EXECUTIVE OFFICER SEVERANCE AGREEMENT
Exhibit 10.19
This Executive Officer Severance Agreement (the
“Agreement”) dated, September 29, 2000 (“Effective Date”), and is by and between Xxxxxx X. Xxxxxxx (the “Executive”), an individual currently residing at 000 Xxxxxxx Xxxxxx, Xxxx Xxxx, XX 00000 and inSilicon
Corporation, a Delaware corporation (the “Company”), with its principal place of business at 000 Xxxx Xxxxxxxx Xxxxx, Xxx Xxxx, XX 00000
R E C I T A L S
A. The Company desires to
employ Executive and Executive desires to provide employment services to the Company, on the terms and conditions set forth herein.
B. The Board of Directors of the Company believes it to be in the best interest of the Company and its stockholders to provide the Executive with certain severance benefits should Executive’s
employment with the Company terminate under certain circumstances, and the parties wish to provide Executive with financial security and with sufficient incentive and encouragement for Executive to remain with the Company.
C. Certain capitalized terms used in the Agreement are defined in Section 9 below.
A G R E E M E N T
In consideration of the mutual covenants herein contained, and in consideration of the continuing employment of Executive by the Company, the parties agree as follows:
1. Duties and Scope of Employment. The Company has appointed Executive as Vice President, General Counsel and Secretary of the Corporation.
Executive shall have such other or additional duties or positions with the Company, its subsidiaries or affiliates as the Company shall determine from time to time. The Executive shall comply with and be bound by the Company’s operating
policies, procedures and practices from time to time in effect during his employment. Executive shall devote his full time, skill and attention to his duties and responsibilities, and shall perform them faithfully, diligently and competently, and
the Executive will use his best efforts to further the business of the Company and its affiliated entities. In connection with his employment under this agreement, Executive shall be based at the Company’s principal place of business which is
currently located in San Jose, California, but Executive understands and agrees that he may be required to perform services anywhere in the world, and will perform his employment at such location or locations as may be determined by the Company from
time to time.
2. Base Compensation. The Company will pay Executive the base annual
salary of $165,000 (“Base Compensation”). The Company will pay the Base Compensation in accordance with normal Company payroll practices. The Base Compensation shall be reviewed annually and may be increased from time to time, in which
case the “Base Compensation” will refer to the base salary earned by Executive at the time in question.
3. Executive’s Benefits. The Executive shall be eligible to participate in the employee benefit plans and Executive compensation programs maintained by the Company applicable
to other Executives of the Company, including (without limitation) retirement plans, savings or profit-sharing plans, stock option,
incentive or other bonus plans, life, disability, health, medical and hospital, accident and other
insurance programs, paid vacations, and similar plans or programs, subject in each case to the generally applicable terms and conditions of the applicable plan or program in question and to the sole determination of the Board or any committee
administering such plan or program. The following additional Executive benefits will be made available:
(a) Stock Option Grant. Executive was originally granted an option to purchase 80,000 shares of Company stock, at an exercise price determined by the Board of Directors, with a price set at
the closing market price on his date of hire. The options will vest in accordance to Company’s Option Plan, over a four-year period.
(b) Bonus Eligibility and Payment. The target amount of Executive’s fiscal year 2001 bonus is set at $7,500 per quarter. Actual payments under the bonus plan will be based on
application of the terms of the published Executive Bonus Plan.
(c) Directors and Officers
Insurance. The Company shall use its best efforts to purchase and maintain in force Directors and Officers insurance, from a company qualified to conduct such business in California, having an A.M. Best rating of at least
A (or equivalent rating), insuring against claims resulting from the Key Employee’s performance of duties and responsibilities on behalf of Company. Executive shall have the benefit of such coverage after leaving Company for a period of 2 years
after termination of employment.
4. Other Business Affiliations. In addition to
Executive’s obligations under Section 8, Executive agrees that, without the approval of the Chief Executive Officer of the Company, he shall not, while employed by the Company, devote any time to any business affiliation which would interfere
with or derogate from his obligations under this Agreement with respect of the Company and any of its subsidiaries, parents or affiliates.
5. Expenses. The Company shall reimburse Executive for all reasonable business expenses incurred in the performance of his duties hereunder on behalf of the Company, upon
submission of expense reports to the extent necessary to substantiate the Company’s federal income tax deductions for such expenses under the Internal Revenue Code (as amended) and the Regulations there under and according to such expense
report regulations as may be established by the Board of Directors of the Company.
6. Term and Termination.
(a) Term of
Agreement. Executive’s employment with the Company under this Agreement shall continue from the Effective Date until terminated in accordance with the terms of this Agreement.
(b) Termination for Cause. The Company may terminate this Agreement and the employment of
Executive hereunder, with immediate effect, including, without limitation, the termination of all compensation and benefits (except as may be expressly provided in this Agreement), for Cause, as defined hereunder.
(c) Termination Other than for Cause If the Company terminates Executive’s employment for
any reason other than Cause, or Executive’s employment is terminated by Constructive Termination as defined in this Agreement, the Executive shall be entitled to receive the severance benefits stated in Section 7(a) below unless the termination
is as a result of death or disability, in which event Executive shall be entitled to receive the benefits set forth in Section 7(b), if any. Both Company and Executive agree that Executive’s employment is “at will” and may be
terminated at any time by either party.
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(d) Executive’s Resignation. In the
event Executive voluntarily resigns, Executive shall give the Board of Directors thirty (30) days written notice of resignation. Upon such notice, the Board of Directors, at its discretion, may terminate the relationship immediately, but in such
event the Board of Directors obligation to Executive shall be limited to compensation through the remainder of the thirty (30) days resignation notice period.
(e) Return of Information. On termination of employment for any reason, Executive will return to the Company all originals and copies of all or any part of:
lists and sources of customers and suppliers; lists of employees; proposals to clients or drafts of proposals; business plans and projections; reports; job notes; specifications; and drawings pertaining to the Company or its customers; or any and
all other things, equipment and written materials obtained by Executive during the course of employment from the Company or from any client of the Company, unless Company agrees in writing to waive any of the forgoing.
7. Severance Benefits.
(a) Termination Not for Cause. If the Company terminates Executive’s employment for any reason other than Cause, or
Executive’s employment is terminated by Constructive Termination as defined in this Agreement, the Executive shall be entitled to receive the following severance benefits.
(1) Guaranteed Severance Payments. Subject to Executive entering into a Release of Claims (in a form substantially
similar to the release of claims attached as Exhibit A), Executive shall be entitled to receive severance payments for a period of six (6) months from the date of termination equal to Executive’s then current base salary, which may be greater
than, but will not be less than the Base Compensation (the “Guaranteed Severance Payment”). The Guaranteed Severance Payment will be paid to Executive in accordance with the Company’s standard payroll practices. Upon termination,
Executive will also be entitled to receive a pro-rated portion of his then current targeted bonus for the fiscal year of his termination as described in Section 3(b) based on the date at which Executive gives notice.
(2) Medical Benefits. The Company, at the Company’s sole expense, shall
provide Executive (and, if applicable, his eligible dependents) with the same level of health coverage and benefits as in effect for Executive (and, if applicable, his eligible dependents) on the day immediately preceding the day of the
Executive’s termination of employment (the “Company-Paid Coverage”); provided, however, that: (i) Executive and each eligible dependent constitutes a qualified beneficiary, as defined in Section 4980B(g)(1) of the Internal Revenue
Code of 1986, as amended (collectively, “Qualified Beneficiaries”); (ii) each Qualified Beneficiary elects continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), within the
time period prescribed pursuant to COBRA; and (iii) if the health coverage is no longer offered by the Company to its current employees, then the Company shall be under no obligation to continue the existing coverage for Executive(and, if
applicable, his eligible dependents). Such Company-Paid Coverage shall continue in effect for each Qualified Beneficiary until the earlier of (i) the Qualified Beneficiary is no longer eligible to receive continuation coverage under COBRA, or (ii)
six (6) months following termination of employment.
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Except for those obligations in subsection (2)(ii) above, the Company’s obligations under
paragraphs 1 and 2 of this Section 7(a) shall terminate upon Executive’s breach of his agreements under Section 8 hereof.
(b) Disability Death. If the Company terminates the Executive’s employment as a result of the Executive’s Disability or if the Executive’s employment terminates due to the death
of the Executive, then the Executive shall not be entitled to receive severance or other benefits pursuant to this Agreement, unless the Company has no benefit plan in place to account for death and disability of employees, in which case Executive
will be entitled to receive the Guaranteed Severance Payment specified in Section 7(a)(1). Executive shall remain eligible for those severance and other benefits (if any) as may then be available under the Company’s then existing severance and
benefits plans and policies at the time of Executive’s termination or death.
(c) Stock
Options. All of Executive’s options not otherwise forfeited will continue to vest during the six month Severance Benefits Period, including grants made other than as provided herein. Executive will forfeit options
that have not vested as of the end of the six month Severance Benefits Period.
(f) Xxxxxxx
Xxxxxxx. While Executive receives severance payments, Executive will no longer be deemed a Section 16(b) officer, but agrees to be considered an “insider” and comply with the Company’s Xxxxxxx Xxxxxxx
Policy, unless otherwise agreed to in writing by the Board of Directors for matters related to reduction of Executive’s stock holding.
8. Covenants Not to Compete and Not to Solicit.
(a) During the term hereof, Executive agrees that he shall not, directly or indirectly, engage on his own behalf, or as owner, manager, advisor, principal, agent, partner, employee consultant, director, officer,
stockholder or other proprietor owning more than a five percent (5%) interest, in any firm, corporation, partnership or other organization which is in the business of manufacturing, selling or distributing products in competition with the products
of the Company. In case of any such ownership or participation, Executive shall furnish a detailed statement thereof to the Board of Directors of the Company, and, as from time to time requested by said Board, resubmit for approval a detailed
statement thereof, which statement may be approved by said Board as not constituting such a violation or conflict, and in the event said Board determines that such violation or conflict exists, Executive shall immediately divest himself of such
ownership or participation (or of representing or promoting others engaged in any such business). It is intended and agreed that during the term of this Agreement, Executive will not knowingly perform any act which may confer any competitive benefit
or advantage upon any enterprise competing with the Company or any successor.
(b) Upon the termination
of the Executive’s employment with the Company within the terms of Section 7(a) and for a period of eighteen (18) months thereafter, Executive agrees that he shall not, on his own behalf, or as owner, manager, advisor, principal, agent,
partner, employee consultant, director, officer, stockholder or other proprietor owning more than a five percent (5%) interest of any business entity, or otherwise, in any territory in which the Company is actively engaged in business: (i) open or
operate any business which is in competition with any business of the Company, (ii) act as an employee, agent, advisor or consultant of any competitor of the Company, (iii) take any action to or do anything reasonably intended to divert business
from the Company or influence or attempt to influence any existing customers of the Company to cease doing business with the Company or to alter its business
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relationship with the Company, or (iv) take any action or do anything reasonably intended to influence any suppliers of the Company to cease
doing business with the Company or to alter its business relationship with the Company. Executive further covenants and agrees that he will not for himself or on behalf of any other person, partnership, firm, association or corporation in any
territory served by the Company, directly or indirectly solicit or accept business from any of the Company’s existing customers for the purchase or sale of products or services of a like kind to those sold or provided the Company. The foregoing
covenant shall not be deemed to prohibit Executive from acquiring an investment not more than one percent (1%) of the capital stock of a competing business, whose stock is traded on a national securities exchange or through the automated quotation
system of a registered securities association.
(c) During the term of this Agreement, and upon the
termination of the Executive’s employment with the Company within the terms of Section 7(a) and for a period of eighteen (18) months thereafter, Executive agrees that he shall not either directly solicit, induce, attempt to hire, recruit,
encourage, take away, hire any employee of the Company or cause any employee of the Company to leave his or her employment either for Executive or for any other entity or person.
(d) Executive represents that he (i) is familiar with the foregoing covenants not to compete and not to directly solicit, and (ii) is fully aware of his
obligations hereunder, including, without limitation, the reasonableness of the length of time, scope and geographic coverage of these covenants. Executive agrees that the provisions of this Section 8 contain restrictions that are not greater than
necessary to protect the interests of the Company. In the event of the breach or threatened breach by Executive of this Section 8, the Company, in addition to all other remedies available to it at law or in equity, will be entitled to seek
injunctive relief and/or specific performance to enforce this Section 8.
(e) Company will respond
within two weeks to any written request by Executive to exclude a particular company or business entity from the scope of this Section 8. Company will not unreasonably deny such a request. The parties agree that a passive financial investment by
Executive in a third party will not constitute competition within the scope of this Section 8.
9. Definition
of Certain Terms. The following terms referred to in this Agreement shall have the following meanings for the purposes of this Agreement only:
(a) Cause. “Cause” shall mean (i) any act of personal dishonesty taken by the Executive in connection with his
responsibilities as Vice President and General Counsel and intended to result in substantial personal enrichment of the Executive, (ii) conviction of a felony resulting from any action or failure to act by the Executive in the performance of
Executive’s duties, that is injurious to the Company, (iii) a willful act by the Executive which constitutes gross misconduct and which results in material injury to the Company, (iv) continued violations by the Executive of the his material
obligations under this Agreement that are demonstrably willful and deliberate on the Executive’s part after there has been delivered to the Executive a written demand for performance from the Company which describes the basis for the
Company’s belief that the Executive has not substantially performed his duties; and (v) the breach by Executive of the non-competition provisions of this Agreement, or of the Company’s standard form of confidentiality and proprietary
inventions agreement, which shall be supplemental hereto and incorporated by reference herein.
(b) Constructive Termination. “Constructive Termination” shall mean any of the following: (1) any material reduction in compensation, including bonus, unless such a reduction is
applied, by resolution of the Board of Directors, to all members of the Company’s officers; (2) reduction of
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Executive’s title; (3) material reduction in Executive’s responsibilities; (4) material reduction in the number of Company employees
in the organization for which Executive is responsible, said reduction not being based on voluntary resignation of Company employees, but through an internal reorganization, or other shifting of personnel that is not under the control of Executive.
(c) Disability. “Disability” shall mean that Executive has
been unable to perform his duties under this Agreement as the result of his incapacity due to physical or mental illness, and such inability, at least ninety (90) days after its commencement, is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative (such Agreement as to acceptability not to be unreasonably withheld). Termination resulting from Disability may only be effected
after at least 30 days’ written notice by the Board of Directors of its intention to terminate the Executive’s employment. In the event that the Executive resumes the performance of substantially all of his duties hereunder before the
termination of his employment becomes effective, the notice of intent to terminate shall automatically be deemed to have been revoked.
10. No Breach of Duty. Executive represents that Executive’s performance of this Agreement and as an employee of the Company does not and will not breach any agreement or duty
to keep in confidence proprietary information acquired by Executive in confidence or in trust prior to employment with the Company. Executive has not and will not enter into any agreement either written or oral in conflict with this Agreement.
Executive is not presently restricted from being employed by the Company or entering into this Agreement.
11. Successors.
(a) Company’s
Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and assets
shall assume the obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a
succession. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and assets which executes and delivers the assumption agreement described in this Section or which becomes
bound by the terms of this Agreement by operation of law.
(b) Executive’s
Successors. The terms of this Agreement, and all rights of the Executive hereunder, shall inure to the benefit of, and be enforceable by, the Executive’s personal or legal representatives, executors, administrators,
successors, heirs, devisees and legatees.
12. Notice.
(a) General. Notices and all other communications contemplated by this Agreement shall be in
writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Executive, mailed notices shall be addressed to the
Executive at the home address that she/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 notices shall be directed to the attention of its
V.P. General Counsel.
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(b) Notice of Termination. Any termination by the Company for Cause pursuant to Section 6(b) hereof
shall be communicated by a notice of termination to the Executive given in accordance with Section 12(a) of this Agreement. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the termination date (which shall be not more than 15 days after the giving of such notice).
13. Arbitration.
(a) The Board of Directors and Executive agree that any dispute or controversy arising out of, relating to, or in connection with this Agreement, the
interpretation, validity, construction, performance, breach, or termination hereof, or any of the matters herein released, excepting claims under applicable workers’ compensation law and unemployment insurance claims, shall be settled by
binding arbitration to be held in Santa Xxxxx County, California in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (the “Rules”). The arbitrator may grant
injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having
jurisdiction. Executive and the Board of Directors hereby waive any rights each may have to a jury trial. This provision confers complete and total jurisdiction for final, binding arbitration with full and complete relief for any and all covered
disputes, including all contract, tort, and statutory claims, and any other causes of action unless otherwise prohibited by law. This arbitration provision will survive after the termination of this Agreement.
(b) The arbitrator(s) shall apply California law to the merits of any dispute or claim, without reference to conflicts of law
rules. Executive hereby consents to the personal jurisdiction of the state and federal courts located in California for any action or proceeding arising from or relating to this Agreement or relating to any arbitration in which the Parties are
participants.
(c) EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION.
EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF, OR
ANY OF THE MATTERS HEREIN TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THIS SEVERANCE AGREEMENT AND
RELEASE OF ALL CLAIMS.
14. 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 the Executive and by an authorized officer of the Company (other than the Executive). No waiver by either party of any breach of, or of compliance with, any condition
or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.
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(b) Whole Agreement. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and supersedes in its entirety any and all prior undertakings and agreements of the Company and Executive with respect to the subject matter hereof.
(c) Choice of Law. The validity, interpretation, construction and performance of this Agreement
shall be governed by the internal substantive laws but not the choice of law rules of the State of California.
(d) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall
remain in full force and effect.
(e) No Assignment of Benefits. The
rights of any person to payments or benefits under this Agreement shall not be made subject to option or assignment, either by voluntary or involuntary assignment or by operation of law, including (without limitation) bankruptcy, garnishment,
attachment or other creditor’s process, and any action in violation of this Section 14(e) shall be void.
(f) Employment Taxes. All payments made pursuant to this Agreement will be subject to withholding of applicable income and employment taxes.
(g) Counterparts. 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.
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.
| inSilicon Corporation |
Executive | |||||||
| |
| |||||||
| By: Xxxxx Xxxxxxxx |
Xxxxxx X. Xxxxxxx | |||||||
| President and Chief Executive Officer |
||||||||
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Exhibit A
In consideration for EXECUTIVE accepting the benefits under his EXECUTIVE Employee and Severance Agreement dated September 29, 2000, EXECUTIVE agrees to release Company of all claims arising from his
employment as set forth below.
EXECUTIVE hereby forever waives for himself, his attorneys, heirs, executors,
administrators, successors and assigns any claim against Company, including its subsidiaries, affiliates, insurers, shareholders, officers, directors and employees (the “Parties Released”), for any action, loss, expense or any damages
arising from any occurrence from the beginning of time until the date of the signing of this Agreement and arising or in any way resulting from Executive’s employment with Company or the termination thereof. The only exceptions to the above
waiver are claims by Employee under any worker’s compensation or unemployment statutes and any right arising under this Agreement. Employee represents that he has no current intention to assert any claim on any basis against the Parties
Released. Company releases its claims on intellectual property created by Employee after the date of execution of this Agreement.
EXECUTIVE ACKNOWLEDGES THAT HE HAS BEEN GIVEN AT LEAST TWENTY-ONE (21) DAYS WITHIN WHICH TO CONSIDER SIGNING THIS RELEASE. EXECUTIVEMAY REVOKE THIS AGREEMENT BY WRITTEN NOTICE TO COMPANY WITHIN SEVEN DAYS FOLLOWING ITS EXECUTION.
THIS RELEASE SHALL NOT BECOME EFFECTIVE AND BINDING UNTIL SUCH PERIOD HAS EXPIRED. EXECUTIVEWILL RETURN ALL CONSIDERATION AND BENEFITS PROVIDED IN CONNECTION WITH THE GRANTING OF THIS RELEASE IF HE REVOKES THE RELEASE.
In the event of breach of this Agreement by Company, Executive’s exclusive remedy for such breach shall be limited to the enforcement
of the terms of this Agreement.
| COMPANY: inSilicon Corporation |
EXECUTIVE: | |||||||
| |
| |||||||
| By:
Name
|
By:
Name
| |||||||
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