Exhibit 10.24
TAB PRODUCTS CO.
CHANGE OF CONTROL AGREEMENT
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This Change of Control Agreement (the "Agreement") is effective as of
May , 1999, by and between (the "Employee"), and TAB
Products Co., a Delaware corporation (the "Company").
RECITALS
A. The Employee presently serves at the pleasure of the Board of
Directors of the Company and performs significant strategic and management
responsibilities necessary to the continued conduct of the Company's business
and operations.
B. The Board of Directors of the Company (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 or occurrence of a Change of
Control (as defined below) of the Company.
C. The Board believes that it is imperative to provide the Employee
with certain severance benefits upon the Employee's termination of employment
following a Change of Control which provide the Employee with enhanced
financial security and provide sufficient incentive and encouragement to the
Employee to remain with the Company following a Change of Control.
D. Certain capitalized terms used in the Agreement are defined in
Section 3 below.
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of Employee by the Company, the
parties agree as follows:
1. TERMS OF EMPLOYMENT. The Company and the Employee agree that the
Employee's employment is at will, and that their employment relationship may
be terminated by either party at any time, with or without cause. If the
Employee's employment terminates for any reason, the Employee shall not be
entitled to any payments, benefits, damages, awards or compensation other
than as provided by this Agreement or in accordance with Company policies
then in effect. The provisions of this Agreement shall terminate on June 1,
2004 (except that the Employee's employment by the Company shall continue to
be "at will"). Any termination of this Agreement shall not affect any
required payment or benefit that accrues prior to such termination.
2. SEVERANCE BENEFITS. Subject to Section 2(b) below,
(a) TERMINATION FOLLOWING A CHANGE OF CONTROL. If the Employee's
employment is terminated within one (1) month prior to or twelve (12) months
following a Change of Control, then the Employee shall be entitled to receive
severance benefits as follows:
(i) INVOLUNTARY TERMINATION. If the Employee's employment is
terminated as a result of Involuntary Termination (as defined in Section 3(b)
below), then the Employee shall be entitled to the following:
(A) all salary, accrued but unused vacation earned
through the date of Employee's termination and Employee's target bonus for
the year in which termination occurs, pro rated through the date of
Employee's termination;
(B) severance pay in an amount equal to 150% of the
Employee's annual base salary at the time of such termination, plus 150% of
Employee's annual bonus at the "on-target" level for the fiscal year in which
Employee is terminated paid in a lump sum within thirty (30) days of the
Employee's termination;
(C) reimbursement for any COBRA premiums paid by the
Employee for continued group health insurance coverage for a period of twelve
(12) months from the date of the Employee's termination or commencement of
new employment by the Employee, if earlier.
(ii) VOLUNTARY RESIGNATION. If the Employee's employment
terminates by reason of the Employee's voluntary resignation (and is not an
Involuntary Termination or a Termination for Cause), then the Employee shall
not be entitled to receive severance or other benefits following the date of
such termination under the terms of this Agreement, and the Company shall
have no obligation to provide for the continuation of any health and medical
benefit or life insurance plans existing on the date of such termination
except as otherwise required by applicable law.
(iii) DISABILITY; DEATH. If the Company terminates the
Employee's employment as a result of the Employee's Disability, or such
Employee's employment is terminated at any time due to the death of the
Employee, then the Employee shall not be entitled to receive severance or
other benefits following the date of such termination under the terms of this
Agreement, and the Company shall have no obligation to provide for the
continuation of any health and medical benefit or life insurance plans
existing on the date of such termination except as otherwise required by
applicable law.
(iv) TERMINATION FOR CAUSE. If the Employee is terminated
for Cause, then the Employee shall not be entitled to receive any severance
or other benefits following the date of such termination under the terms of
this Agreement, and the Company shall have no obligation to provide for the
continuation of any health and medical benefit or life insurance plans
existing on the date of such termination except as otherwise required by
applicable law.
(v) ACCELERATION OF STOCK OPTIONS. The Employee shall be
entitled to acceleration of vesting for Employee's stock options as provided
under the Company's 1991 Stock Option Plan or any applicable successor plan.
(b) LIMITATION OF PAYMENTS AND BENEFITS.
(i) To the extent that any of the payments and benefits
provided for in this Agreement or otherwise payable to the Employee
constitute "parachute payments" within
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the meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), and, but for this Section 2(b), would be subject to the excise
tax imposed by Section 4999 of the Code or any similar or successor
provision, the aggregate amount of such payments and benefits shall be
reduced, but only to the extent necessary so that none of such payments and
benefits are subject to excise tax pursuant to Section 4999 of the Code.
(ii) Within sixty (60) days after the later of termination of
employment or the related Change in Control, the Company shall notify the
Employee in writing if it believes that any reduction in the payments and
benefits that would otherwise be paid or provided to the Employee under the
terms of this Agreement is required to comply with the provisions of
Subsection 2(b)(i). If the Company determines that any such reduction is
required, it will provide the Employee with copies of the information used
and calculations made by the Company to determine the amount of such
reduction. The Company shall determine, in a fair and equitable manner after
consultation with the Employee, which payments and benefits are to be reduced
so as to result in the maximum benefit for the Employee.
(iii) Within thirty (30) days after the Employee's receipt of
the Company's notice pursuant to Subsection 2(b)(ii), the Employee shall
notify the Company in writing if the Employee disagrees with the amount of
reduction determined by the Company, or the selection of the payments and the
benefits to be reduced. As part of such notice, the Employee shall also
advise the Company of the amount of reduction, if any, that the Employee has,
in good faith, determined to be necessary to comply with the provisions of
Subsection 2(b)(i) and/or the payments and benefits to be reduced. Failure
by the Employee to provide this notice within the time allowed will be
treated by the Company as acceptance by the Employee of the amount of
reduction determined by the Company and/or the payments and benefits to be
reduced. If any differences regarding the amount of the reduction and/or the
payments and benefits to be reduced have not been resolved by mutual
agreement within sixty (60) days after the Employee's receipt of the
Company's notice pursuant to Subsection 2(b)(ii), the amount of reduction
and/or the payments and benefits to be reduced as determined by the Employee
will be conclusive and binding on both parties unless, prior to the
expiration of such sixty (60) day period, the Company notifies the Employee
in writing of the Company's intention to have the matter submitted to
arbitration for resolution and proceeds to do so promptly. If the Company
gives no notice to the Employee of a required reduction as provided in
Subsection 2(b)(ii), the Employee may unilaterally determine the amount of
reduction required, if any, and/or the payments and benefits to be reduced,
and, upon written notice to the Company, the amount and/or the payments and
benefits to be reduced will be conclusive and binding on both parties.
(iv) If, as a result of the reductions required by Subsection
2(b)(i), the amounts previously paid to the Employee exceed the amount to
which the Employee is entitled, the Employee will promptly return the excess
amount to the Company.
3. 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 the
occurrence of either of the following events:
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(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company's then outstanding
voting securities; or
(ii) (A) A merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 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 or consolidation; or
(B) the complete liquidation of the Company; or
(C) the sale or disposition by the Company of all or
substantially all the Company's assets.
(iii) There occurs a change in the Board of Directors of the
Company within a two-year period, as a result of which fewer than a majority
of the Directors are Incumbent Directors. For purposes of this Agreement, an
Incumbent Director is any director who is either:
(A) a director of the Company as of the Effective Date
of this Agreement; or
(B) a director who is appointed or nominated for
election to the Board of Directors of the Company by the Board of Directors
or its nominating committee and whose nomination or appointment is approved
by with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such appointment or nomination (but shall not
include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to
the Company).
(b) INVOLUNTARY TERMINATION. "Involuntary Termination" shall mean
the Employee's resignation within 60 days after any of the following:
(i) Without the Employee's express written consent, the
assignment to the Employee of any significant duties or the significant
reduction of the Employee's duties, either of which is materially
inconsistent with the Employee's position with the Company and
responsibilities in effect immediately prior to such assignment, or the
removal of the Employee from such position and responsibilities, which is not
effected for death, Disability or for Cause;
(ii) Without the Employee's express written consent, a
substantial reduction, without good business reasons, of the facilities and
perquisites (including office space and location) available to the Employee
immediately prior to such reduction;
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(iii) Any reduction by the Company in an amount greater than
10% in the base salary and/or prospective bonus of the Employee as in effect
immediately prior to such reduction, other than a reduction applied generally
to executive officers of the Company;
(iv) Any reduction by the Company in the kind or level of
employee benefits to which the Employee is entitled immediately prior to such
reduction, other than a reduction applied generally to executive officers of
the Company;
(v) The relocation of the Employee to a facility or a
location more than 40 miles from the Employee's then present location,
without the Employee's express written consent; or
(vi) The failure of the Company to obtain the assumption of
the terms of this Agreement by any successors contemplated in Section 4 below.
PROVIDED, HOWEVER, that the Employee's resignation as a result of any of the
foregoing conditions shall be a voluntary resignation, and not an involuntary
termination, unless the Employee gives written notice of any such
condition(s) to the Board and allows the Company at least 10 days thereafter
to correct such condition(s). It shall also be an Involuntary Termination if
the Company terminates the Employee for any reason other than Disability,
death or for Cause.
(c) CAUSE. For purposes of this Agreement, a termination "for
Cause" occurs if the Employee is terminated for any of the following reasons:
(i) Theft, dishonesty, or intentional falsification of any
employment or Company records;
(ii) Improper disclosure of the Company's confidential or
proprietary information;
(iii) Any action by the Employee that Employee knew or should
have known could have a material detrimental effect on the Company's
reputation or business;
(iv) The Employee's failure or inability to perform any
reasonable assigned duties after written notice from the Company to the
Employee of, and a reasonable opportunity to cure, such failure or inability;
or
(v) The Employee's conviction (including any plea of guilty
or nolo contendere) for any criminal act that impairs his ability to perform
his duties for the Company.
(d) DISABILITY. "Disability" shall mean that the Employee is
unable to perform his duties as an employee of the Company as the result of
his incapacity due to physical or mental illness for 120 days (not
necessarily consecutive) in any one year period. Termination resulting from
Disability may only be effected after at least 30 days' written notice by the
Company of its intention to terminate the Employee's employment. In the
event that the Employee resumes the performance of substantially all of his
duties as an employee of the Company before the termination of his employment
becomes effective, the notice of intent to terminate shall automatically be
deemed to have been revoked.
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4. EMPLOYEE COVENANT REGARDING NONSOLICITATION. For a period of one
(1) year following termination of employment for any reason, the Employee
shall not recruit, solicit, or invite the solicitation of any employees of
the Company to terminate their employment with the Company.
5. 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/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 subsection (a) or which becomes bound by the terms of this
Agreement by operation of law.
(b) EMPLOYEE'S SUCCESSORS. 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. Employee shall have no right to assign
any of his obligations or duties under this Agreement to any other person or
entity.
6. 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 Employee, mailed notices shall be addressed to him at the home address
which 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
Secretary.
(b) NOTICE OF TERMINATION. Any termination by the Company for
Cause or by the Employee as a result of a voluntary resignation or an
Involuntary Termination shall be communicated by a notice of termination to
the other party hereto given in accordance with Section 6 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).
7. MISCELLANEOUS PROVISIONS.
(a) NO DUTY TO MITIGATE. The Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement (whether by
seeking New Employment or in any other manner), nor shall any such payment be
reduced by any earnings that the Employee may receive from any other source.
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(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) CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws 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) ARBITRATION. In the event of any dispute or claim relating to
or arising out of the Employee's employment relationship with the Company,
this Agreement, or the termination of the Employee's employment with the
Company for any reason (including, but not limited to, any claims of breach
of contract, wrongful termination, fraud or age, race, sex, national origin,
disability or other discrimination or harassment), the Employee and the
Company agree that all such disputes shall be fully, finally and exclusively
resolved by binding arbitration conducted by the American Arbitration
Association in Santa Xxxxx County, California. The Employee and the Company
hereby knowingly and willingly waive their respective rights to have any such
disputes or claims tried to a judge or jury. Provided, however, that this
arbitration provision shall not apply to any disputes or claims relating to
or arising out of the actual or alleged misuse or misappropriation of the
Company's property, including, but not limited to, its trade secrets or
proprietary information.
(f) 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 subsection (f)
shall be void.
(g) EMPLOYMENT TAXES. All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.
(h) ASSIGNMENT BY COMPANY. The Company may assign its rights
under this Agreement to an affiliate, and an affiliate may assign its rights
under this Agreement to another affiliate of the Company or to the Company;
provided, however, that no assignment shall be made if the net worth of the
assignee is less than the net worth of the Company at the time of assignment.
In the case of any such assignment, the term "Company" when used in a
section of this Agreement shall mean the corporation that actually employs
the Employee.
(i) 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.
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(j) PRIOR AGREEMENTS. This Agreement shall supersede all prior
arrangements whether written or oral, and understandings, regarding the
subject matter of this Agreement.
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 TAB PRODUCTS CO.
By: __________________________________
Title: _______________________________
EMPLOYEE By: __________________________________
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