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EXHIBIT 10.43
XXXX.XXX
KEY EMPLOYEE RETENTION AGREEMENT
This Key Employee Retention Agreement (the "Agreement") is made and
entered into by and between __________ (the "Employee") and Xxxx.xxx, a Delaware
corporation (the "Company"), effective as of __________.
RECITALS
A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of control. The
Board of Directors of the Company (the "Board") recognizes that such
consideration can be a distraction to the Employee and can cause the Employee 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 the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined in Section 5 below) of the Company.
B. The Board believes that it is in the best interests of the Company
and its stockholders to provide the Employee with an incentive to continue his
or her employment and to motivate the Employee to maximize the value of the
Company upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Employee with
certain benefits upon a Change of Control that provide the Employee with
enhanced financial security and incentive and encouragement to the Employee to
remain with the Company notwithstanding the possibility of a Change of Control.
D. Certain capitalized terms used in the Agreement are defined in
Section 5 below.
The parties hereto agree as follows:
1. TERM OF AGREEMENT. This Agreement shall terminate upon the earlier
of: (a) the termination of Employee's employment for any reason prior to a
Change of Control, or (b) the date that all obligations of the parties hereto
with respect to this Agreement have been satisfied.
2. AT-WILL EMPLOYMENT. The Company and the Employee acknowledge that the
Employee's employment is and shall continue to be at-will, as defined under
applicable law. If the Employee's employment terminates for any reason prior to
a Change of Control, the Employee shall not be entitled to the benefits provided
by this Agreement, or any other benefits
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unless otherwise available in accordance with the Company's established employee
plans and practices or pursuant to other agreements with the Company.
3. SEPARATION BENEFITS UPON INVOLUNTARY TERMINATION FOLLOWING CHANGE OF
CONTROL. If within one year of the effective date of a Change of Control, the
Employee's employment with the Company is terminated as a result of an
Involuntary Termination by the Company or the successor corporation without
Cause or by the Employee as the result of a Constructive Termination by the
Company or the successor corporation, then, subject to Section 4, Employee shall
be entitled to receive the following benefits: (i) severance payments for a
period of twelve (12) months following the termination date (the "Severance
Period") equal to the Employee's then current monthly base salary; (ii) a
pro-rated amount of the Employee's "target bonus" for the fiscal year in which
the termination occurs (or for the prior fiscal year if a target bonus has not
yet been determined for the fiscal year in which the termination occurs), with
such payment being made on the termination date; and (iii) continuation of all
health and life insurance benefits through the end of the Severance Period, at
Company expense. Severance payments under this Section 3 shall be reduced by
applicable taxes and shall be made in accordance with the Company's regular
payroll practices.
4. LIMITATION ON PAYMENTS. In the event that the severance benefits (the
"Benefits") provided for in this Agreement or otherwise payable to the 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 4, would be subject to the excise tax imposed by Section 4999 of the
Code (or any corresponding provisions of state income tax law), then the
Employee's Benefits under Section 3 shall be either:
(a) delivered in full, or
(b) delivered as to such lesser extent which would result in no
portion of such 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 the Employee on an after-tax-basis, of the
greater amount of Benefits, notwithstanding that all or some portion of such
Benefits may be taxable under Section 4999 of the Code. Unless the Company and
the Employee otherwise agree in writing, any determination required under this
Section 4 shall be made in writing by the Accountants, whose determination shall
be conclusive and binding upon the Employee and the Company for all purposes.
For purposes of making the calculations required by this Section 4, the
Accountants 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 the 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. The Company shall bear all costs the Accountants may reasonably
incur in connection with any calculations contemplated by this Section 4. In the
event that subsection (a) above applies, then Employee shall be responsible for
any excise taxes imposed with respect to such severance and other benefits. In
the event that
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subsection (b) above applies, then each benefit provided hereunder shall be
proportionately reduced to the extent necessary to avoid imposition of such
excise taxes.
5. DEFINITION OF TERMS. The following terms referred to in this
Agreement shall have the following meanings:
(a) CHANGE OF CONTROL. "Change of Control" shall mean a sale or
merger of the Company, in which more than fifty-one percent (51%) of the voting
power of the Company is transferred to a third party.
(b) CAUSE. "Cause" for Employee's termination shall mean the good
faith judgment of the Company's Board of Directors, that the undersigned has
engaged in or committed any of the following: (i) gross negligence or willful
misconduct in the performance of his duties to the Company where such gross
negligence or willful misconduct has resulted or is likely to result in
substantial and material damage to the Company or its subsidiaries, (ii)
repeated unexplained or unjustified absence from the Company, (iii) a material
and willful violation of any federal or state law, (iv) commission of any act of
fraud with respect to the Company, (v) breach of any confidentiality obligation
to the Company, whether determined by agreement or by applicable law; or (vi)
conviction of a felony or a crime involving moral turpitude causing material
harm to the standing and reputation of the Company, in each case as determined
in good faith by the Board of Directors of the Company.
(c) CONSTRUCTIVE TERMINATION. "Constructive Termination" shall
be deemed to occur if there is (i)(A) a material adverse change in Employee's
position causing such position to be of materially reduced responsibility, (B)
any reduction of Employee's base compensation unless in connection with similar
decreases of other similarly situated employees of the Company or its successor
corporation, or (C) Employee's refusal to relocate to a facility or location
more than 50 miles from the Company's current location in San Francisco,
California; and (ii) within the 30-day period immediately following any of the
foregoing events, Employee elects to terminate his or her employment
voluntarily.
6. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. Any successor to the Company (whether
direct or indirect and whether by purchase, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company's business and/or
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/or assets
which executes and delivers the assumption agreement described in this Section
6(a) or which becomes bound by the terms of this Agreement by operation of law.
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(b) EMPLOYEE'S SUCCESSORS. The terms of this Agreement and all
rights of the Employee hereunder shall inure to the benefit of, and be
enforceable by, the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
7. NOTICE. 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 three (3) days after being mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid. In the case of the
Employee, mailed notices shall be addressed to him or her at the home address
which he or she 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
Secretary.
8. MISCELLANEOUS PROVISIONS.
(a) NO DUTY TO MITIGATE. The Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement, nor shall any
such payment be reduced by any earnings that the Employee may receive from any
other source.
(b) 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 Employee and by an authorized officer of the
Company (other than the Employee). 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.
(c) WHOLE AGREEMENT. This Agreement, together with Employee's
offer letter from the Company dated __________, represents the entire agreement
between the Employee and the Company with respect to the matters set forth
herein. No agreements, representations or understandings (whether oral or
written and whether express or implied) which are not expressly set forth in
this Agreement and the offer letter have been made or entered into by either
party with respect to the subject matter hereof.
(d) CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California as applied to agreements entered into and performed within California
solely by residents of that state.
(e) 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.
(f) LEGAL FEES AND EXPENSES. The parties shall each bear their
own expenses, legal fees, and other fees incurred in connection with this
Agreement.
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(g) WITHHOLDING. All payments made pursuant to this Agreement
will be subject to withholding of applicable income and employment taxes.
(h) 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
date set forth above.
COMPANY: XXXX.XXX
By:
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Title:
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EMPLOYEE:
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Signature:
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Please print name
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