Exhibit 10.68
SEVERANCE AGREEMENT
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This Severance Agreement (the "Agreement") is made and entered into effective as
of January 4, 2001, by and between Xxxxx X. Xxxxx (the "Executive") and Phoenix
Technologies Ltd., a Delaware corporation (the "Company").
RECITALS
A. Management of the Company believes that it is 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. Such benefits will provide Executive with enhanced
financial security and with sufficient incentive and encouragement for
Executive to remain with the Company.
B. To accomplish the foregoing objectives, the Company will, upon execution of
this Agreement by the parties, agree to the terms provided herein.
C. Certain capitalized terms used in the Agreement are defined in Section 7
below.
AGREEMENT
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 currently employs Executive
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as Vice President, General Counsel and Secretary. 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 continue to devote his full time, skill and attention to
her duties and responsibilities, and shall perform them faithfully,
diligently and competently, and the Executive shall use his best efforts
to further the business of the Company and its affiliated entities.
2. Base Compensation. The Company shall continue to pay Executive as
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compensation for his services a base salary in accordance with normal
Company payroll practices ("Base Compensation"). The Base Compensation
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 Benefits. The Executive shall be eligible to participate in
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the employee benefit plans and executive compensation programs
maintained by the Company applicable to other key executives of the
Company, including (without limitation) retirement plans, savings or
profit-sharing plans, stock options, incentive or other bonus plans,
life, disability, health, 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.
(a) Stock Option Grants. Executive will receive an annual grant of stock
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options during the term of this Agreement in a manner and under
terms that are consistent with grants made to other executives of
the Company.
(b) Bonus Eligibility and Payment. Executive is currently eligible to
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receive a bonus based on application of the terms of the executive
bonus plan (i.e. if the Company fails to meet minimum financial
objectives or Executive fails to complete personal objectives under
the plan, no bonus will be paid). Such bonus, if any, will be paid
to Executive at approximately the same time other Company Executives
receive their bonuses.
4. Term of Agreement. The terms of this Agreement shall terminate on the
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date that all obligations of the parties hereunder have been satisfied.
A termination of the terms of this Agreement pursuant to this Section
shall be effective for all purposes.
5. Severance Benefits.
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(a) Termination Not for Cause. If the Company terminates Executive's
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employment for any reason other than Cause, or terminates Executive
by Constructive Termination as defined in this Agreement, the
Executive shall be entitled to receive the following severance
benefits:
(i) Severance Payments.
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(1) Guaranteed Severance Payments. Subject to Executive entering
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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 twelve
(12) months from the date of termination at 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 rate portion of his then
current targeted bonus for the fiscal year following his
termination as described in Section 3(b)(ii).
(2) Contingent Severance Payments. If Executive has not secured
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Reemployment as of the end of the twelve (12) month period,
Executive shall be eligible to receive an additional six (6)
months of Base Compensation, also paid in accordance with
the Company's standard payroll practices ("Contingent
Severance Payments"). The Contingent Severance Payments
shall discontinue upon Executive notifying Company of
Re-Employment.
(ii) Medical Benefits. The Company, at the Company's sole expense,
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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) eighteen (18) months following
termination of employment pursuant to Section 5(a).
(iii) Change in Control. In the event the Company undergoes a Change
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in Control, or other material event in that the Company or Key
Executive's position undergoes a material change as a result
of the material event, Key Executive's stock options will
accelerate vesting such that fifty percent (50%) of the
options will vest at the completion of the Change in Control,
or material event, and the remaining fifty percent (50%) will
vest 90 days thereafter. If there is an inconsistency between
this Agreement and the Company's Stock Option Plan or a Stock
Option Agreement, the terms of this Agreement shall prevail.
(b) Voluntary Resignation; Termination For Cause. If the Executive
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voluntarily resigns from the Company, or if the Company terminates
the Executive's employment for Cause, then the Executive shall not
be entitled to receive severance or other benefits pursuant to this
Agreement. However, Executive shall remain eligible for the
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.
(c) Disability; Death. If the Company terminates the Executive's
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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. However, Executive shall
remain eligible for those severance and other benefits (if any) as
may be available under the Company's then existing severance and
benefit plans and policies at the time of Executive's termination or
death.
6. Covenants Not to Compete and Not to Solicit.
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(a) Upon the termination of the Executive's employment with the Company
pursuant to Section 5(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,
consultant, director, officer, stockholder, or employee 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 or any competitor of
the Company, (iii) solicit or accept business from any of the
Company's competitors, (iv) 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
relationship with the Company, or (v) 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.
(b) Upon the termination of the Executive's employment with the Company
pursuant to Section 5(a) and for a period of eighteen (18) months
thereafter, Executive agrees that he shall not either directly or
indirectly 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.
(c) Executive represents that he (i) is familiar with the foregoing
covenants not to compete and not to 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.
(d) 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 6. 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 6.
7. Definition of Certain Terms. The following terms referred to in the
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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
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by the Executive in connection with his responsibilities as an
Executive and intended to result in substantial personal enrichment
of the Executive, (ii) conviction of a felony 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, and (iv) continued violations by the Executive of the
Executive's obligations under Section 1 of this Agreement that are
demonstrably willful and deliberate on the Executive's part after
which describes the basis for the Company's belief that the
Executive has not substantially performed his duties.
(b) Constructive Termination. "Constructive Termination" shall mean any
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of the following: (i) any material reduction in compensation,
including bonus, unless such a reduction is applied to all members
of the Company's executive officers or members of the Chief
Executive's staff; (ii) reduction of Executive's title or (iii)
material reduction in Executive's responsibilities.
(c) Disability. "Disability" shall mean that Executive has been unable
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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
Company of its intention to terminate the Executive's employment. In
the event that the Executive resumes the performance of
substantially all of her duties hereunder before the termination of
his employment becomes effective, the notice of intent to terminate
shall automatically be deemed to have been revoked.
(d) Re-employment. "Re-employment" shall mean that the Executive has
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obtained work for compensation from any single employer or client,
or any group of employers or clients in a cumulative amount greater
than twenty-four (24) hours per week, or one hundred (100) hours per
month.
(e) Change in Control. "Change in Control" means the occurrence of any
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of the following:
(i) The consummation of a merger or consolidation of the Company
with or into another entity or any other corporate
reorganization, if more than 50% of the combined voting power of
the continuing or surviving entity's securities outstanding
immediately after such merger, consolidation or other
reorganization is owned by persons who were not stockholders of
the Company immediately prior to such merger, consolidation or
other reorganization;
(ii) The sale, transfer or other disposition of all or
substantially all of the Company's assets:
(iii) Any transaction as a result of which any person becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Company representing at least 20% of the total voting power
represented by the Company's then outstanding voting
securities. For purposes of this Paragraph (iii), the term
"person" shall have the same meaning as when used in sections
13(d) and 14(d) of the Exchange Act but shall exclude:
(A) A trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a subsidiary of
the Company;
(B) A corporation owned directly or indirectly by the
stockholders of the Company in substantially the same
proportions as their ownership of the common stock of the
Company.
8. Successors.
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(a) Company's Successors. Any successor to the Company (whether direct
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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
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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.
9. Notice.
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(a) General. Notices and all other communications contemplated by this
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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 him at
the home address that 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
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shall be communicated by a notice of termination to the Executive
given in accordance with Section 9(a) of this Agreement. Such notice
shall indicate the specific termination provision in the 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).
10. Arbitration.
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(a) The Company 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 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.
(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.
11. Miscellaneous Provisions.
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(a) Waiver. No provision of this Agreement shall be modified, waived or
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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.
(b) Whole Agreement. This Agreement constitutes the entire agreement of
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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
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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
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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
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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 11(e) shall be void.
(f) Employment Taxes. All payments made pursuant to this Agreement will
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be subject to withholding of applicable income and employment taxes.
(g) Counterparts. This Agreement may be executed in counterparts, each
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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.
PHOENIX TECHNOLOGIES LTD. EXECUTIVE
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By: Xxxxxx X. Xxxxx Xxxxx X. Xxxxx
President and CEO
Exhibit A
In consideration for Executive accepting the benefits under his Severance
Agreement dated January 4, 2001, Executive agrees to release Company of all
claims arising from his employment as set forth below.
Employee hereby forever waives for himself, his attorneys, heirs, executors,
administrators, successors and assigns any claims against Phoenix, 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 Employee's
employment with Phoenix 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. Phoenix releases its claims on intellectual
property created by Employee after the date of execution of this Agreement.
In the event of breach of this Agreement by Phoenix, Employee's exclusive remedy
for such breach shall be limited to the enforcement of the terms of this
Agreement.
COMPANY: PHOENIX TECHNOLOGIES LTD.
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By: Xxxxxx X. Xxxxx
Title: President and CEO
EXECUTIVE: Xxxxx X. Xxxxx
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Signature
