EXHIBIT 10.2
EMCORE CORPORATION
EXECUTIVE SEVERANCE POLICY
1.
Purpose of the
Policy
The Emcore
Corporation Executive Severance Policy (the “Policy”)
is effective May 1, 2007 and incorporates and amends the terms of
the Executive Severance Policy adopted by the Compensation
Committee of the Board of Directors of Emcore Corporation (the
“Committee”) on November 29, 2004. The Policy is
intended to provide certain executives of the Company who are in a
position to contribute materially to the success of the Company
with Severance Benefits if they are separated from employment with
the Company as set forth herein.
2.
Definitions
As used in this
Policy, the following terms shall have the respective meanings set
forth below:
a.
"Base Salary" means the higher of
(i) the Participant's highest annual rate of base salary during the
twelve-month period immediately prior to the Executive’s Date
of Termination or (ii) the average of the Participant's annual base
salary earned during the past three (3) completed fiscal years of
the Company immediately preceding the Participant's Date of
Termination (annualized in the event the Participant was not
employed by the Company (or its affiliates) for the whole of any
such fiscal year).
b. "Board of
Directors" means, the board of directors of the Company.
c. "Cause"
means termination of employment resulting from a good faith
determination by the Board of Directors that:
(i) the
Participant has willfully failed or repeatedly refused in a
material respect to follow policies or reasonable directives
established by the Board of Directors with the result that such
refusal has caused material damage to the Company or willfully
failed or repeatedly refused to perform the material duties or
obligations of his or her office (other than any such failure
resulting from the person's inability due to physical or mental
illness), which the Participant has failed to correct within a
reasonable period following with notice to such Participant;
or
(ii) there has
been an act by the Participant involving wrongful misconduct which
has a demonstrably adverse impact or material damage to the
Company, or which constitutes theft, fraud or a misappropriation of
the assets of the Company; or
(iii) the
Participant has engaged in an unauthorized disclosure of
confidential information, directly or indirectly, to persons
outside the Company that materially adversely affects the Company;
or
(iv) the
Participant while employed by the Company has performed services
for another company or person which competes with the Company
without the prior written approval of the Board of
Directors.
d. "Code" means
the Internal Revenue Code of 1986, as amended.
e. "Committee"
has the meaning set forth in Section 1.
f. "Company"
means EMCORE Corporation or any successor thereto.
g.
"Date of Termination" means (i) the
effective date on which the Participant's employment by the Company
terminates as specified in a prior written notice by the Company or
the Participant, as the case may be, to the other, or (ii) if the
Participant's employment by the Company terminates by reason of
death, the date of death of the Participant.
h. "Disability"
means that at the time the Participant's employment is terminated,
he or she has been unable to perform the duties of his/her position
for a period of six consecutive months as a result of the
Participant's inability due to physical or mental
illness.
i.
“Disposition” means the
sale, transfer, spin-off or other disposition to another party or a
resulting new entity (the “Purchaser”) of the stock or
assets of any subsidiary, business unit or division of the Company.
For example, the sale of the Company’s electronic materials
division in Somerset, New Jersey constitutes a
Disposition.
j. "Good
Reason" means, without the consent of the Participant:
(i) a material
reduction in base salary, incentive compensation potential or
benefits (other than reductions applicable to employees generally);
or
(ii) a material
diminution in job responsibilities; or
(iii) a
requirement that the Participant relocate, except for office
relocations that would not increase the Participant's one-way
commute by more than 50 miles; or
(iv) following
a Disposition, a change in the Participant’s job
requirements, such as a request from the Chief Executive Officer or
the Board of Directors that the Participant travel more frequently,
such that the Participant reasonably believes that he cannot meet
the new requirements.
k.
"Participant" means each of the
senior executives of the Company who are selected by the Committee
for coverage by this Policy and who have been employed by the
Company for a minimum of twelve months. As of the adoption date of
the Policy, Participants shall include the:
|
vi.
|
Vice President
and General Manager
|
|
viii.
|
Vice President,
Human Resources
|
|
ix.
|
Vice President
& Deputy Counsel
|
l. "Qualifying
Separation" means a termination of employment from the Company (and
its affiliates) but specifically excludes, without limitation,
termination of employment due to Cause, death, Disability, or
termination by the Participant (other than a termination for Good
Reason); provided, however, that such termination of employment
also constitutes a "Separation from Service" within the meaning of
Section 409A of the Code.
m.
"Separation Agreement" means an
effective agreement prepared by the Company, executed by the
Participant and returned to the Company within the time period
requested by the Company. It shall contain (a) typical provisions
concerning termination of employment, (b) a statement that
Severance Benefits under this Policy are conditioned upon the
Company's receipt of such agreement, and (c) a release (in a form
to be determined by the Company) by the Participant of the Company
from any liability or obligation (excluding any indemnification to
which the Participant may be entitled pursuant to the
Company’s Amended and Restated Certificate of Incorporation,
By-Laws and any coverage under directors and officers,
professional, fiduciary or errors or omissions policies that
benefit the Participant) to the Participant. To be effective, the
Separation Agreement shall not have been revoked by the Participant
within the time permitted under applicable state and federal
laws.
n. "Severance
Benefits" mean the benefits set forth in Sections 5, 6, 7, 8, 9 and
10 of this Policy.
o. "Severance
Pay" means the salary continuation payments under Section 5 of this
Policy.
p.
“409A Participant”
means a Participant who satisfies the “specified
employee” definition described under Code Section 409A and
who is either:
(i) eligible
for Severance Pay due to the Participant’s termination for
Good Reason;
(ii) eligible
to receive Severance Pay that exceeds two times the lesser of (1)
the Participant’s compensation for the calendar year
preceding the calendar year of the Participant’s Date of
Termination or (2) the maximum amount of compensation that may be
taken into account under a qualified plan pursuant to Code Section
401(a)(17); or
(iii) eligible
to receive Severance Pay payments that extend past the December
31st of the second calendar year following the calendar year of the
Participant’s Date of Termination.
3.
Participation in the
Policy
All
Participants who have experienced a Qualifying Separation from the
Company shall be eligible to receive Severance Benefits under this
Policy provided the requirements of Section 4 are met.
4.
Condition to Receipt
of
Benefits
A Participant
must execute an effective Separation Agreement to receive Severance
Benefits. Severance Benefits shall cease upon the Participant
violating any provision of his or her Separation Agreement, or any
post-termination obligations under his or her employment agreement
(if any).
5.
Severance
Pay
Severance
payments shall be made as follows:
Participants at the level of Executive Vice
President or higher hired or promoted prior to May 1,
2007 :
Continuation of Base Salary for a period equal to (a) one year,
plus (b) two weeks, plus (c) two additional
weeks for each year the Participant was employed by the Company
(the “Severance Period”).
Participants at the level of Executive Vice
President or higher hired or promoted on or after May 1,
2007 :
Continuation of Base Salary for a period equal to (a) one year,
plus (b) one week, plus (c) one additional
week for each year the Participant was employed by the Company (the
“Severance Period”).
Participants at the level of Vice President or
lower hired or promoted prior to May 1, 2007
: Continuation of Base Salary
for a period equal to (a) five months, plus
(b) two weeks, plus (c) two additional weeks for each year the
Participant was employed by the Company (the “Severance
Period”).
Participants at the level of Vice President or
lower hired or promoted on or after May 1, 2007
: Continuation of Base Salary
for a period equal to (a) five months, plus
(b) one week, plus (c) one additional week for each year the
Participant was employed by the Company (the “Severance
Period”).
Notwithstanding
the foregoing:
(i) during the
applicable revocation period of a Participant’s Separation
Agreement, the severance payments that would otherwise have been
paid during such time shall be paid as soon as administratively
feasible following the lapsing of such revocation period;
and
(ii) to the
extent a Participant is a 409A Participant, the severance payments
that would otherwise have been paid within the first six months of
the Participant’s Date of Termination shall be paid in a lump
sum as soon as administratively feasible following the six month
anniversary of the Participant’s Date of
Termination.
Subject to the
foregoing, the Company shall pay to the Participant severance on
regular paydays of the Company to the extent administratively
feasible. The Severance Pay will be made less applicable
withholdings and deductions.
6.
Health
Insurance
In accordance
with the Company’s health plans, the Participant will be
eligible to exercise his or her rights to COBRA health insurance
coverage for the Participant, and, where applicable,
Participant’s spouse and eligible dependents, at
Participant’s expense (subject to the foregoing), upon
termination of the Participant’s employment. To the extent
the Participant elects
