Iridex Corp 8-K, filed Nov 13, 2024
Iridex Corp (IRIX)
About this 8-K
Iridex Corp filed this 8-K on November 13, 2024, reporting on events of November 7, 2024.
Items reported
- Item 5.02: Director or officer change, or executive pay
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES Washington, D.C. 20549 |
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FORM CURRENT REPORT |
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PURSUANT TO SECTION 13 OR 15(d) OF THE |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
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Securities registered pursuant to Section 12(b) of the Act:
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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
David Bruce Resignation and Separation Agreement
On October 1, 2024, Dave Bruce was terminated as the Company’s Chief Executive Officer (the “CEO”) and principal executive officer, effective immediately, and on November 11, 2024, Mr. Bruce resigned from the Board. The Board thanks Mr. Bruce for his service to the Company.
Pursuant to the terms of Mr. Bruce’s employment agreement, Mr. Bruce was eligible to receive certain severance benefits in connection with his termination, subject to his entry into a separation agreement with the Company. On November 11, 2024, Mr. Bruce and the Company entered into a separation and release agreement (the “Separation Agreement”) providing for certain benefits in exchange for a release of claims by Mr. Bruce and compliance with certain ongoing covenants, including:
Mr. Bruce shall have twelve (12) months from October 4, 2024 (the “Separation Date”) to exercise any vested and unexercised options to purchase the Company’s common stock unless such options expire prior to the end of such twelve-month period. Except for the Accelerated Options and Accelerated RSUs, Mr. Bruce’s unvested options to purchase common stock and unvested restricted stock units ceased vesting and were forfeited on the Separation Date.
Pursuant to the terms of the Separation Agreement, Mr. Bruce will remain bound by the confidentiality provisions and certain restrictive covenants included in his employment agreement.
The foregoing description of the Separation Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Separation Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Patrick Mercer Compensatory Arrangements and Change in Control Severance Agreement
On November 7, 2024, the Board adjusted the terms of Patrick Mercer’s compensation in connection with his role as CEO. Mr. Mercer will retain an annualized 2024 base salary of $360,000 and will be eligible to receive an annual target bonus of 65% of his 2024 annual base salary upon the achievement of certain performance objectives determined by the Company’s Compensation Committee and Board. In addition, Mr. Mercer entered into an amended and restated Change in Control Severance Agreement, in which Mr. Mercer would be entitled to a lump sum cash severance payment equal to 150% of his base salary then in effect, if terminated without cause (as defined therein) or in connection with a change in control (as defined in the Plan). The foregoing description of the Change in Control Severance Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Change in Control Severance Agreement, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.
Item 8.01 Other Events
Effective November 7, 2024, Kenneth E. Ludlum was appointed to the Compensation Committee. Following Mr. Ludlum’s appointment, the composition of the Company’s committees is as follows:
Item 9.01 Financial Statements and Exhibits.
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Exhibits |
Exhibit No. |
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Description |
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10.1 |
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Separation and Release Agreement dated as of November 11, 2024, between the Company and Mr. Bruce. |
10.2 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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IRIDEX CORPORATION |
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/s/ Patrick Mercer |
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Patrick Mercer |
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President and Chief Executive Officer |
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Date: November 13, 2024 |
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Exhibit 10.1
SEPARATION AND RELEASE AGREEMENT
This Separation and Release Agreement (“Agreement”) is entered into by and between IRIDEX CORPORATION (defined to include its related organizations, foundations, subsidiaries, predecessors, successors, assigns, affiliates, and their respective officers, employees, ex-employees, and representatives and hereinafter referred as collectively as “IRIDEX” or the “Company”) and David I. Bruce (“Employee”). Employee and IRIDEX are referred to collectively herein as the Parties. This Agreement shall be effective as of the date the revocation period expires, if Employee has not revoked the Agreement (“Effective Date”).
RECITALS
WHEREAS, Employee’s employment with IRIDEX and Insperity PEO Services, L.P. ("Insperity") is terminated on October 4, 2024 (“Separation Date”);
WHEREAS, the Parties seek a full and final resolution of all past, present and potential claims, controversies and disputes Employee may have concerning Employee’s employment or separation from IRIDEX, to the fullest extent permitted by law;
WHEREAS, the Parties hereby acknowledge, represent and warrant that the terms and conditions in this Agreement are fair, reasonable, adequate and in their mutual best interest; and,
WHEREAS, the Parties acknowledge that they are waiving significant legal rights or claims by signing this Agreement and that they voluntarily enter into this Agreement after being given the opportunity to consult with legal counsel, with a full and complete understanding of its terms and legal effect, and with the intent to be bound thereby.
AGREEMENT AND RELEASE
NOW, THEREFORE, in consideration of the foregoing Recitals, and in consideration for the covenants, terms and conditions set forth herein, each of which is material, and for other valuable consideration, the sufficiency of which is hereby acknowledged by each Party hereto, Employee and IRIDEX, and each of them, agree as follows:
(a) Mutual Non-disparagement. Employee agrees to refrain from any disparagement, defamation, libel, or slander of IRIDEX, and agrees to refrain from any tortious
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interference with the contracts and relationships of IRIDEX. IRIDEX agrees to use its reasonable best efforts to cause its officers and directors to refrain from any disparagement, defamation, libel, or slander of Employee for so long as such individuals are officers and directors of the Company. (b) Employee further agrees to immediately notify IRIDEX upon receipt of any court order, subpoena, or any legal discovery device that seeks or might require the disclosure or production of the existence of or terms of this Agreement. Employee agrees to furnish, within three (3) business days of receipt, a copy of such subpoena or legal discovery device to IRIDEX. Nothing in this Paragraph shall preclude Employee from testifying truthfully under oath pursuant to subpoena or otherwise, or from cooperating with any governmental, regulatory or self-regulatory body or agency with jurisdiction over the activities of IRIDEX.
(c) Employee further agrees that promptly following to the delivery by IRIDEX of all cash amounts payable to Employee hereunder, in any case, within five (5) business days, Employee will deliver documentation effecting his resignation from Employee’s position on the Company’s Board of Directors, and that such resignation is without disagreement. Such resignation shall be effective upon such delivery by Employee.
(a) Employee understands and agrees that through Employee’s employment with IRIDEX, Employee was given access to certain confidential, sensitive, or proprietary information about IRIDEX’s policies, procedures, operations and/or activities (“Confidential Information”). “Confidential Information” shall mean confidential sensitive, and/or proprietary information concerning the policies, procedures, tactical or operational methodologies, or strategies followed or used by IRIDEX in providing services or events, release of which could compromise the ability of IRIDEX to provide those services or events. Confidential Information may consist of oral communications, e-mails, written documents, plans or diagrams, audio or video recordings, photographs depicting confidential, sensitive, or proprietary information, or material in other media. Written materials that constitute or contain Confidential Information may, but need not necessarily, be marked “Confidential.” Employee understands and agrees that if this confidential, sensitive, and/or proprietary information is revealed, it could compromise the ability of IRIDEX to provide services or events or could compromise other employees’ confidential information. Employee agrees that Employee shall not disclose, give, display, post on the Internet, or otherwise communicate any Confidential Information to anyone other than IRIDEX personnel without the prior authorization, and/or as otherwise required by law. In consideration of the severance terms described in Paragraph 3(c), Employee warrants and agrees that Employee keep such Confidential Information confidential. Employee further specifically agrees that, unless required by law, or specifically authorized by IRIDEX in advance, Employee will not directly or indirectly use or disclose to others any information regarding IRIDEX’s past, present or future financial information or status, Confidential Information or trade secrets concerning IRIDEX’s business practices, activities, events, training, information about IRIDEX personnel, or any other information considered to be confidential by IRIDEX. IRIDEX’s Confidential Information remains confidential and Employee’s legal duty to keep IRIDEX’s Confidential Information confidential continues now that Employee’s employment at IRIDEX has come to an end.
(b) Employee warrants and represents that Employee has returned all Employer property, including but not limited to identification cards or badges, access codes or devices, keys, laptops, computers, telephones, mobile phones, hand-held electronic devices, credit cards,
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electronically stored documents or files, physical files, passwords for any Employer devices or accounts, and any other Employer property in Employee's possession. Employee further agrees that Employee will not access any of Employer’s information technology systems, hardware, software, or infrastructures.
(c) Employee will be provided with information regarding Employee’s right to continue Employee’s health insurance coverage pursuant to the Consolidated Omnibus Reconciliation Act (“COBRA”) and must make a timely election in order to continue such coverage. IRIDEX will pay Employee, promptly following the expiration of the seven (7) day period provided by Section 6(b) hereof, the lump sum amount of $20,000, which is approximately equivalent to 12 months of Executive’s estimated COBRA premiums. Iridex will report the payment on a Form 1099, and Employee agrees that he shall be responsible for any and all taxes, levies or amounts as set forth in Section 3(d), below.
(d) Employee has, from time to time been granted Incentive Stock Options, Restricted Stock Units, and Performance Stock Units (together, the “Incentive Equity Grants”) pursuant to the Company’s Amended and Restated 2008 Equity Incentive Plan (“Equity Plan”) or otherwise. With respect to such Incentive Equity Grants, the Parties agree as follows.
(i) Pursuant to the applicable grant documents, the Equity Plan and the discretion afforded the Equity Plan Administrator thereunder, the Company shall cause 100% of the remaining 19,913 unvested Restricted Stock Unit Award shares and 100% of the unvested options to purchase 40,431 of the Company’s common stock, each granted on October 27, 2022, to accelerate and fully vest as of the Effective Date.
(ii) The option grants dated May 21, 2019, relating to 300,000 shares, and August 5, 2021, relating to 81,740 shares, of the Company’s common stock are hereby cancelled and the Company will return the options to the Equity Plan as of the date of this Agreement.
(iii) The last day Employee may exercise any of his vested options to purchase the Company’s common stock will be extended to the date that is twelve months following the Separation Date. Employee will not engage in any open market transactions involving or relating to the accelerated vesting Incentive Equity Grants during the period ending on the date which is 180 days following Employee’s Separation Date.
(iv) Except as specifically provided above, all Incentive Equity Grants shall remain subject to the applicable grant agreements and the terms of the Equity Plan.
(e) Employee understands and agrees that the Consideration described in this Paragraph 3 shall constitute the entire amount of monetary consideration provided to Employee under this Agreement and that, except as provided immediately below in this Section 3(e), Employee shall not seek any further compensation for any other claimed damage, costs or attorneys’ fees in connection with the matters encompassed or released in this Agreement. Employee further acknowledges that the Parties have agreed that IRIDIX will pay to Employee all
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amounts due and payable to Employee relating to IRIDEX’s Executive MBO Program for fiscal year 2024 within five (5) business days following public release of IRIDEX’s financial results for the third quarter of fiscal year 2024, and Employee agrees, that once such payment has been delivered, Employee will have received all wages, salary, bonuses, monies and compensation of any type due to Employee from IRIDEX except for the amounts set forth in this Paragraph 3.
(f) Employee acknowledges and agrees that neither IRIDEX nor any of its representatives have made any representations, warranties, or promises of any kind, regarding the tax consequences of any amounts received by Employee pursuant to this Agreement. Employee agrees to pay all federal and state taxes of every type which Employee is required to pay by law with respect to this Agreement. Employee agrees to hold IRIDEX completely harmless for same and to indemnify IRIDEX for any charges incurred because of Employee’s failure timely and/or fully to meet Employee’s tax obligations hereunder.
(a) Employee, on Employee’s own behalf, and on behalf of Employee’s respective heirs, family members, executors, and assigns, without limitation hereby irrevocably and unconditionally releases and forever discharges IRIDEX, its employees, founders, investors, shareholders, partners, limited partners, administrators, officers, directors, representatives, attorneys, divisions, parents, subsidiaries, affiliates, predecessors, successors, agents, insurers, and all persons acting by, through, under, or in concert with any of them, and Insperity, including its current and former parent companies, subsidiaries, and other affiliated companies as well as any of their current and former insurers, directors, officers, agents, shareholders, and employees, (“Releasees”), from any and all charges, complaints, claims, causes of action, debts, sums of money, controversies, agreements, promises, damages and liabilities of any kind or nature whatsoever, both at law and equity, known or unknown, suspected or unsuspected arising from conduct occurring on or before the date of this Agreement, including without limitation any claims incidental to or arising out of Employee’s employment relationship with IRIDEX and Insperity, to the full extent of the law (“Release”). Employee further understands that through this Release, Employee is releasing any claim Employee may have for damages, whether brought by Employee or on Employee’s behalf by any other party, governmental agency or otherwise, and further agrees not to institute any claim for damages through any further administrative or legal proceedings against IRIDEX or any Releasee. Employee further understands that Employee is waiving and releasing any and all rights to monetary damages or other legal relief awarded by any governmental agency related to any charge or other claim arising out of or occurring on or before the date of this Agreement.
(b) Employee accepts the amount to which Employee is entitled by virtue of this Agreement as final settlement of accounts between the Parties and warrants that, subject to performance of this Agreement, IRIDEX and the Releasees shall have no further obligations vis-à-vis Employee.
(c) Employee understands this Release includes without limitation all actions, claims and grievances, whether actual or potential, known or unknown, related, incidental to or arising out of Employee’s employment relationship with IRIDEX, based on facts occurring prior to the date Employee executes this Agreement. All such claims, including related attorney’s fees
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and costs, are forever barred by this Agreement without regard to whether those claims are based on any alleged breach of a duty arising by statute, in contract or tort; any alleged unlawful act, any other claim or cause of action; and regardless of the forum in which it might be brought. Employee expressly waives the right to invoke any factual or legal error or any omission whatsoever pertaining to the existence and extent of Employee’s rights.
(d) This Release specifically extends to, without limitation, any and all claims for: (i) breach of contract; (ii) breach of the covenant of good faith and fair dealing, both express and implied; (iii) discrimination, harassment, retaliation and/or failure to take preventative steps to prevent such conduct, in violation of local, state or federal law; (iv) constructive discharge; (v) wrongful termination and (including wrongful termination in violation of public policy); (vi) negligent or intentional infliction of emotional distress; (vii) negligent or intentional interference with contract or prospective economic advantage; (viii) conversion; (ix) personal injury, assault, battery or false imprisonment; (x) damages, injunctive relief and/or declaratory relief arising as the result of any other tort, contract, common law or equitable claim; (xi) violation of any section of (a) any state or Federal Constitution, including the right to privacy; (f) Title VII of the Civil Rights Act of 1964, as amended, and any similar state or local laws, regulations, or ordinances similar to Title VII, such as laws, regulations, or ordinances prohibiting discrimination, harassment, and retaliation; (g) Sections 502(a)(2) or 502(a)(3) of ERISA, 29 U.S.C. Sections 1132(a)(2) or 1132(a)(3); (h) the Worker Adjustment and Retraining Notification Act and any similar local or state laws, regulations, or ordinances; (i) the Age Discrimination in Employment Act of 1967, as amended, and any similar local or state laws, regulations, or ordinances; (j) the Civil Rights Act of 1991 and any similar local or state laws, regulations, or ordinances; (k) Sections 1981 through 1988 of Title 42 of the United States Code and any similar local or state laws, regulations, or ordinances; (l) the Immigration Reform Control Act, as amended; (m) the Americans with Disabilities Act of 1990, as amended and any similar local or state laws, regulations, or ordinances; (n) the Family and Medical Leave Act of 1993; (o) the National Labor Relations Act, as amended, and any similar local or state laws, regulations, or ordinances; (p) the Fair Labor Standards Act, as amended, and any similar local or state laws, regulations, or ordinances; or (q) any other federal, state or local law, regulation or ordinance, or any public policy, tort, contract or other common law; (xii) unpaid wages, unpaid overtime wages, or other compensation or benefits arising out of Employee’s employment with any Releasee; (xiii) negligent or intentional misrepresentation, defamation, slander and/or libel; (xiv) damages of any nature, past, present or future, including compensatory, general, special or punitive; (xv) injunctive and/or declaratory relief and (xvi) costs, fees, sanctions or other expenses, including attorneys’ fees, incurred regarding any of these claims.
(e) The term of this Agreement and the release herein do not extend to: (1) claims based on obligations created by or reaffirmed in this Agreement; (2) rights or claims that may arise after the date Employee executes this Agreement; (3) any accrued and vested rights under any applicable ERISA-covered or 401(k) employee benefit plan provided by IRIDEX to Employee; (4) any workers’ compensation claims or unemployment insurance claims; and (5) any other claims which the controlling law clearly states may not be released by settlement. Nothing in this Agreement (including but not limited to the release of claims, promise not to sue, and confidentiality, cooperation, non-disparagement, and return of property provisions and any other limiting provisions) (a) limits or affects Employee’s right to challenge the validity of this Agreement under the ADEA or the OWBPA or (b) prevents Employee from filing a charge or
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complaint with or from participating in an investigation or proceeding conducted by the Equal Employment Opportunity Commission (“EEOC”), the National Labor Relations Board (“NLRB”), the Securities and Exchange Commission (“SEC”), or any other federal, state or local agency charged with the enforcement of any laws, including providing documents or other information, or (c) prevents Employee exercising Employee’s rights under Section 7 of the National Labor Relations Act to engage in protected, concerted activity with other employees, although by signing this Agreement Employee is waiving Employee’s right to recover any individual relief (including but not limited to back pay, front pay, reinstatement or other legal or equitable relief) in any charge, complaint, or lawsuit or other proceeding brought by Employee or on Employee’s behalf by any third party, except for any right Employee may have to receive a payment from a government agency (and not the Company) for information provided to the government agency.
(a) Acknowledgments/Time to Consider. Employee acknowledges and agrees:
(i) Employee has read and understands the terms of this Agreement;
(ii) Employee has been advised in writing to consult with an attorney before executing this Agreement;
(iii) Employee has obtained and considered such legal counsel as Employee deems necessary;
(iv) Employee has been given at least 45 days from the date Employee received this Release and any attached information to consider the terms of this Release before signing it (the “Consideration Period”) (although Employee may voluntarily choose to sign this Release prior to the expiration of the Consideration Period, and if Employee so elects, Employee represents Employee knowingly and voluntarily waives the remainder of the Consideration Period);
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(v) by signing this Agreement, Employee acknowledges that Employee does so freely, knowingly, and voluntarily; and
(vi) the Parties agree that changes to this Agreement, whether material or immaterial, do not restart the running of the 45-day period. If Employee does not sign this Agreement on or before the expiration of the Consideration Period, the Company will consider the offer this Agreement to be withdrawn.
(b) Revocation/Effective Date. Employee may revoke Employee’s acceptance of this Agreement within seven (7) days after the date Employee signs it. Employee's revocation must be in writing and received by Mary Dy, Sr. Director, Human Resources, IRIDEX Corporation, 1212 Terra Bella Avenue, Mountain View, CA 94043; telephone number: 650-605-8744; facsimile number: 650-940-4710; email: mdy@iridex.com. by 5:00 p.m. Pacific Time on the seventh day in order to be effective. If Employee does not revoke acceptance within the seven (7) day period, Employee's acceptance of this Agreement shall become binding and enforceable on the eighth day after Employee signs the Agreement (“Effective Date”). The Separation Package shall become due and payable in accordance with Paragraph 3, provided this Agreement has not been revoked.
(c) Employee has carefully read and fully understands all of the provisions of this Agreement, which is written in a manner that Employee clearly understands.
(d) The Consideration provided for in this Agreement and the provisions of this Paragraph 6 are in addition to that to which Employee is already entitled and will receive upon Employee’s termination from IRIDEX.
(e) Employee knowingly and voluntarily agrees to all of the terms in this Agreement and intends to be legally bound by this Agreement.
(f) Preserved Rights of Employee. This Agreement does not waive or release any rights or claims that Employee may have under the Age Discrimination in Employment Act that arise after the execution of this Agreement. In addition, this Agreement does not prohibit Employee from challenging the validity of this Agreement’s waiver and release of claims under the Age Discrimination in Employment Act of 1967, as amended.
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BY AFFIXING HIS/HER SIGNATURE BELOW, EACH OF THE PERSONS SIGNING THIS AGREEMENT REPRESENTS THAT S/HE HAS READ AND UNDERSTANDS THIS AGREEMENT, THAT S/HE IS AUTHORIZED TO SIGN THIS AGREEMENT, AND THAT THE PARTY ON BEHALF OF WHOM S/HE SIGNS THIS AGREEMENT AGREES TO BE BOUND BY ITS TERMS.
Date: /s/ David I. Bruce
David I. Bruce
On behalf of IRIDEX CORPORATION.
Date: /s/ Mary Dy
Mary Dy
Sr. Director, Human Resources
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Exhibit 10.2
IRIDEX CORPORATION
AMENDED AND RESTATED
CHANGE IN CONTROL SEVERANCE AGREEMENT
This Amended and Restated Change in Control Severance Agreement (the “Agreement”) is made and entered into by and between Patrick Mercer (“Executive”) and IRIDEX Corporation, a Delaware corporation (the “Company”), effective as of October 30, 2024 (the “Effective Date”).
RECITALS
Whereas, it is expected that the Company from time to time will consider the possibility of a merger with another company, an acquisition by another company or other Change in Control (as defined herein). The Board of Directors of the Company (the “Board”) recognizes that such consideration can be a distraction to Executive and can cause Executive to consider alternative employment opportunities. The Board has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity of Executive, notwithstanding the possibility, threat or occurrence of a termination of employment or a merger, acquisition or Change in Control of the Company.
Whereas, the Board believes that it is in the best interests of the Company and its stockholders to provide Executive with an incentive to continue Executive’s employment and to motivate Executive to maximize the value of the Company upon a Change in Control for the benefit of its stockholders.
Whereas, the Board believes that it is in the best interests of the Company and its stockholders to provide Executive with certain severance benefits upon Executive’s termination of employment other than for Cause (as defined herein) or upon a resignation for Good Reason in connection with a Change in Control of the Company, in order to provide Executive with enhanced financial security and incentive to remain with the Company.
Whereas, Executive and the Company entered into a Change in Control Severance Agreement dated October 25, 2019 (the “Prior Agreement”) and they wish to change the terms of the Prior Agreement and supercede and replace the Prior Agreement with this Agreement.
Whereas, certain capitalized terms used in the Agreement are defined in Section 6 below
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties hereto agree as follows:
(a) Termination in Connection With a Change in Control. If, in the event that (a) within twelve (12) months following a Change in Control, or (b) at any time prior to a Change in Control if such termination is effected at the written request of any successor to the Company, (x) Executive resigns Executive’s employment with the Company (or any parent or subsidiary or successor of the Company) for Good Reason, or (y) the Company (or any parent or subsidiary or successor of the Company) terminates Executive’s employment for a reason other than Cause, death or Disability, and, in each case, Executive signs and does not revoke a release of claims agreement and complies with certain non-solicitation restrictions as set forth in Section 4 hereof, then Executive will receive, in addition to Executive’s salary payable through the date of termination of employment and any other employee benefits earned and expense reimbursements owed through the date of termination, the following severance pay and benefits from the Company (subject to Section 4(c) hereof):
(i) Severance Payment. A lump sum severance payment equal to (A) Executive’s annual base salary, as then in effect on the date of such termination, or, if greater, at the level in effect immediately prior to the Change in Control, plus Executive’s target bonus in effect prior to the Change in Control, multiplied by (B) a factor of 1.5, which will be paid in accordance with the Company’s regular payroll procedures.
(ii) Accelerated Vesting of Equity Awards. Accelerated vesting as to one-hundred percent (100%) of the then unvested portion of all of Executive’s outstanding Company equity awards. If, however, an outstanding Company equity award is to vest and/or the amount of the award to vest is to be determined based on the achievement of performance criteria, then the Company equity award will vest as to one-hundred percent (100%) of the amount of the Company equity award assuming the performance criteria had been achieved at target levels for the relevant performance period(s).
(iii) Continued Employee Benefits. If Executive elects continuation coverage pursuant to COBRA within the time period prescribed pursuant to COBRA for Executive and Executive’s eligible dependents, the Company will reimburse Executive for the premiums necessary to continue group health insurance benefits for Executive and Executive’s eligible dependents until the earlier of (A) a period of twelve (12) months from the date of Executive’s termination of employment, (B) the date upon which Executive and/or Executive’s eligible dependents becomes covered under similar plans or (C) the date upon which Executive ceases to be eligible for coverage under COBRA (such reimbursements, the “COBRA Premiums”). However, if the Company determines in its sole discretion that it cannot pay the COBRA Premiums without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the
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Company will in lieu thereof provide to Executive a taxable monthly payment payable on the last day of a given month (except as provided by the following sentence), in an amount equal to the monthly COBRA premium that Executive would be required to pay to continue Executive’s group health coverage in effect on the date of Executive’s termination of employment (which amount will be based on the premium for the first month of COBRA coverage), which payments will be made regardless of whether Executive elects COBRA continuation coverage and will commence on the month following Executive’s termination of employment and will end on the earlier of (x) the date upon which Executive obtains other employment or (y) the date the Company has paid an amount equal to twelve (12) payments. For the avoidance of doubt, the taxable payments in lieu of COBRA Premiums may be used for any purpose, including, but not limited to continuation coverage under COBRA, and will be subject to all applicable tax withholdings. Notwithstanding anything to the contrary under this Agreement, if at any time the Company determines in its sole discretion that it cannot provide the payments contemplated by the preceding sentence without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), Executive will not receive such payment or any further reimbursements for COBRA premiums.
(b) Other Termination Events. If Executive’s employment with the Company terminates with the Company (and any parent or subsidiary or successor of the Company) (i) voluntarily by Executive (except as provided in Section 3(a)), (ii) for Cause, or (iii) for death or Disability, then Executive will not be entitled to receive any severance payment or benefits and the sole obligation of the Company shall be to pay to Executive (or Executive’s estate), an amount equal to Executive’s base salary payable through the date of termination of employment and any other employee benefits earned and owed through the date of termination. If Executive employment is terminated other than Cause (except as provided in Section 3(a)) by the Company, then Executive will be entitled to Severance payments defined in Section 3(a)(i).
(c) Exclusive Remedy. In the event of a termination of Executive’s employment with the Company (or any parent or subsidiary or successor of the Company), the provisions of this Section 3 are intended to be and are exclusive and in lieu of any other rights or remedies to which Executive or the Company may otherwise be entitled, whether at law, tort or contract, in equity, or under this Agreement. Executive will be entitled to no benefits, compensation or other payments or rights upon termination of employment other than those benefits expressly set forth in this Section 3.
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whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by Executive on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code. If a reduction in severance and other benefits constituting “parachute payments” is necessary so that benefits are delivered to a lesser extent, reduction will occur in the following order: (i) reduction of cash payments; (ii) cancellation of awards granted “contingent on a change in ownership or control” (within the meaning of Code Section 280G); (iii) cancellation of accelerated vesting of equity awards; or (iv) reduction of employee benefits. In the event that acceleration of vesting of equity award compensation is to be reduced, such acceleration of vesting will be cancelled in the reverse order of the date of grant of Executive’s equity awards. If two or more equity awards are granted on the same date, each award will be reduced on a pro-rata basis. In all events, the Executive shall have no right, power or discretion to determine the reduction of payments and/or benefits.
Unless the Company and Executive otherwise agree in writing, any determination required under this Section 5 will be made in writing by a nationally recognized certified professional services firm selected by the Company, the Company’s legal counsel or such other person or entity to which the parties mutually agree (the “Firm”) immediately prior to the Change in Control, whose determination will be conclusive and binding upon Executive and the Company for all purposes. For purposes of making the calculations required by this Section 5, the Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Executive will
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furnish to the Firm such information and documents as the Accountants may reasonably request in order to make a determination under this Section 5. The Company will bear all costs the Firm may reasonably incur in connection with any calculations contemplated by this Section 5.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer or director, as of the day and year set forth below.
COMPANY IRIDEX CORPORATION
________________
Title: ______________________
EXECUTIVE By: _______________________
Patrick Mercer
Title: Chief Executive Officer
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