledge your continuing obligations under
you
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