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EXHIBIT 10.3
EXECUTIVE CHANGE IN CONTROL AGREEMENT
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AGREEMENT made as of this 1st day of December, 1997 by and between GeoTel
Communications Corporation, a Delaware corporation with its principal place of
business in Lowell, Massachusetts (the "Company") and Xxxxxx X. Xxxxx (the
"Executive").
1. PURPOSE. The Company considers it essential to the best interests of its
stockholders to xxxxxx the continuous employment of key management personnel.
The Board of Directors of the Company (the "Board") recognizes, however, that,
as is the case with many corporations, the possibility of a Change in Control
(as defined in Section 2 hereof) exists and that such possibility, and the
uncertainty and questions which it may raise among management, may result in the
departure or distraction of management personnel to the detriment of the Company
and its stockholders. Therefore, the Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including the Executive, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control. Nothing in
this Agreement shall be construed as creating an express or implied contract of
employment and, except as otherwise agreed in writing between the Executive and
the Company, the Executive shall not have any right to be retained in the employ
of the Company.
2. CHANGE IN CONTROL. A "Change in Control" shall be deemed to have
occurred in any one of the following events:
(a) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934 (the "Act")) becomes a "beneficial owner"
(as such term is defined in Rule 13d-3 promulgated under the Act) (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company), directly or indirectly, of securities
of the Company representing fifty percent (50%) or more of the combined voting
power of the Company's then outstanding securities;
(b) persons who, as of September 30, 1996, constituted the Company's Board
(the "Incumbent Board") cease for any reason, including without limitation as a
result of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board, provided that any person becoming a
director of the Company subsequent to September 30, 1996 whose election was
approved by at least a majority of the directors then comprising the Incumbent
Board shall, for purposes of this Agreement, be considered a member of the
Incumbent Board;
(c) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation or other entity, other than (i) 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) more than 50% of the combined voting power of the voting
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securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction in which no
"person" (as hereinabove defined) acquires more than 50% of the combined voting
power of the Company's then outstanding securities, or
(d) the stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets.
3. TERMINATING EVENT. A "Terminating Event" shall mean any of the events
provided in this Section 3 occurring subsequent to a Change in Control as
defined in Section 2:
(a) termination by the Company of the employment of the Executive with the
Company for any reason other than (A) a willful act of dishonesty by the
Executive with respect to any matter involving the Company or any subsidiary or
affiliate, or (B) conviction of the Executive of a crime involving moral
turpitude, or (C) the gross or willful failure by the Executive to substantially
perform the Executive's duties with the Company, or (D) the failure by the
Executive to perform his full-time duties with the Company by reason of his
death, disability or retirement; provided, however, that a Terminating Event
shall not be deemed to have occurred pursuant to this Section 3(a) solely as a
result of the Executive being an employee of any direct or indirect successor to
the business or assets of the Company, rather than continuing as an employee of
the Company following a Change in Control. For purposes of clause (D) of this
Section 3(a), Section 6 and Section 7(b) hereof, "disability" shall mean the
Executive's incapacity due to physical or mental illness which has caused the
Executive to be absent from the full-time performance of his duties with the
Company for a period of six (6) consecutive months if the Company shall have
given the Executive a Notice of Termination and, within thirty (30) days after
such Notice of Termination is given, the Executive shall not have returned to
the full-time performance of his duties. For purposes of clause (D) of this
Section 3(a) and Section 5, "retirement" shall mean termination of the
Executive's employment in accordance with the Company's retirement policy, not
including early retirement, generally applicable to its salaried employees, as
in effect immediately prior to the Change in Control, or in accordance with any
retirement arrangement established with respect to the Executive with the
Executive's express written consent;
(b) termination by the Executive of the Executive's employment with the
Company for Good Reason. Good Reason shall mean the occurrence of any of the
following events:
(i) a materially adverse change, not consented to by the Executive, in
the nature or scope of the Executive's responsibilities, authorities, powers,
functions or duties from the responsibilities, authorities, powers, functions or
duties exercised by the Executive immediately prior to the Change in Control; or
(ii) a reduction in the Executive's annual base salary and bonuses as
in effect on the date hereof or as the same may be increased from time to time
except for across-the-board
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salary or bonuses reductions similarly affecting all or substantially all
management employees; or
(iii) the relocation of the Company's offices at which the Executive
is principally employed immediately prior to the date of a Change in Control to
a location more than twenty-five (25) miles from such offices, or the
requirement by the Company for the Executive to be based anywhere other than the
Company's offices at such location, except for required travel on the Company's
business to an extent substantially consistent with the Executive's business
travel obligations immediately prior to the Change in Control.
4. SEVERANCE PAYMENT. In the event a Terminating Event occurs within twelve
(12) months after a Change in Control,
(a) the Company shall continue to pay to the Executive an amount equal to
the Executive's base salary as in effect on the Date of Termination (as such
term is defined in Section 7(b)) for a period of six (6) months following the
Date of Termination;
(b) the Executive shall continue to be covered under the medical benefit
plans maintained by the Company on the Date of Termination, at no additional
charge to the Executive, for a period of six (6) months following the Date of
Termination; and
(c) the Company shall pay to the Executive all reasonable legal and
arbitration fees and expenses incurred by the Executive in successfully
obtaining or enforcing any right or benefit provided by this Agreement.
5. TERM. This Agreement shall take effect on the date first set forth above
and shall terminate upon the earlier of (a) the termination by the Company of
the employment of the Executive because of (A) a willful act of dishonesty by
the Executive with respect to any matter involving the Company or any subsidiary
or affiliate, or (B) commission of the Executive of a crime punishable as a
felony, or (C) the gross or wilful failure by the Executive to perform in a
satisfactory manner a substantial portion of the Executive's duties with the
Company, or (D) the failure by the Executive to perform his full-time duties
with the Company by reason of his death, disability (as defined in Section 3(a))
or retirement (as defined in Section 3(a)), (b) the resignation or termination
of the Executive for any reason prior to a Change in Control or (c) the
resignation of the Executive after a Change in Control for any reason other than
the occurrence of any of the events enumerated in Section 3(b)(i)-(iii) of this
Agreement.
6. WITHHOLDING. All payments made by the Company under this Agreement shall
be net of any tax or other amounts required to be withheld by the Company under
applicable law.
7. NOTICE AND DATE OF TERMINATION: DISPUTES; ETC.
(a) NOTICE OF TERMINATION. After a Change in Control and during the term of
this Agreement, any purported termination of the Executive's employment (other
than by reason of death) shall be communicated by written Notice of Termination
from one party hereto to the
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other party hereto in accordance with this Section 7. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and the Date of
Termination. Further, a Notice of Termination pursuant to one or more of the
clauses (A) through (C) of Section 3(a) hereof is required to include a copy of
a resolution duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board at a meeting of the Board (after reasonable
notice to the Executive and an opportunity for the Executive, accompanied by the
Executive's counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, the termination met the criteria set forth in one or
more of clauses (A) through (C) of Section 3(a) hereof.
(b) DATE OF TERMINATION. "Date of Termination," with respect to any
purported termination of the Executive's employment after a Change in Control
and during the term of this Agreement, shall mean (i) if the Executive's
employment is terminated for disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned to the
full-time performance of the Executive's duties during such thirty (30) day
period) and (ii) if the Executive's employment is terminated for any other
reason, the date specified in the Notice of Termination. In the case of a
termination by the Company other than a termination pursuant to one or more of
clauses (A) through (C) of Section 3(a) (which may be effective immediately),
the Date of Termination shall not be less than thirty (30) days after the Notice
of Termination is given. In the case of a termination by the Executive, the Date
of Termination shall not be less than fifteen (15) days from the date such
Notice of Termination is given.
(c) NO MITIGATION. The Company agrees that, if the Executive's employment
by the Company is terminated during the term of this Agreement, the Executive is
not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 4(a), (b)
and (c) hereof. Further, the amount of any payment provided for in this
Agreement shall not be reduced by any compensation earned by the Executive as
the result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the Company or
otherwise.
(d) SETTLEMENT AND ARBITRATION OF DISPUTES. Any controversy or claim
arising out of or relating to this Agreement or the breach thereof shall be
settled exclusively by arbitration in accordance with the laws of the
Commonwealth of Massachusetts by three arbitrators, one of whom shall be
appointed by the Company, one by the Executive and the third by the first two
arbitrators. If the first two arbitrators cannot agree on the appointment of a
third arbitrator, then the third arbitrator shall be appointed by the American
Arbitration Association in the City of Boston. Such arbitration shall be
conducted in the City of Boston in accordance with the rules of the American
Arbitration Association for commercial arbitrations, except with respect to the
selection of arbitrators which shall be as provided in this Section 7(d).
Judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof.
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8. ASSIGNMENT; PRIOR AGREEMENTS. Neither the Company nor the Executive may
make any assignment of this Agreement of any interest herein, by operation of
law or otherwise, without the prior written consent of the other party, and
without such consent any attempted transfer shall be null and void and of no
effect. This Agreement shall inure to the benefit of and be binding upon the
Company and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns. In the event of the Executive's
death after a Terminating Event but prior to the completion by the Company of
all payments due him under Section 4(a), (b) and (c) of this Agreement, the
Company shall continue such payments to the Executive's beneficiary designated
in writing to the Company prior to his death (or to his estate, if the Executive
fails to make such designation).
9. ENFORCEABILITY. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
10. WAIVER. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
11. NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Company, or to the Company at its main office, attention of the Board of
Directors.
12. EFFECT ON OTHER PLANS. An election by the Executive to resign after a
Change in Control and a Terminating Event under the provisions of this Agreement
shall not be deemed a voluntary termination of employment by the Executive for
the purpose of interpreting the provisions of any of the Company's
non-competition agreements, non-disclosure agreements, benefit plans, programs
or policies. Nothing in this Agreement shall be construed to limit the rights of
the Executive under the Company's benefit plans, programs or policies and except
that the Executive shall have no rights to any severance benefits under any
severance pay plan.
13. AMENDMENT. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by a duly authorized representative of
the Company.
14. GOVERNING, LAW. This is a Massachusetts contract and shall be construed
under and be governed in all respects by the laws of the Commonwealth of
Massachusetts.
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15. OBLIGATIONS OF SUCCESSORS. In addition to any obligations imposed by
law upon any successor to the Company, the Company will use its best efforts to
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform if no such succession had taken place.
16. ELECTION OF REMEDIES. An election by the Executive to resign after a
Change in Control and a Terminating Event under the provisions of this Agreement
shall not constitute a breach by the Executive of any employment agreement
between the Company and the Executive, and shall be deemed a termination of
employment by the Company without cause for the purpose of determining the
Executive's right to receive any benefits or cash compensation under any such
employment agreement. Nothing in this Agreement shall be construed to limit the
rights of the Executive under any employment agreement the Executive may then
have with the Company, provided, however, that if there is a Terminating Event
under Section 3 hereof after a Change in Control, the Executive may elect either
to receive the severance payment provided under Section 4 or such base salary
and cash compensation as the Executive may be entitled to receive under any
employment agreement, but may not elect to receive both. The foregoing proviso
shall apply only to base salary and cash compensation to which the Executive may
be entitled under any employment agreement and shall not be construed to limit
the rights of the Executive to receive any benefits under such employment
agreement other than base salary or cash compensation in the event that the
Executive elects to receive severance payments under this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument
by the Company by its duly authorized officer, and by the Executive, as of the
date first above written.
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: President & CEO
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
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