EXHIBIT 10.14
PALM, INC.
FORM OF MANAGEMENT RETENTION AGREEMENT
This Management Retention Agreement (the "Agreement") is made and entered into
by and between ___________________________________________ (the "Employee") and
Palm, Inc. (the "Company"), effective as of the latest date set forth by the
signatures of the parties hereto below (the "Effective Date").
R E C I T A L S
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A. It is expected that the Company from time to time may consider 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.
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 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
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
severance benefits upon Employee's termination of employment following a Change
of Control which provides the Employee with enhanced financial security and
incentive and encouragement to remain with the Company notwithstanding the
possibility of a Change of Control.
D. Certain capitalized terms used in this Agreement are defined in Section
5 below.
The parties hereto agree as follows:
1. Term of Agreement. This Agreement shall terminate upon the date
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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
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that the Employee's employment is and shall continue to be at-will, as defined
under applicable law, and may be terminated by either party at any time, with or
without cause or notice. If the Employee's employment terminates for any reason,
including (without limitation) any termination prior to a Change of Control, the
Employee shall not be entitled to any payments,
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benefits, damages, awards or compensation other than as provided by this
Agreement, or as may otherwise be available in accordance with the Company's
established employee plans or pursuant to other written agreements with the
Company.
3. Change of Control Severance Benefits.
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(a) Involuntary Termination other than for Cause, Death or
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Disability or Voluntary Termination for Good Reason Following A Change of
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Control. If, within twelve (12) months following a Change of Control, Employee's
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employment is terminated (i) involuntarily by the Company other than for Cause,
death or Disability or (ii) by the Employee pursuant to a Voluntary Termination
for Good Reason, then, subject to Employee entering into a standard form of
mutual release of claims with the Company, the Company shall provide Employee
with the following benefits upon such termination:
(i) Severance Payment. A lump-sum cash payment in an
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amount equal to one hundred percent (100%) of the Employee's Annual
Compensation;
(ii) Continued Employee Benefits. Company-paid health,
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dental, vision, long-term disability and life insurance coverage at the same
level of coverage as was provided to such Employee immediately prior to the
Change of Control and at the same ratio of Company premium payment to Employee
premium payment as was in effect immediately prior to the Change of Control (the
"Company-Paid Coverage"). If such coverage included the Employee's dependents
immediately prior to the Change of Control, such dependents shall also be
covered at Company expense. Company-Paid Coverage shall continue until the
earlier of (A) two years from the date of termination, or (B) the date upon
which the Employee and his dependents become covered under another employer's
group health, dental, vision, long-term disability or life insurance plans that
provide Employee and his dependents with comparable benefits and levels of
coverage. For purposes of Title X of the Consolidated Budget Reconciliation Act
of 1985 ("COBRA"), the date of the "qualifying event" for Employee and his or
her dependents shall be the date upon which the Company-Paid Coverage commences,
and each month of Company-Paid Coverage provided hereunder shall offset a month
of continuation coverage otherwise due under COBRA.
(iii) Pro-Rated Bonus Payment. A lump-sum cash payment
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equal to one hundred percent (100%) of the higher of (A) Employee's target bonus
as in effect for the fiscal year in which the Change of Control occurs or (B)
Employee's target bonus as in effect for the fiscal year in which Employee's
termination occurs, pro-rated by multiplying such bonus amount in clause (A) or
(B), as applicable, by a fraction, the numerator of which shall be the number of
days prior to Employee's termination during such fiscal year, and the
denominator of which shall be three-hundred and sixty-five.
(iv) Equity Compensation Accelerated Vesting. One Hundred
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percent (100%) of the unvested portion of any stock option, restricted stock or
other Company
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equity compensation held by the Employee shall be automatically accelerated in
full so as to become completely vested.
(b) Voluntary Resignation; Termination For Cause. If the
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Employee's employment terminates by reason of the Employee's voluntary
resignation (and is not a Voluntary Termination for Good Reason), or if the
Employee is terminated for Cause, then the Employee shall not be entitled to
receive severance or other benefits except for those (if any) as may then be
established under the Company's then existing severance and benefits plans or
pursuant to other written agreements with the Company.
(c) Disability; Death. If the Employee's employment with the
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Company terminates as a result of the Employee's Disability, or if Employee's
employment is terminated due to the death of the Employee, then the Employee
shall not be entitled to receive severance or other benefits except for those
(if any) as may then be established under the Company's then existing severance
and benefits plans or pursuant to other written agreements with the Company.
(d) Termination Apart from Change of Control. In the event the
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Employee's employment is terminated for any reason, either prior to the
occurrence of a Change of Control or after the twelve (12) month period
following a Change of Control, then the Employee shall be entitled to receive
severance and any other benefits only as may then be established under the
Company's then existing severance and benefits plans or pursuant to other
written agreements with the Company.
4. Golden Parachute Excise Taxes. In the event that the severance
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and other benefits provided for in this agreement or otherwise payable to
Employee (a) constitute "parachute payments" within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code") and (b) would be
subject to the excise tax imposed by Section 4999 of the Code, then such
benefits shall be either be: (i) delivered in full, or (ii) delivered as to such
lesser extent which would result in no portion of such severance 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 and
employment taxes and the excise tax imposed by Section 4999, results in the
receipt by you, 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 Executive otherwise agree
in writing, the determination of Executive's excise tax liability and the amount
required to be paid under this Section 4 shall be made in writing by the
Company's independent auditors who are primarily used by the Company immediately
prior to the Change of Control (the "Accountants"). 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
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under this Section. The Company shall bear all costs the Accountants may
reasonably incur in connection with any calculations contemplated by this
Section 4.
5. Definition of Terms. The following terms referred to in this
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Agreement shall have the following meanings:
(a) Annual Compensation. "Annual Compensation" shall mean an
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amount equal to the sum of (i) the Employee's Company annual base salary, and
(ii) 100% of the Employee's Target Bonus, as in effect on the date of the Change
of Control or Employee's termination, in each case, whichever is higher.
(b) Target Bonus. "Target Bonus" shall mean Employee's annual
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bonus, assuming 100% "on target" satisfaction of any objective or subjective
performance milestones.
(c) Cause. "Cause" shall mean (i) an act of personal dishonesty
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taken by the Employee in connection with his responsibilities as an employee and
intended to result in substantial personal enrichment of the Employee, (ii)
Employee being convicted of a felony, (iii) a willful act by the Employee which
constitutes gross misconduct and which is injurious to the Company, (iv)
following delivery to the Employee of a written demand for performance from the
Company which describes the basis for the Company's reasonable belief that the
Employee has not substantially performed his duties, continued violations by the
Employee of the Employee's obligations to the Company which are demonstrably
willful and deliberate on the Employee's part.
(d) Change of Control. "Change of Control" means the occurrence
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of any of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) 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 who is not already such as of the Effective Date of this
Agreement; or
(ii) The consummation of the sale or disposition by the
Company of all or substantially all the Company's assets; or
(iii) The consummation of 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 or its parent) at
least fifty percent (50%) of the total voting power represented by
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the voting securities of the Company or such surviving entity or its parent
outstanding immediately after such merger or consolidation; or
(iv) A change in the composition of the Board occurring
within a two-year period, as a result of which fewer than a majority of the
directors are Incumbent Directors. "Incumbent Directors" shall mean directors
who either (A) are directors of the Company as of the date upon which this
Agreement was entered into, or (B) are elected, or nominated for election, to
the Board with the affirmative votes of at least a majority of those directors
whose election or nomination was not in connection with any transaction
described in subsections (i), (ii), or (iii) above, or in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company; or
Notwithstanding the foregoing, in no event shall either or both of the
following events constitute a Change of Control for purposes of this Agreement:
(i) the initial public offering of the Company's securities pursuant to a
registration statement filed under Section 12 of the Securities Exchange Act of
1934, as amended or (ii) the spin-off of the Company from 3Com Corporation
("3COM") pursuant to one or more transactions in which 3COM distributes eighty
percent (80%) or more of its securities ownership of the Company to the
shareholders of 3COM.
(e) Disability. "Disability" shall mean that the Employee has
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been unable to perform his Company duties as the result of his incapacity due to
physical or mental illness, and such inability, at least 26 weeks after its
commencement, is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Employee or the Employee'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
Employee's employment. In the event that the Employee resumes the performance of
substantially all of his duties hereunder before the termination of his
employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.
(f) Voluntary Termination for Good Reason. "Voluntary
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Termination for Good Reason" shall mean the Employee voluntarily resigns after
the occurrence of any of the following (i) without the Employee's express
written consent, a material reduction of the Employee's duties, title, authority
or responsibilities, relative to the Employee's duties, title, authority or
responsibilities as in effect immediately prior to such reduction, or the
assignment to Employee of such reduced duties, title, authority or
responsibilities; provided, however, that a reduction in duties, title,
authority or responsibilities solely by virtue of the Company being acquired and
made part of a larger entity (as, for example, when the Senior Vice-President of
a business unit of the Company remains as such following a Change of Control)
shall not by itself constitute grounds for a "Voluntary Termination for Good
Reason;" (ii) without the Employee's express written consent, a material
reduction, without good business reasons, of the facilities and perquisites
(including office space and location) available to the Employee immediately
prior to such reduction; (iii) a reduction by the Company in the base salary of
the Employee as in effect
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immediately prior to such reduction; (iv) a material reduction by the Company in
the aggregate level of employee benefits, including bonuses, to which the
Employee was entitled immediately prior to such reduction with the result that
the Employee's aggregate benefits package is materially reduced (other than a
reduction that generally applies to Company employees); (v) the relocation of
the Employee to a facility or a location more than thirty-five (35) miles from
the Employee's then present location, without the Employee's express written
consent; (vi) the failure of the Company to obtain the assumption of this
agreement by any successors contemplated in Section 7(a) below; or (vii) any act
or set of facts or circumstances which would, under California case law or
statute constitute a constructive termination of the Employee.
6. Non-Solicitation. In consideration for the severance benefits
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Employee is to receive herein, if any, Employee agrees that he or she will not,
at any time during the one year following his or her termination date, directly
or indirectly solicit any individuals to leave the Company's (or any of its
subsidiaries') employ for any reason or interfere in any other manner with the
employment relationships at the time existing between the Company (or any of its
subsidiaries) and its current or prospective employees.
7. Successors.
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(a) Company's Successors. Any successor to the Company
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(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 such successor to the Company's business and/or
assets which executes and delivers the assumption agreement described in this
Section 7(a) or which becomes bound by the terms of this Agreement by operation
of law.
(b) Employee's Successors. The terms of this Agreement and all
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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.
8. Notice.
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(a) General. Notices and all other communications contemplated
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by this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or one day following mailing via Federal Express
or similar overnight courier service. 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.
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(b) Notice of Termination. Any termination by the Company for
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Cause or by the Employee pursuant to a Voluntary Termination for Good Reason
shall be communicated by a notice of termination to the other party hereto given
in accordance with Section 8(a) 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 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 Voluntary Termination for Good
Reason shall not waive any right of the Employee hereunder or preclude the
Employee from asserting such fact or circumstance in enforcing his rights
hereunder.
9. Miscellaneous Provisions.
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(a) No Duty to Mitigate. The Employee shall not be required to
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mitigate the value of any benefits contemplated by this Agreement, nor shall any
such benefits be reduced by any earnings or benefits that the Employee may
receive from any other source.
(b) Waiver. No provision of this Agreement shall be modified,
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waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by the Employee and by two authorized officers 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. No agreements, representations or
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understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof. This Agreement
represents the entire understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior arrangements and understandings
regarding same.
(d) Choice of Law. The validity, interpretation, construction and
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performance of this Agreement shall be governed by the laws of the State of
California.
(e) Severability. The invalidity or unenforceability of any
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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) Counterparts. This Agreement may be executed in counterparts,
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each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
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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 set forth below.
PALM, INC.
By:
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Title:
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Date:
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By:
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Title:
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Date:
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EMPLOYEE
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Date:
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