GLU MOBILE INC. CHANGE OF CONTROL SEVERANCE AGREEMENT
EXHIBIT 10.08
This Change of Control Severance Agreement (the “Agreement”) is made and entered into
effective as of October 10, 2008 (the “Effective Date”), by and between L. Xxxxxxx Xxxxxxx (the
“Employee”) and Glu Mobile Inc., a Delaware corporation (the “Company”).
RECITALS
A. It is expected that the Company from time to time will consider the possibility of a Change
of Control (as defined below). 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.
B. The Board believes that it is in the best interests of the Company and its shareholders to
provide the Employee with an incentive to continue his or her employment and to maximize the value
of the Company upon a Change of Control for the benefit of its shareholders.
C. In order to provide the Employee with enhanced financial security and sufficient
encouragement to remain with the Company notwithstanding the possibility of a Change of Control,
the Board believes that it is important to provide the Employee with certain severance benefits
upon the Employee’s termination of employment following a Change of Control.
AGREEMENT
In consideration of the mutual covenants herein contained and the continued employment of
Employee by the Company, the parties agree as follows:
1. Definitions. Unless otherwise defined elsewhere herein, the following terms
referred to in this Agreement shall have the following meanings:
(a) “Cause” means (i) the Employee’s committing of an act of gross negligence, gross
misconduct or dishonesty, or other willful act, including misappropriation, embezzlement or fraud,
that materially adversely affects the Company or any of the Company’s customers, suppliers or
partners, (ii) his or her personal dishonesty, willful misconduct in the performance of services
for the Company, or breach of fiduciary duty involving personal profit, (iii) his or her being
convicted of, or pleading no contest to, any felony or misdemeanor involving fraud, breach of trust
or misappropriation or any other act that the Board reasonably believes in good faith has
materially adversely affected, or upon disclosure will materially adversely affect, the Company,
including the Company’s public reputation, (iv) any material breach of any agreement with the
Company by him or her that remains uncured for thirty (30) days after written notice by the Company
to him or her, unless that breach is incapable of cure, or any other material unauthorized use or
disclosure of the Company’s confidential information or trade secrets involving personal benefit or
(v) his or her failure to follow the lawful directions of the Board or, if he or she is not the
chief executive officer, the lawful directions of the chief executive officer, in the scope of his
or her employment unless he or she reasonably believes in good faith that these directions are not
lawful and notifies the Board or chief executive officer, as the case may be, of the reasons for
his or her belief.
(b) “Change of Control” means the closing of (i) a merger or consolidation in one transaction
or a series of related transactions, in which the Company’s securities held by the Company’s
shareholders before the merger or consolidation represent less than fifty percent (50%) of the
outstanding voting equity securities of the surviving corporation after the transaction or series
of related transactions, (ii) a sale or other transfer of all or substantially all of the Company’s
assets as a going concern, in one transaction or a series of related transactions, followed by the
distribution to the Company’s shareholders of any proceeds remaining after payment of creditors or
(iii) a transfer of more than 50% of the Company’s outstanding voting equity securities by the
Company’s shareholders to one or more related persons or entities other than the Company in one
transaction or a series of related transactions:
(c) “Code” means the United States Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
(d) “Involuntary Termination” means the Employee’s resignation of employment from the Company
expressly based on the occurrence of any of the following conditions, without the Employee’s
informed written consent, provided, however, that with respect to each of the following conditions,
the Employee must (a) within ninety (90) days following its occurrence, deliver to the Company a
written notice, pursuant to Section 8(b) hereof, explaining the specific basis for the Employee’s
belief that the Employee is entitled to terminate the Employee’s employment due to an Involuntary
Termination and (b) give the Company an opportunity to cure any of the following within thirty (30)
days following delivery of such notice and explanation: (i) a material reduction in his or her
duties, position or responsibilities, or his or her removal from these duties, position and
responsibilities, unless he or she is provided with a position of substantially equal or greater
organizational level, duties, authority and compensation; provided, however, that a change of
title, in and of itself, or a reduction of duties, position or responsibilities solely by virtue of
the Company’s being acquired and made part of a larger entity will not constitute an “Involuntary
Termination,” (ii) a greater than fifteen percent (15%) reduction in his or her then-current annual
base compensation that is not applicable to the Company’s other executive officers, or (iii) a
relocation to a facility or a location more than thirty (30) miles from his or her then-current
location of employment. For the avoidance of doubt, Involuntary Termination shall not include a
termination of employment for death or Permanent Disability.
(e) “Permanent Disability” has the meaning set forth in Section 22(e) of the Code.
(f) “Termination Date” shall mean the effective date of any notice of termination delivered by
one party to the other hereunder.
2. Term of Agreement. This Agreement shall terminate upon the date that all
obligations of the parties hereto under this Agreement have been satisfied or, if earlier, on the
date, prior to a Change of Control, Employee is no longer employed by the Company.
3. At-Will Employment. The Company and the Employee acknowledge that the Employee’s
employment is, and shall continue to be, at-will.
4. Severance Benefits.
(a) Termination Following a Change of Control. If the Employee’s employment with the
Company is terminated without Cause or is terminated as a result of an Involuntary Termination at
any time within twelve (12) months after a Change of Control and the Employee delivers to the
Company within sixty (60) days following such termination a general release of claims in favor of
the Company (the release of which shall not include any release of claims pursuant to which the
Employee is entitled to indemnification with respect to thereof) (the “Release”), then the Employee
will be entitled to
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the following severance benefits (which shall be payable not later than sixty (60) days
following receipt by the Company of the Release and subject to the time limitations set forth in
Section 5):
(i) twelve (12) months of the Employee’s then-current annual base salary, payable in a lump
sum.
(ii) Employee’s bonus actually earned, based on actual completion of the applicable
performance targets for the year, quarter or other period (as applicable) in which the Involuntary
Termination occurs, prorated for the number of days of the Employee’s service to the Company for
such year, quarter or other period (as applicable), payable in a lump sum; provided that all
individual performance objectives will be deemed fully achieved.
(iii) all outstanding equity grants (whether in the form of options, restricted stock or
otherwise) granted by the Company to the Employee prior to the Termination Date shall become fully
vested and exercisable;
(iv) Until the earlier of (i) the date Employee is no longer eligible to receive continuation
coverage pursuant to COBRA, or (ii) twelve (12) months from the Termination Date, the Company shall
reimburse Employee for continuation coverage pursuant to COBRA (as defined below) as was in effect
for the Employee (and any eligible dependents) on the day immediately preceding the Termination
Date; provided, however, that (i) the Employee constitutes a qualified beneficiary, as defined in
Section 4980B(g)(l) of the Code; and (ii) the Employee timely elects continuation coverage pursuant
to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”).
(b) Termination Apart from a Change of Control. If the Employee’s employment with the
Company terminates for any reason (including a termination without Cause or due to an Involuntary
Termination) at any time following twelve (12) months after a Change of Control, then the Employee
shall not be entitled to receive any acceleration, severance or other benefits pursuant to this
Agreement, but may be eligible for those benefits (if any) as may then be established under the
Company’s then-existing severance and benefits plans and policies at the time of such termination.
(c) Accrued Wages and Vacation; Expenses. Without regard to the reason for, or the
timing of, Employee’s termination of employment: (i) the Company shall pay the Employee any unpaid
base salary due for periods prior to the Termination Date; (ii) the Company shall pay the Employee
all of the Employee’s accrued and unused vacation through the Termination Date and (iii) following
submission of proper expense reports by the Employee, the Company shall reimburse the Employee for
all expenses reasonably and necessarily incurred by the Employee in connection with the business of
the Company prior to the Termination Date. These payments shall be made promptly and within the
period of time mandated by law.
5. Six Month Hold-Back. To the extent (i) any payments or benefits to which Employee
becomes entitled under this Agreement, or any agreement or plan referenced herein, in connection
with Employee’s termination of employment with the Company constitute deferred compensation subject
to Section 409A of the Code and (ii) the Employee is deemed at the time of such termination of
employment to be a “specified employee” under Section 409A of the Code, then such payments shall
not be made or commence until the earliest of (A) the expiration of the six (6)-month period
measured from the date of Employee’s “separation from service” (as such term is at the time defined
in Treasury Regulations under Section 409A of the Code) from the Company; or (B) the date of the
Employee’s death following such separation from service; provided, however, that such deferral
shall only be effected to the extent required to avoid adverse tax treatment to the Employee,
including (without limitation) the additional twenty percent (20%) tax for which the Employee would
otherwise be liable under Section 409A(a)(1)(B) of the
Code in the absence of such deferral. Upon the expiration of the applicable deferral period,
any payments
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which would have otherwise been made during that period (whether in a single sum or in
installments) in the absence of this paragraph shall be paid to the Employee or the Employee’s
beneficiary in one lump sum (without interest).
6. Limitation on Payments Under Code Section 280G. In the event that the severance
and other benefits provided for in this Agreement or otherwise payable to the Employee (i)
constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) would be
subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Employee’s
benefits under this Agreement shall be either:
(a) delivered in full; or
(b) delivered as to such lesser extent that would result in no portion of such benefits being
subject to the Excise Tax, with any such reductions first being made to the equity portion of the
benefits and second being made to the cash portion of the benefits,
whichever of the foregoing amounts, taking into account the applicable federal, state and
local income taxes and the Excise Tax, results in the receipt by Employee on an after-tax basis, of
the greatest 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 shall be made in writing by the Company’s independent public accountants (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, the
Accountants may make reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of Section 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.
7. 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 Company’s obligations
under this Agreement and agree expressly to perform the Company’s 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, unless otherwise agreed upon in writing by the Employee
and such successor. For all purposes under this Agreement, the term “Company” shall include any
successor to the Company’s business and/or assets.
(b) Employee’s Successors. Without the written consent of the Company, Employee shall
not assign or transfer this Agreement or any right or obligation under this Agreement to any other
person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights of
Employee hereunder shall inure to the benefit of, and be enforceable by, Employee’s personal or
legal representatives, executors, administrators, successors, heirs, distributees, devisees and
legatees.
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8. Notices.
(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 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 General Counsel.
(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 this Section. 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 thirty (30) days after the giving of such notice). The failure by the Employee to include in
the notice any fact or circumstance which contributes to a showing of Involuntary Termination shall
not waive any right of the Employee hereunder or preclude the Employee from asserting such fact or
circumstance in enforcing Employee’s rights hereunder.
9. Arbitration. The parties agree that any controversy or claim arising out of, or
relating to, this Agreement, or the breach hereof, shall be submitted to the American Arbitration
Association (“AAA”) and that a neutral arbitrator will be selected in a manner consistent with the
AAA’s National Rules for the Resolution of Employment Disputes (the “Rules”). The arbitration
proceedings will allow for discovery according to the Rules. All arbitration proceedings shall be
conducted in Santa Xxxxx County, California.
10. 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 may be modified, waived or discharged
unless the modification, waiver or discharge is agreed to in writing and signed by both 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) Integration. This Agreement and any outstanding equity agreements referenced
herein represent the entire agreement and understanding between the parties as to the subject
matter herein regarding severance and acceleration benefits and supersede all prior or
contemporaneous agreements, whether written or oral, with respect to this Agreement. This
Agreement replaces and supersedes in its entirety that certain Change of Control Severance
Agreement between the Company and the Employee, dated as of January 31, 2007.
(d) Choice of Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules,
of the State of California.
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(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) Employment Taxes. All payments made pursuant to this Agreement shall 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.
| COMPANY: | GLU MOBILE INC. | |||||||||
| By: | /s/ Xxxx X. Xxxxxx | |||||||||
| Title: | SVP and CFO | |||||||||
| EMPLOYEE: | /s/ L. Xxxxxxx Xxxxxxx | |||||||||
| Signature | ||||||||||
| L. Xxxxxxx Xxxxxxx | ||||||||||
| Printed Name | ||||||||||
[Signature Page to Change of Control Severance Agreement]
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