EXHIBIT 10.19

 

NEW FOCUS, INC.

 

AMENDED AND RESTATED

 

EMPLOYMENT AGREEMENT

 

This Amended and Restated Employment Agreement (the “Agreement”) is made and
entered into as of March 18, 2003, by and between Nicola Pignati (“Employee”)
and New Focus, Inc., a Delaware corporation (the “Company”).

 

WHEREAS, Employee was appointed the Company’s President and Chief Executive
Officer effective as of April 25, 2002;

 

WHEREAS, the Company and Employee entered into that certain Employment Agreement
dated August 28, 2002 (the “Prior Employment Agreement”);

 

WHEREAS, pursuant to Section 11(c) of the Prior Employment Agreement, the
parties now wish to amend and restate the Prior Employment Agreement in its
entirety and enter into this Agreement to set forth certain agreements related
to the compensation and employment of Employee in connection with his employment
as President and Chief Executive Officer of the Company.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:

 

1.    Duties and Scope of Employment.

 

(a)    Position.    The Company shall employ Employee in the position of
President and Chief Executive Officer. Employee shall have overall
responsibility for the day-to-day management of the Company and shall be
expected to perform such duties and exercise such powers as are customarily
associated with his position, subject to direction from the Company’s Board of
Directors (the “Board”). The period of Employee’s employment under this
Agreement is referred to herein as the “Employment Term.”

 

(b)    Obligations.    During the Employment Term, Employee agrees to devote his
full time and attention to the business and affairs of the Company and to use
his best efforts to perform his responsibilities faithfully and efficiently. For
the duration of the Employment Term, Employee agrees not to engage in any other
employment, occupation or consulting activity for any direct or indirect
remuneration without the prior approval of the Board.

 

2.    At-Will Employment.    The Company and Employee acknowledge that
Employee’s employment with the Company is for an unspecified duration and
constitutes “at-will” employment. As such, either the Company or Employee may
terminate Employee’s employment at any time, with or without notice and with or
without Cause (as defined in Section 8(c) below). Neither Employee’s job
performance, promotions, commendations, bonuses, stock option grants or the like
from the

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Company shall imply or create an obligation on the part of either the Company or
Employee to continue employment. If Employee’s employment terminates for any
reason, Employee shall not be entitled to any payments, benefits, severance,
damages, awards or compensation other than as provided by this Agreement.

 

3.    Compensation and Benefits.

 

(a)    Salary.    The Company shall pay Employee a salary of $25,000 per month
(annualized at $300,000), payable in accordance with the Company’s standard
payroll practices and subject to customary deductions. Employee’s salary may be
adjusted by the Board or the Compensation Committee of the Board.

 

(b)    Employee Benefits.    Employee shall be eligible to receive the standard
benefits given to Company employees and any additional or other benefits offered
specifically to executives, subject in each case to the generally applicable
terms and conditions of the plan or program in question and to the determination
of any committee administering such plan or program. The Company will include
Employee under its policy for directors and officers insurance coverage, and has
entered into an Indemnification Agreement with Employee dated as of October 25,
2001, attached as Exhibit A hereto (the “Indemnification Agreement”), which
shall remain in full force and effect in accordance with its terms.

 

(c)    Expenses.    The Company shall reimburse Employee for reasonable
business-related expenses incurred by Employee in furtherance of, or in
connection with, the performance of his duties hereunder, after written request
made by Employee to the Company in a timely manner and in accordance with the
Company’s expense reimbursement policy as in effect from time to time.

 

4.    Strategic Combination Bonus.

 

(a)    In the event of a Strategic Combination (as defined in Section 8(g)
below) during the Employment Term and prior to December 31, 2003, the Company
shall pay Employee a one-time cash bonus equal to $300,000, less applicable
withholding (the “Strategic Combination Bonus”). Any such Strategic Combination
Bonus shall be paid within thirty days of the Strategic Combination Closing Date
(as defined in Section 8(h) below).

 

(b)    Employee’s right to earn the Strategic Combination Bonus shall terminate
on the effective date of Employee’s voluntary termination of employment with the
Company or Employee’s involuntary termination of employment with the Company for
Cause (as defined in Section 8(c) below) prior to the Strategic Combination
Closing Date, if any; provided, however, that if Employee terminates his
employment with the Company following a Good Reason Event (as defined in Section
8(e) below), or his employment with the Company is involuntarily terminated
without Cause, prior to December 31, 2003, he shall nonetheless be entitled to
receive the Strategic Combination Bonus so long as the Strategic Combination is
consummated prior to such termination; provided that, with respect to a Buy-Side
Event (as defined in Section 8(b)) or series of Buy-Side Events, such Buy-Side
Event or series of Buy-Side Events results in an Acquisition Milestone (as
defined in Section 8(a)) prior to December 31, 2003.

 

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5.    Severance Benefits.

 

(a)    Termination by the Company Without Cause.    In the event that, during
the Employment Term, Employee’s employment with the Company is involuntarily
terminated without Cause (as defined in Section 8(c) below) or Employee
voluntarily terminates his employment with the Company following a Good Reason
Event (as defined in Section 8(e) below), Employee shall be entitled to the
following: (i) continuation of his then current salary for a period of eighteen
months following the date of Employee’s termination without Cause or voluntary
termination following a Good Reason Event, less applicable withholding, payable
in accordance with the normal payroll practices of the Company; (ii)
reimbursement by the Company of Employee’s COBRA payments for eighteen months
beginning on the date of such involuntary termination without Cause or voluntary
termination following a Good Reason Event, provided Employee timely elects to
continue his health insurance; (iii) cash equal to an aggregate of sixty percent
(60%) of Employee’s then current salary for a period of eighteen months, less
applicable withholding, payable in accordance with the normal payroll practices
of the Company; and (iv) executive outplacement assistance. Employee shall be
required to sign a Separation Agreement and Release of Claims in a form
satisfactory to the Company as a condition precedent to receiving the severance
benefits from the Company.

 

(b)    Termination by Employee or for Cause.    In the event that Employee’s
employment with the Company is voluntarily terminated during the term of this
Agreement by Employee (other than following a Good Reason Event, as defined in
Section 8(e) below), or by the Company for Cause (as defined in Section 8(c)
below), Employee shall be entitled only to any unpaid base salary due for
periods prior to the termination date, accrued and unused vacation and,
following submission of proper expense reports by Employee, the Company shall
reimburse Employee for all expenses reasonably and necessarily incurred by
Employee in connection with the business of the Company prior to the termination
date. Employee shall not be entitled to any further compensation or benefits of
any kind.

 

6.    Limitation on Payments.    In the event that the severance and other
benefits provided for in this Agreement or otherwise payable to Employee: (i)
constitute “parachute payments” within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the “Code”); and (ii) but for this
Section 6, would be subject to the excise tax imposed by Section 4999 of the
Code, then Employee’s severance benefits under Section 5 and Section 7(b) shall
be payable either:

 

(a)    in full, or

 

(b)    as to such lesser amount which would result in no portion of such
severance benefits being subject to excise tax under Section 4999 of the Code,
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 Employee on an after-tax basis, of the greatest amount of
severance benefits under Section 5 and Section 7(b), notwithstanding that all or
some portion of such severance benefits may be taxable under Section 4999 of the
Code. Unless the Company and Employee otherwise agree in writing, any
determination required under this Section 6 shall be made in writing by the
Company’s independent public accountants (the “Accountants”), whose
determination shall be conclusive and binding upon Employee and the Company for
all purposes. For purposes of making the calculations required by this Section
6, the Accountants may

 

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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 Employee shall furnish to
the Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section 6. The Company shall
bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 6.

 

7.    Stock Options.

 

(a)    Option Grant.    The Company shall grant to Employee an option to
purchase 1,000,000 shares of the Company’s Common Stock at a price per share
equal to the fair market value per share of the Common Stock on the date of the
grant, which shall be the closing price of the Company’s Common Stock on the
Nasdaq National Market on the date prior to the date of grant (the “Option”).
1/60th of the shares subject to the Option shall vest as of May 25, 2002, and
1/60th of the shares subject to the Option shall vest monthly thereafter,
provided that Employee’s status as a service provider has not terminated on such
dates. The Option shall be subject to the terms and conditions of the Stock
Option Agreement in substantially the form attached hereto as Exhibit B (the
“Stock Option Agreement”), which Employee shall be required to execute as a
condition to receiving the Option.

 

(b)    Acceleration Upon a Change of Control.    Upon Employee’s voluntary
termination of employment with the Company following a Good Reason Event (as
defined in Section 8(e) below), or Employee’s involuntary termination of
employment with the Company without Cause (as defined in Section 8(c) below), at
any time within the 3-month period prior to, or the 18-month period following,
the effective date of a Change of Control (as defined in Section 8(d) below) or
the 12-month period following a Buy-Side Event (as defined in Section 8(b)
below), Employee shall fully vest in and have the right to exercise the Option
as to one hundred percent (100%) of the then unvested shares subject to the
Option as of the date of such termination.

 

8.    Definitions.    As used in this Agreement, the following terms shall have
the meanings set forth below:

 

(a)    Acquisition Milestone.    “Acquisition Milestone” shall mean the
Company’s recognition on or prior to December 31, 2003, of more than $20 million
in cumulative Net Revenues (as determined in accordance with generally accepted
accounting principles, “GAAP” and consistent with the Company’s past practices)
or more than $2.0 million in cumulative Operating Income on a pro forma basis
(consistent with the Company’s past practices) derived from the operating
results of one or more entities acquired in a Buy-Side Event or series of
Buy-Side Events occurring during the Employment Term and before December 31,
2003.

 

(b)    Buy-Side Event.    “Buy-Side Event” shall mean (i) the Company’s
acquisition, directly or indirectly, of securities of another corporation or
entity representing more than fifty percent (50%) of the total voting power
represented by such corporation or entity’s then outstanding voting securities,
or (ii) a merger or consolidation of another corporation or entity with the
Company, or the Company’s purchase of all or substantially all the assets of
another corporation or entity, a result of which merger, consolidation or
purchase, the voting securities of such corporation

 

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or entity outstanding immediately prior thereto do not continue to represent
(either by remaining outstanding or by being converted into voting securities of
the Company) more than fifty percent (50%) of the total voting power represented
by the voting securities of such corporation or entity or surviving entity
outstanding immediately after such merger, consolidation or purchase.

 

(c)    Cause.    “Cause” shall mean Employee’s (i) willful act of personal
dishonesty, gross misconduct, fraud or misrepresentation, taken by Employee in
connection with his responsibilities as an employee, that is seriously injurious
to the Company; (ii) conviction of or entry of a plea of guilty or nolo
contendere to a felony; or (iii) willful and continued failure to substantially
perform his principal duties and/or obligations of employment (other than any
such failure resulting from incapacity due to bona fide physical or mental
illness), which failure is not remedied within a period of forty-five days after
receipt of written notice from the Company, specifically identifying the manner
in which the Company believes that Employee has not substantially performed his
duties and/or obligations. For the purposes of this subsection (c) no act or
failure to act shall be considered “willful” unless done or omitted to be done
in bad faith and without reasonable belief that the act or omission was in or
not opposed to the best interests of the Company.

 

(d)    Change of Control.    “Change of Control” shall mean the occurrence of
any of the following events:

 

(i)    the acquisition by any “person” (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended, the “Exchange
Act”) (other than the Company or a person that directly or indirectly controls,
is controlled by, or is under common control with, the Company) of the
“beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing more than
fifty percent (50%) of the total voting power represented by the Company’s then
outstanding voting securities;

 

(ii)    a Merger Event (as defined in Section 8(f) below); or

 

(iii)    the approval of a plan of complete liquidation or dissolution of the
Company; or

 

(iv)    a change in the composition of the Board occurring within a 12-month
period, as a result of which fewer than a majority of the directors are
Incumbent Directors. “Incumbent Directors” shall mean directors who either (A)
are members of the Board as of the date of this Agreement, or (B) are elected,
or nominated for election, to the Board with the affirmative votes of at least a
majority of directors whose election was neither in connection with any
transactions described in subsections (i) or (ii) above, nor in connection with
an actual or threatened proxy contest relating to the election of directors to
the Board.

 

(e)    Good Reason Event.    “Good Reason Event” shall mean that without
Employee’s written consent and without Cause, any of the following events occur:

 

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(i)    a reduction of five percent (5%) or more of Employee’s compensation
(including base salary and any non-discretionary and objective standard
incentive payments or bonus awards, but excluding facilities, fringe benefits
and prerequisites included in subsection (iii) below);

 

(ii)    a reduction of the scope or nature of Employee’s duties and/or
responsibilities, it being understood that the fact alone that Employee’s duties
and/or responsibilities are conducted at the Company level following a Change of
Control, rather than at the combined entity level, shall constitute a “Good
Reason Event;”

 

(iii)    a substantial reduction, without good business reasons, of the
facilities, fringe benefits or perquisites available to Employee immediately
prior to such reduction (good business reasons include reductions to make such
facilities, fringe benefits or perquisites consistent with the practice of the
acquiring company);

 

(iv)    the relocation of Employee’s primary workplace to a location more than
fifty miles away from his workplace in effect immediately prior to such
relocation; or

 

(v)    the failure of the Company to obtain the express assumption of this
Agreement by an acquiring corporation.

 

(f)    Merger Event.    “Merger Event” shall mean a merger or consolidation of
the Company with any other corporation, or the sale of all or substantially all
the assets of the Company, a result of which merger, consolidation or sale, the
voting securities of the Company outstanding immediately prior thereto do not
continue to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity, including the parent corporation
of such surviving entity) more than fifty percent (50%) of the total voting
power represented by the voting securities of the Company or such surviving
entity outstanding immediately after such merger, consolidation or sale.

 

(g)    Strategic Combination.    “Strategic Combination” shall mean the first to
occur of (i) a Merger Event or (ii) a Buy-Side Event or series of Buy-Side
Events that result(s) in an Acquisition Milestone.

 

(h)    Strategic Combination Closing Date.    “Strategic Combination Closing
Date” shall mean:

 

(i)    In the event of a Strategic Combination resulting from a Merger Event,
the effective date of such merger, consolidation or sale; and

 

(ii)    In the event of a Strategic Combination resulting from a Buy-Side Event
or series of Buy-Side Events, the date that the Audit Committee of the Board (or
an external consultant to the Audit Committee), in its sole and absolute
discretion, determines that the operating results of one or more entities
acquired in a Buy-Side Event or series of Buy-Side Events has resulted in an
Acquisition Milestone.

 

9.    Proprietary Information Agreement.    Employee and the Company entered
into that certain Proprietary Information Agreement dated as of April 14, 2000,
attached hereto as Exhibit C

 

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(the “Proprietary Information Agreement”), and Employee acknowledges and agrees,
as a condition of Employee’s employment, that the Proprietary Information
Agreement remains in full force and effect, and Employee agrees to comply with
the terms thereof, which requires, among other provisions, the assignment of
patent rights to any invention made during Employee’s employment at the Company
and non-disclosure of the Company’s confidential and proprietary information.

 

10.    Notices.    Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed given (i) on the date of
delivery when personally delivered, (ii) one day after deposit with a
well-established commercial overnight service, or (iii) four days after being
mailed by U.S. registered or certified mail, return receipt requested and
postage prepaid. In the case of Employee, mailed notices shall be addressed to
him at the home address that he most recently communicated to the Company in
writing. In the case of the Company, mailed notices shall be addressed to its
corporate headquarters, and all such notices shall be directed to the attention
of its Chief Financial Officer.

 

11.    Arbitration.    In consideration of Employee’s employment with the
Company, the Company’s like promise to arbitrate disputes with Employee, and
Employee’s receipt of the compensation and other benefits the Company has agreed
to pay Employee, at present and in the future, Employee agrees that any and all
disputes, claims or controversies with anyone (including the Company and any
employee, officer, director, shareholder or benefit plan of the Company in their
capacity as such or otherwise) arising out of or relating to any interpretation,
construction, performance or breach of this Agreement or any agreements between
Employee and the Company relating to stock or stock options shall be settled by
binding arbitration to be held in Santa Clara, California, under the arbitration
rules set forth in California Code of Civil Procedure section 1280 through
1294.2, including section 1283.05 (the “Rules”) and pursuant to California law.
The arbitrator may grant injunctions and other relief in such disputes. The
decision of the arbitrator shall be final, conclusive and binding on the parties
to the arbitration. The prevailing party in any arbitration shall be entitled to
injunctive relief in any court of competent jurisdiction to enforce the
arbitration award. The prevailing party in any arbitration shall be awarded its
reasonable attorneys’ fees and costs. EMPLOYEE UNDERSTANDS THAT BOTH HE AND THE
COMPANY WAIVE THEIR RIGHT TO HAVE ANY DISPUTE BETWEEN THEM ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY AGREEMENTS BETWEEN EMPLOYEE AND THE COMPANY
RELATING TO STOCK OR STOCK OPTIONS RESOLVED IN A COURT OF LAW BY A JUDGE OR
JURY. This paragraph will not prevent the Company or Employee from seeking
injunctive relief (or any other provisional remedy) from any court having
jurisdiction over the parties and the subject matter of their dispute relating
to Employee’s obligations under this Agreement.

 

12.    Miscellaneous Provisions.

 

(a)    Waiver.    No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by Employee and by an authorized officer of the Company (other than
Employee). No waiver by either party of any breach of, or of compliance with,
any condition or provision of this Agreement by the

 

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other party shall be considered a waiver of any other condition or provision or
of the same condition or provision at another time.

 

(b)    Voluntary Nature of Agreement.    Employee acknowledges and agrees that
he is executing this Agreement voluntarily and without any duress or undue
influence by the Company or anyone else.

 

(c)    Entire Agreement/Amendment.    This Agreement, together with the
Indemnification Agreement, the Stock Option Agreement and the Proprietary
Information Agreement, represents the entire agreement and understanding between
the parties as to the subject matter herein and supercedes the Prior Employment
Agreement, and all prior or contemporaneous agreements, whether written or oral,
except for those certain Stock Option Agreements dated April 19, 2000, November
14, 2001 and January 3, 2002, each as amended by the Amendment to Nonstatutory
Stock Option Agreement dated as of March 7, 2002, which remain in full force and
effect. Any waiver, modification or amendment of any provision of this Agreement
will be effective only if in writing and signed by Employee and an authorized
officer of the Company (other than Employee).

 

(d)    Choice of Law.    This Agreement shall be governed by the laws of the
State of California (with the exception of its conflict of laws provisions).

 

(e)    Severability.    In the event that any provision or any portion of any
provision hereof becomes or is declared by a court of competent jurisdiction to
be illegal, unenforceable or void, this Agreement shall continue in full force
and effect without said provision or portion of provision.

 

(f)    No Representations.    Employee represents that he has had the
opportunity to consult with an attorney of his choice, and has carefully read
and understands the scope and effect of the provisions of this Agreement.
Employee further represents that he has not relied upon any representations or
statements made by the Company or anyone else regarding his employment with the
Company which are not specifically set forth in this Agreement

 

(g)    Counterparts; Facsimile.    This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument. Facsimile copies of this
Agreement shall be deemed to be originals.

 

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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, as of the day and year first
above written.

 

COMPANY:

         

NEW FOCUS, INC.

               

/S/    WILLIAM L. POTTS, JR.        

               

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By:  William L. Potts, Jr.

Title:  Chief Financial Officer

EMPLOYEE:

         

/S/    NICOLA PIGNATI        

               

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Nicola Pignati

 

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EXHIBIT A

 

INDEMNIFICATION AGREEMENT

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EXHIBIT B

 

FORM OF STOCK OPTION AGREEMENT

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EXHIBIT C

 

PROPRIETARY INFORMATION AGREEMENT