EXHIBIT 10.28
CHANGE OF CONTROL AND SEVERANCE AGREEMENT
Agreement (hereinafter "Agreement") dated as of April 10, 2000 by and
between CFM Technologies, Inc., a Pennsylvania Business Corporation having a
place of business at 150 Oaklands Boulevard, Exton, PA 19341 ("CFM" or the
"Company"), and Roger A. Carolin, an individual residing at 158 Kentsdale Court,
Malvern, PA 19355 ("Carolin").
WITNESSETH:
WHEREAS, based upon Carolin's demonstrated commitment and unique
contributions to the Company, and a desire to motivate Carolin's retention prior
to the occurrence of a Change of Control Event (an "Event") as defined in
Section 5, herein, CFM desires that Carolin continue to be employed, prior to an
Event and, Carolin desires to be so employed, all pursuant to the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, and intending to be legally bound hereby, it is
agreed as follows:
1. REPRESENTATIONS AND WARRANTIES BY CAROLIN AND CFM
Carolin hereby represents and warrants to CFM as follows:
(a) Neither the execution and delivery of this Agreement nor the
performance by Carolin of his duties and other obligations hereunder
violate or will violate any statute, law, determination or award, or
conflict with or constitute a default under (whether immediately, upon the
giving of notice or lapse of time or both) any prior employment agreement,
contract, or other instrument to which Carolin is a party or by which he is
bound.
(b) Carolin has the right, power and legal capacity to enter and
deliver this Agreement and to perform his duties and other obligations
hereunder. This Agreement constitutes the legal, valid and binding
obligation of Carolin enforceable against him in accordance with its terms.
No approvals or consents of any persons or entities are required for
Carolin to execute and deliver this Agreement or perform his duties and
other obligations hereunder.
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CFM hereby represents and warrants to Carolin as follows:
(a) CFM is duly organized, validly existing and in good standing under
the laws of the Commonwealth of Pennsylvania, with all requisite corporate
power and authority to own its properties and conduct its business in the
manner presently contemplated.
(b) CFM has full power and authority to enter into this Agreement and
to incur and perform its obligations hereunder.
(c) The execution, delivery and performance by CFM of this Agreement
does not conflict with or result in a breach or violation of or constitute
a default under (whether immediately, upon the giving of notice or lapse of
time or both) the certificate of incorporation or by-laws of CFM, or any
agreement or instrument to which CFM is a party or by which CFM or any of
its properties may be bound or affected.
2. TERM
This agreement shall terminate five (5) years from execution hereof or upon
the mutual agreement, in writing, of CFM and Carolin.
3. EFFECTIVENESS
This Agreement shall become effective only upon the assumption of control
by another entity ("Successors and Assigns") following an Event. This Agreement
shall have no force of effect until such an Event shall occur.
4. TERMINATION OF EMPLOYMENT
Carolin's employment hereunder shall continue until terminated upon the
first to occur of the following events:
(a) THE DEATH OR DISABILITY OF CAROLIN. Successor and Assigns may, at
its option, terminate Carolin's employment for "disability" (as hereinafter
defined). In the event of termination for death or disability, Carolin or
his designated beneficiary, shall be entitled to termination benefits
pursuant to Section 5(d), which monthly benefits shall be reduced in each
month such benefit may be received by any amounts received by Carolin from
disability insurance during such month from a program provided by CFM or
Successors and Assigns. For purposes of this Agreement, the term
"disability" means any physical or mental illness, impairment or incapacity
which prevents Carolin from performing, with or without accommodation, the
essential functions of Carolin's position hereunder for a period totaling
not less than one hundred eighty (180) days during any period of twelve
(12) consecutive months.
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(b) TERMINATION BY THE PRESIDENT, CHAIRMAN OR BOARD OF DIRECTORS OF
SUCCESSORS AND ASSIGNS FOR CAUSE. Any of the following actions by Carolin
shall constitute cause:
(i) Material breach by Carolin of the provisions of the CFM
Non-Disclosure and Invention Agreement which he is a party
to (or any similar agreement entered into by Carolin with
Successors and Assigns) provided that Carolin has received
written notice of such breach from the President, Chairman
or Board of Directors of Successors and Assigns, and has had
an opportunity to respond to the notice in a meeting within
thirty (30) days of such notice; or
(ii) Theft; a material act of dishonesty or fraud; intentional
falsification of any employment or Company records; or the
commission of any criminal act which impairs Carolin's
ability to perform appropriate employment duties under this
Agreement; or
(iii) Carolin's conviction (including any plea of guilty or nolo
contendere) for a crime involving moral turpitude causing
material harm to the reputation and standing of Successors
and Assigns; or
(iv) Gross negligence or willful misconduct in the performance of
Carolin's assigned duties; provided however, that merely
unsatisfactory performance by Carolin of such duties and
responsibilities shall not constitute "cause" for purposes
of the Agreement; and provided further that Carolin has
received written notice of such breach or neglect from the
President, Chairman or Board of Directors of Successors and
Assigns, has had an opportunity to respond to the notice in
a meeting and has failed to substantially cure such breach
or neglect within thirty (30) days of such notice.
(c) TERMINATION BY CAROLIN FOR GOOD REASON. Any of the following
actions or omissions by CFM or Successors and Assigns shall constitute good
reason:
(i) Material breach by Successors and Assigns of any provision
of this Agreement which is not cured by Successors and
Assigns within fifteen (15) days of written notice thereof
from Carolin; or
(ii) Any action by Successors and Assigns to intentionally harm
Carolin; or
(iii) If, (i) upon the occurrence of an Event, Carolin's status,
title, position, and responsibilities are not expanded to
include responsibility for substantially all related
functional activities in the merger or combined
post-transition entity for which Carolin was responsible
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immediately prior to the Event, or (ii) at any time
thereafter, a change occurs in Carolin's status, title,
position, work location or compensation which, in either
event, in Carolin's reasonable judgment, represents a
material adverse change from his status, title, position,
work location, compensation, or responsibilities existing or
in effect prior to such change, Carolin may, at his sole
option by providing written notice deem such change to be
good reason under this Section 4(c).
(iv) The failure of CFM to have obtained an agreement,
satisfactory to Carolin, from any successors and assigns to
assume and agree to perform this Agreement prior to the
occurrence of an Event.
Carolin's right to terminate his employment pursuant to this Section 4(c)
shall not be affected by his incapacity due to disability.
In the event of any action or omission constituting good reason (a "Good
Reason Event"), (1) any options to purchase common stock of CFM or Successors
and Assigns held by Carolin shall vest immediately as of the date of such
termination, (2) Successors and Assigns will pay to Carolin his target annual
bonus for the current fiscal year on a pro rata basis corresponding to the date
of termination, and (3) Carolin shall agree to serve as a consultant to
Successors and Assigns for up to twenty-six (26) days during the six (6) months
following termination hereunder at times and locations and with duties as
Carolin and Successors and Assigns may mutually agree, and (4) Successors and
Assigns will pay Carolin twenty-four (24) monthly payments equal to one twelfth
of Carolin's then current annual base salary plus annual target bonus and the
amount of $3,500 for each day of consulting in excess of twenty-six (26) days.
(d) TERMINATION BY THE PRESIDENT, CHAIRMAN OR BOARD OF DIRECTORS OF
SUCCESSORS AND ASSIGNS WITHOUT CAUSE.
(i) Successors and Assigns shall give Carolin not less than
thirty (30) days notice of the termination of Carolin's employment
without cause and Successors and Assigns shall have the option of
terminating Carolin's duties and responsibilities prior to the
expiration of the notice period subject to payment by Successors and
Assigns of Carolin's then current base pay for the remainder of the
notice period; and
(ii) Following any Termination of Carolin under 5(d)(i), above,
(1) any options to purchase common stock of CFM or Successors and
Assigns held by Carolin shall vest immediately as of the date of such
termination, (2) Successors and Assigns will pay to Carolin his target
annual bonus for the current fiscal year on a pro rata basis
corresponding to the date of termination, and (3) Successors and
Assigns will pay Carolin twenty-four (24) monthly payments equal to
one twelfth of Carolin's then current annual base salary plus annual
target bonus.
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(e) TERMINATION BY CAROLIN WITHOUT GOOD REASON.
In the event Carolin wishes to resign, he shall give not less than thirty
(30) days prior notice of such resignation and Successors and Assigns shall have
the option of terminating Carolin's duties and responsibilities at any time
prior to Carolin's proposed termination date, subject to payment by Successors
and Assigns of the lesser of Carolin's then current base pay for a thirty (30)
day period, or such other period as may remain under the notice given by
Carolin.
5. CHANGE OF CONTROL
For purposes of this Agreement, a "Change of Control Event" shall mean any
of the following:
(a) An acquisition (other than directly from CFM) of any voting
securities of CFM (the "Voting Securities") by any "Person" (as the term
person is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act") immediately after which
such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of thirty percent (30%) or more of the
combined voting power of CFM's then outstanding Voting Securities;
provided, however, that in determining whether a Change of Control Event
has occurred, Voting Securities which are acquired in a "Non-Control
Acquisition" (as defined below) shall not constitute an acquisition which
would cause a Change of Control Event. A "Non-Control Acquisition" shall
mean an acquisition by (1) an employee benefit plan (or trust forming a
part thereof) maintained by (x) CFM or (y) any corporation or other Person
of which a majority of its voting power or its equity securities or equity
interest is owned directly or indirectly by CFM (a "Subsidiary"), (2) CFM
or any Subsidiary, or (3) any Person in connection with a "Non-Control
Transaction."
(b) The individuals who, as of the date hereof, are members of the
Board (the "Incumbent Board"), cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election, or
nomination for election by CFM's stockholders, of any new director was
approved by a vote of at least two-thirds of the then Incumbent Board, such
new director shall, for purposes of this Agreement, be considered as a
member of the Incumbent board; provided, further, that no individual shall
be considered a member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened "Election
Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a "Proxy Contest") including by
reason of any agreement intended to avoid or settle any Election Contest or
Proxy Contest; or
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(c) Approval by stockholders of CFM of:
(i) A merger, consolidation, or reorganization involving CFM,
unless
(1) the stockholders of CFM, immediately before such
merger, consolidation or reorganization, own, directly
or indirectly, immediately following such merger,
consolidation or reorganization, at least seventy
percent (70%) of the combined voting power of the
outstanding Voting Securities of the corporation
resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in
substantially the same proportion as their ownership of
the Voting Securities immediately before such merger,
consolidation, or reorganization, and
(2) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement
providing for such merger, consolidation, or
reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving
Corporation or corporation beneficially owning,
directly or indirectly, a majority of the Voting
Securities of the Surviving Corporation, and
(3) no Person (other than CFM, any Subsidiary, any employee
benefit plan (or any trust forming a part thereof)
maintained by CFM, the Surviving Corporation or any
Subsidiary, or any Person who, immediately prior to
such merger, consolidation or reorganization had
Beneficial Ownership of fifteen percent (15%) or more
of the then outstanding Voting Securities) owns,
directly or indirectly, fifteen percent (15%) or more
of the combined voting power of the Surviving
Corporation's then outstanding voting securities, and
(4) a transaction described in clauses 1 through 3 shall
herein be referred to as a "Non-Control Transaction";
(ii) A complete liquidation or dissolution of CFM, or
(iii) A sale or other disposition of all or substantially all of
the assets of CFM to any Person (other than a transfer to a
Subsidiary).
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(d) Notwithstanding the foregoing, a Change of Control Event shall not
be deemed to occur solely because any Person (the "Subject Person")
acquired Beneficial Ownership of more than the permitted amount of the
outstanding Voting Securities as a result of the acquisition of Voting
Securities by CFM which by reducing the number of Voting Securities
outstanding, increases the proportional number of shares Beneficially Owned
by the Subject Person, provided that if a Change in Control would occur
(but for the operation of this sentence) as a result of the acquisition of
Voting Securities by CFM, and after such share acquisition by CFM, the
Subject Person becomes the Beneficial Owner of any additional Voting
Securities which increases the percentage of the then outstanding Voting
Securities Beneficially Owned by the Subject Person, then a Change in
Control shall occur.
(e) Notwithstanding anything contained in this Agreement to the
contrary, if Carolin's employment is terminated prior to a Change of
Control Event and Carolin reasonably demonstrates that such termination (i)
was at the request of a third party who has indicated an intention or taken
steps reasonably calculated to effect a Change of Control Event and who
effectuates a Change of Control Event (a "Third Party") or (ii) otherwise
occurred in connection with, or in anticipation of, a Change of Control
Event which actually occurs, then for all purposes of this Agreement, the
date of a Change of Control Event with respect to Carolin shall mean the
date immediately prior to the date of such termination of Carolin's
employment and shall constitute grounds for Termination for good reason by
Carolin under Section 4(c) of this Agreement.
6. EXTENDED MEDICAL AND DENTAL BENEFITS
In the event of an event of Termination under Section 4(a), 4(c) or 4(d) of
this Agreement, Carolin and Carolin's dependents shall receive continued
provision of CFM's standard employee medical and dental benefits or comparable
benefits under the plans of Successors and Assigns for thirty (30) months.
Notwithstanding the foregoing, in the event Carolin becomes covered as a primary
insured (that is, not as a beneficiary under a spouse's plan) under another
employer's group health plan during the extended benefit period provided for
herein, Carolin shall promptly inform Successors and Assigns and Successors and
Assigns shall cease provision of continued group health benefits for Carolin and
any dependents.
7. FEDERAL EXCISE TAX UNDER IRC SECTION 280G
(a) If (1) any amounts payable under this Agreement are characterized
as excess parachute payments pursuant to Section 4999 of the Internal
Revenue Code, and (2) Carolin thereby would be subject to any United States
federal excise tax due to that characterization, then (3) Carolin may
elect, in Carolin's sole discretion, to reduce the amounts payable under
this Agreement or to have any portion of applicable options not be granted
or vest in order to avoid any "excess parachute payment" under Section
280(G)(b)(1) of the Internal Revenue Code of 1986, as amended.
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(b) Unless Successors and Assigns and Carolin otherwise agree in
writing, any determination required under this Section 6 shall be made in
writing by independent public accountants agreed to by Successors and
Assigns and Carolin (the "Accountants"), whose determination shall be
conclusive and binding upon Successors and Assigns and Carolin for all
purposes. For purposes of making the calculations required by this Section
6, the Accountants may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code.
Successors and Assigns and Carolin shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in
order to make the required determinations. Successors and Assigns shall
bear all fees and expenses the Accountants may reasonably charge in
connection with the services contemplated by this Section 7.
8. RELEASE OF CLAIMS
Successors and Assigns may condition payment of the termination benefits
described in Sections 4(a), 4(c), 4(d) and 6 of this Agreement upon the delivery
by Carolin of a signed release of claims in a form reasonably satisfactory to
Successors and Assigns; provided, however, that Carolin shall not be required to
release any rights Carolin may have to be indemnified by CFM or Successors and
Assigns.
9. NON-COMPETITION AND NON-SOLICITATION
During the term of Carolin's employment and any period during which
post-Termination compensation may be received, Carolin agrees not to (1) engage
in (as an employee, consultant, director, principal, partner, officer, agent,
advisor or otherwise) or be financially interested in any business operating
anywhere in the world which, in the reasonable judgment of Successors and
Assigns, directly competes with Successors and Assigns through the design,
manufacture or distribution of semiconductor wet processing equipment or (2)
directly or indirectly solicit, induce, encourage, or attempt to influence any
client, customer, employee, consultant, independent contractor, salesman, or
supplier of Successors and Assigns to cease to do business or terminate his
employment with Successors and Assigns.
10. NOTICES
Any notice or other communication under this Agreement shall be in writing
and shall be deemed to have been given: (i) upon delivery when delivered
personally against receipt therefor; (ii) one (1) day after being sent by
Federal Express or similar overnight delivery; or (iii) three (3) days after
being mailed via registered or certified mail, postage prepaid, return receipt
requested, to either party at the address set forth above, or to such other
address as such party shall give by notice hereunder to the other party.
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11. SEVERABILITY OF PROVISIONS
If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, such provision shall be interpreted so as to remain
enforceable to the maximum extent permissible consistent with applicable law and
the remaining conditions and provisions or portions thereof shall nevertheless
remain in full force and effect and enforceable to the extent they are valid,
legal and enforceable, and no provision shall be deemed dependent upon any other
covenant or provision unless so expressed herein.
12. ARBITRATION
With the exception of actions to enforce the terms of Section 9, any
dispute or disagreement arising out of this Agreement or a claimed breach, shall
be resolved by arbitration in Chester County, Pennsylvania under the National
Rules for the Resolution of Employment Disputes of the American Arbitration
Association, each party to bear its own costs. The arbitrator's decision shall
be final and binding upon the parties and judgment may be entered in any court.
13. SUCCESSORS
This Agreement shall be binding upon and shall inure to the benefit of CFM,
its successors and assigns and CFM shall require any successors and assigns to
expressly assume and agree, in writing, to perform this Agreement in the same
manner and to the same extent that CFM would be required to perform it if no
such succession or assignment had taken place.
14. ENTIRE AGREEMENT MODIFICATION
This Agreement contains the entire agreement of the parties relating to the
subject matter hereof and the parties hereto have made no agreements,
representations or warranties relating to the subject matter of this Agreement
which are not set forth herein. No modification of this Agreement shall be valid
unless made in writing and signed by the parties hereto.
15. BINDING EFFECT
The rights, benefits, duties and obligations under this Agreement shall
inure to, and be binding upon, CFM, its successors and assigns, and upon Carolin
and his legal representatives. This Agreement constitutes a personal service
agreement, and the performance of Carolin's obligations hereunder may not be
transferred or assigned by Carolin.
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16. GOVERNING LAW
This Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the Commonwealth of Pennsylvania without regard to
principles of conflict of laws.
17. HEADINGS
The headings of paragraphs are inserted for convenience and shall not
affect any interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have executed this Agreement as of the day and year first above written.
By: /s/ ROGER A. CAROLIN April 10, 2000
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By: /s/ LORIN J. RANDALL April 10, 2000
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CFM TECHNOLOGIES, INC
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