Exhibit 10.1
SEVERANCE COMPENSATION AGREEMENT
This SEVERANCE COMPENSATION AGREEMENT
(“Agreement”) is effective as of
April 1, 2008, between NEWPORT CORPORATION, a Nevada
corporation (the “Company”), and Robert J. Phillippy
(the “Executive”).
WHEREAS, 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; and
WHEREAS, the Company and the
Executive desire to set forth the terms and conditions upon which
the Company will pay severance compensation to the Executive if the
Executive’s employment with the Company terminates under one
of the circumstances described herein.
NOW, THEREFORE, in consideration of
the mutual agreements herein contained, the parties agree as
follows:
1. Term . The term of
this Agreement shall commence on the date hereof and shall continue
for a period extending until two (2) years following the date
on which notice of termination of this Agreement is given by either
the Company or Executive to the other (unless earlier terminated
pursuant to Section 3(f)).
2. Definition of Change in
Control . For purposes of this Agreement, a “Change in
Control” of the Company shall be deemed to have occurred
if:
(i) there
shall be consummated 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
outstanding voting securities would be converted into cash,
securities or other property (other than a merger of the Company in
which the holders of the Company’s outstanding voting
securities immediately prior to the merger have the same
proportionate ownership of at least eighty percent (80%) of the
outstanding voting securities of the surviving corporation
immediately after the merger); or
(ii) there
shall be consummated any consolidation or merger of the Company in
which the Company is the surviving corporation, but the
holders of the Company’s outstanding voting securities
immediately prior to such merger or consolidation hold, in the
aggregate, securities possessing less than fifty percent (50%) of
the total combined voting power of all outstanding voting
securities of the Company immediately after such merger or
consolidation; or
(iii) there
shall be consummated 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
(iv) the
stockholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company; or
(v) 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 twenty percent (20%)
or more of the Company’s outstanding voting securities (other
than any such person who is the record owner of at least
fifteen
percent (15%) of the Company’s outstanding voting securities
on the date hereof, other than nominees); or
(vi) 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
(vii) an
event constituting a “Business Combination” under the
Company’s Articles of Incorporation as amended to date.
3. Termination of Employment
Following Change in Control .
(a)
Eligible Termination . The Executive shall be entitled to
the compensation set forth in Section 4 of this Agreement if
(1) a Change in Control of the Company shall have occurred
while the Executive is an employee of the Company and (2) the
Executive’s employment with the Company is subsequently
terminated by the Company or by the Executive within two
(2) years of such Change in Control, unless such
termination is as a result of:
(i) the
Executive’s death; or
(ii) the
Executive’s Disability (as defined in Section (3)(b) below);
or
(iii) the
Executive’s Retirement (as defined in Section 3(c) below);
or
(iv) the
Executive’s termination by the Company for Cause (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)
Disability . For the purposes of this Agreement, the term
“Disability” shall mean the Executive’s
incapacity due to physical or mental illness which results in the
Executive’s absence from his duties with the Company on a
full-time basis for six (6) consecutive months and prevents
the Executive from returning to the full-time performance of duties
within thirty (30) days after receipt of written notice of
termination from the Company.
(c)
Retirement . For the purposes of this Agreement, the term
“Retirement” shall mean termination of the
Executive’s employment by the Company or by the Executive
based on the Executive having reached age sixty-five (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 . 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
2
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 this Section 3(d) and specifying the particulars thereof in
detail.
(e)
Good Reason . For purposes of this Agreement, the term
“Good Reason” shall mean any of the following (without
the Executive’s express written consent):
(i) the
Company has materially reduced 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 failed 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 twelve (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, equity compensation plans, 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) (each hereinafter
referred to as a “Benefit Plan”), 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 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) (each hereinafter referred to as an
“Incentive Plan”) 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,
restricted stock units 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) (each hereinafter referred to as a “Securities
Plan”) 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;
3
(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)
an
| 
