Exhibit 10.16
CUSEEME NETWORKS, INC.
EXECUTIVE RETENTION AGREEMENT
THIS EXECUTIVE RETENTION AGREEMENT by and between CUseeMe Networks, Inc.,
a Delaware corporation (the "Company"), and Xxxxxx X. Xxxxx (the "Executive") is
made as of December 1, 2000 (the "Effective Date").
WHEREAS, the Company recognizes that, as is the case with many
publicly-held corporations, the possibility of a change in control of the
Company exists and that such possibility, and the uncertainty and questions that
it may raise among key personnel, may result in the departure or distraction of
key personnel to the detriment of the Company and its stockholders, and
WHEREAS, the board of directors of the Company (the "Board") has
determined that appropriate steps should be taken to reinforce and encourage the
continued employment and dedication of the Executive without distraction from
the possibility of a change in control of the Company and related events and
circumstances.
NOW, THEREFORE, as an inducement for and in consideration of the Executive
remaining in its employ, the Company agrees that the Executive shall receive the
severance benefits set forth in this Agreement in the event the Executive's
employment with the Company is terminated under the circumstances described
below subsequent to a Change in Control (as defined in Section 1.1).
1. KEY DEFINITIONS.
As used herein, the following terms shall have the following respective
meanings:
1.1. "CHANGE IN CONTROL" means an event or occurrence set forth in any one
or more of subsections (a) through (d) below (including an event or occurrence
that constitutes a Change in Control under one of such subsections but is
specifically exempted from another such subsection):
(a) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended) (a "Person") of beneficial ownership of
any capital stock of the Company if, after such acquisition, such
Person beneficially owns (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended)
30% or more of either (i) the then-outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or
(ii) the combined voting power of the then-outstanding securities
of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); PROVIDED,
HOWEVER, that the following acquisitions shall be excluded from
this subsection (a): (1) any acquisition directly from the Company
(excluding an acquisition pursuant to the exercise, conversion or
exchange of any security exercisable for, convertible into or
exchangeable for common stock or voting securities of the Company,
unless the Person exercising, converting or exchanging such
security acquired such security directly from the Company or an
underwriter or agent of the Company), (2) any acquisition by the
Company, or (3) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company;
(b) such time as the Continuing Directors do not constitute a majority
of the Board (including, if applicable, the board of directors of a
successor corporation to
the Company), where the term "Continuing Director" means at any
date a member of the Board (i) who was a member of the Board on the
date of the execution of this Agreement or (ii) who was nominated
or elected subsequent to such date by at least a majority of the
directors who were Continuing Directors at the time of such
nomination or election or whose election to the Board was
recommended or endorsed by at least a majority of the directors who
were Continuing Directors at the time of such nomination or
election, PROVIDED, HOWEVER, that there shall be excluded from this
clause (ii) any individual whose initial assumption of office
occurred as a result of an actual or threatened election contest
with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents, by or on
behalf of a person other than the Board; or
(c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving the Company
or a sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), unless,
immediately following such Business Combination, each of the
following two conditions is satisfied: (i) all or substantially all
of the individuals and entities who were the beneficial owners of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting
power of the then-outstanding securities entitled to vote generally
in the election of directors, respectively, of the resulting or
acquiring corporation in such Business Combination (which shall
include a corporation that as a result of such transaction owns the
Company or substantially all of the Company's assets either
directly or through one or more subsidiaries) (such resulting or
acquiring corporation is referred to herein as the "Acquiring
Corporation") in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, respectively; and (ii) no Person (excluding the
Acquiring Corporation or any employee benefit plan (or related
trust) maintained or sponsored by the Company or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 30% or more
of the then-outstanding shares of common stock of the Acquiring
Corporation, or of the combined voting power of the
then-outstanding securities of such corporation entitled to vote
generally in the election of directors (except to the extent that
such ownership existed prior to the Business Combination).
1.2. "CHANGE IN CONTROL DATE" means the first date during the Term (as
defined in Section 2) on which a Change in Control occurs. Anything in this
Agreement to the contrary notwithstanding, if (a) a Change in Control occurs,
(b) the Executive's employment with the Company is terminated prior to the date
on which the Change in Control occurs, and (c) it is reasonably demonstrated by
the Executive that such termination of employment (i) was at the request of a
third party who has taken steps reasonably calculated to effect a Change in
Control or (ii) otherwise arose in connection with or in anticipation of a
Change in Control, then for all purposes of this Agreement the "Change in
Control Date" shall mean the date immediately prior to the date of such
termination of employment.
1.3. "CAUSE" means:
(a) the Executive's willful and continued failure to substantially
perform his reasonable assigned duties as an officer of the Company
(other than any such failure resulting from incapacity due to
physical or mental illness or any failure after the Executive gives
notice of termination for Good Reason), which failure is not cured
within 30 days after a written demand for substantial performance
is received by the Executive from the Board that
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specifically identifies the manner in which the Board believes the
Executive has not substantially performed the Executive's duties;
or
(b) the Executive's willful engagement in illegal conduct or gross
misconduct that is materially and demonstrably injurious to the
Company.
For purposes of this Section 1.3, no act or failure to act by the Executive
shall be considered "willful" unless it is done, or omitted to be done, in bad
faith and without reasonable belief that the Executive's action or omission was
in the best interests of the Company.
1.4. "GOOD REASON" means the occurrence, without the Executive's written
consent, of any of the events or circumstances set forth in clauses (a) through
(d) below. Notwithstanding the occurrence of any such event or circumstance,
such occurrence shall not be deemed to constitute Good Reason if, prior to the
Date of Termination specified in the Notice of Termination (each as defined in
Section 3.2(a)) given by the Executive in respect thereof, such event or
circumstance has been fully corrected and the Executive has been reasonably
compensated for any losses or damages resulting therefrom (PROVIDED that such
right of correction by the Company shall only apply to the first Notice of
Termination for Good Reason given by the Executive):
(a) a reduction in the Executive's annual base salary as in effect
immediately prior to the earliest to occur of (i) the Change in
Control Date, (ii) the date of the execution by the Company of the
initial written agreement or instrument providing for the Change in
Control and (iii) the date of the adoption by the Board of a
resolution providing for the Change in Control (with the earliest
to occur of such dates referred to herein as the "Measurement
Date");
(b) the failure by the Company to (i) continue in effect any material
compensation or benefit plan or program (including any life
insurance, medical, health and accident or disability plan and any
vacation program or policy) (a "Benefit Plan") in which the
Executive participates or that is applicable to the Executive
immediately prior to the Measurement Date, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan or program, (ii) continue
the Executive's participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of the
Executive's participation relative to other participants, than the
basis existing immediately prior to the Measurement Date or (iii)
award cash bonuses to the Executive in amounts and in a manner
substantially consistent with past practice in light of the
Company's financial performance;
(c) the failure of the Company to obtain the agreement, in a form
reasonably satisfactory to the Executive, from any successor to the
Company to assume and agree to perform this Agreement, as required
by Section 6.1; or
(d) any failure of the Company to pay or provide to the Executive any
portion of the Executive's compensation or benefits due under any
Benefit Plan within seven days of the date such compensation or
benefits are due, or any material breach by the Company of any
employment agreement with the Executive.
The Executive's right to terminate his employment for Good Reason shall not be
affected by his incapacity due to physical or mental illness.
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2. TERM OF AGREEMENT.
This Agreement, and all rights and obligations of the parties hereunder,
shall take effect upon the Effective Date and shall expire upon (a) the
expiration of the Term (as defined below) if a Change in Control has not
occurred during the Term or (b) the date 12 months after the Change in Control
Date, if the Executive is still employed by the Company as of such date (c) the
fulfillment by the Company of all of its obligations under Sections 4 and 5.2 if
a Change in Control has occurred during the Term. "Term" shall mean the period
commencing as of the Effective Date and continuing in effect through December
31, 2003; PROVIDED, HOWEVER, that commencing on January 1, 2004 and each January
1 thereafter, the Term shall be automatically extended for one additional year
unless, not later than 180 days prior to the scheduled expiration of the Term
(or any extension thereof), the Company shall have given the Executive written
notice that the Term will not be extended.
3. EMPLOYMENT STATUS; TERMINATION FOLLOWING CHANGE IN CONTROL.
3.1. NOT AN EMPLOYMENT CONTRACT. The Executive acknowledges that this
Agreement does not constitute a contract of employment or impose on the Company
any obligation to retain the Executive as an employee. The Company acknowledges
that this Agreement does not prevent the Executive from terminating employment
at any time. If the Executive's employment with the Company terminates for any
reason and subsequently a Change in Control shall occur, the Executive shall not
be entitled to any benefits hereunder except as otherwise provided pursuant to
Section 1.2.
3.2. TERMINATION OF EMPLOYMENT.
(a) If the Change in Control Date occurs during the Term, any
termination of the Executive's employment by the Company or by the
Executive within 12 months following the Change in Control Date
(other than due to the death of the Executive) shall be
communicated by a written notice to the other party hereto (the
"Notice of Termination"), given in accordance with Section 6.1. Any
Notice of Termination shall: (i) indicate the specific termination
provision (if any) of this Agreement relied upon by the party
giving such notice; (ii) to the extent applicable, set forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the
provision so indicated; and (iii) specify the Date of Termination
(as defined below). The effective date of an employment termination
(the "Date of Termination") shall be the close of business on the
date specified in the Notice of Termination (which date may not be
less than 15 days or more than 120 days after the date of delivery
of such Notice of Termination), in the case of a termination other
than one due to the Executive's death, or the date of the
Executive's death, as the case may be.
(b) The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance that contributes to
a showing of Good Reason or Cause shall not waive any right of the
Executive or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting any such
fact or circumstance in enforcing any right of the Executive or the
Company, respectively, hereunder.
(c) Any Notice of Termination for Cause given by the Company must be
given within 90 days of the occurrence of the event(s) or
circumstance(s) that constitute(s) Cause. Prior to any Notice of
Termination for Cause being given (and prior to any termination for
Cause being effective), the Executive shall be entitled to a
hearing before the Board at which he may, at his election, be
represented by counsel and at which he shall have a reasonable
opportunity to be heard. Such hearing shall be held on not less
than 15 days' prior written notice to the Executive stating the
Board's intention to terminate the Executive for Cause and stating
in detail the particular event(s) or circumstance(s) that the Board
believes constitutes Cause for termination.
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(d) Any Notice of Termination for Good Reason given by the Executive
must be given within 90 days of the occurrence of the event(s) or
circumstance(s) that constitute(s) Good Reason.
4. BENEFITS TO EXECUTIVE.
4.1. ACCELERATION OF OPTIONS. If the Change in Control Date occurs during
the Term, then, effective upon the Change in Control Date, (a) the vesting of
each option to purchase shares of Common Stock of the Company held by the
Executive as of the Change in Control Date shall accelerate automatically by one
year, without any further action on behalf of the Company, such that the number
of shares vested thereunder shall equal the number of shares that (with the
passage of time) would have been vested as of the first anniversary of the
Change in Control Date and (b) notwithstanding any provision in any applicable
option agreement to the contrary, each such option shall continue to be
exercisable by the Executive (to the extent such option was exercisable on the
Date of Termination) for a period of six months following the Date of
Termination. Notwithstanding the foregoing provisions of this Section 4(1), if
the Change in Control is intended to be accounted for as a "pooling of
interests" for financial accounting purposes, and if any change or changes to be
effected by clause (a) or (b) of the preceding sentence would preclude
accounting for the Change in Control as a "pooling of interests" for financial
accounting purposes, then such change or changes shall not occur upon the Change
in Control.
4.2. SEVERANCE PAYMENT. If the Change in Control Date occurs during the
Term and the Executive's employment with the Company terminates within 12 months
following the Change in Control Date, the Executive shall be entitled to the
following benefits:
(a) If the Executive's employment with the Company is terminated by the
Company (other than for Cause, Disability or Death) or by the
Executive for Good Reason following the Change in Control Date,
then the Executive shall be entitled to the following benefits:
(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of
the following amounts:
(A) the sum of (1) the Executive's base salary through the Date
of Termination, (2) the product of (x) the annual bonus
paid or payable (including any bonus or portion thereof
which has been earned but deferred) for the most recently
completed fiscal year and (y) a fraction, the numerator of
which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of
which is 365, and (3) the amount of any compensation
previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not previously
paid (the sum of the amounts described in clauses (1), (2)
and (3) being referred to as the "Accrued Obligations");
and
(B) the Executive's highest annual base salary during the
five-year period prior to the Change in Control Date;
(ii) for one year after the Date of Termination, or such longer
period as may be provided by the terms of the appropriate plan,
program, practice or policy, the Company shall continue to
provide benefits to the Executive and the Executive's family at
least equal to those which would have been provided to them if
the Executive's employment had not been terminated, in
accordance with the applicable Benefit Plans in effect on the
Measurement Date or, if more favorable to the Executive and his
family, in effect generally at any time thereafter with respect
to other peer executives of the Company and its affiliated
companies; PROVIDED that if
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the Executive becomes re-employed with another employer and is
eligible to receive a particular type of benefits (E.G., health
insurance benefits) from such employer on terms at least as
favorable to the Executive and his family as those being
provided by the Company, then the Company shall no longer be
required to provide those particular benefits to the Executive
and his family;
(iii) to the extent not previously paid or provided, the Company
shall timely pay or provide to the Executive any other amounts
or benefits required to be paid or provided or which the
Executive is eligible to receive following the Executive's
termination of employment under any plan, program, policy,
practice, contract or agreement of the Company and its
affiliated companies (such other amounts and benefits being
referred to as the "Other Benefits"); and
(iv) for purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree benefits
to which the Executive is entitled, the Executive shall be
considered to have remained employed by the Company until one
year after the Date of Termination.
(b) If the Executive voluntarily terminates his employment with the
Company following the Change in Control Date, excluding a
termination for Good Reason, or if the Executive's employment with
the Company is terminated by reason of the Executive's death or
Disability following the Change in Control Date, then the Company
shall (i) pay the Executive (or his estate, if applicable), the
Accrued Obligations in a lump sum in cash within 30 days after the
Date of Termination and (ii) timely pay or provide to the Executive
the Other Benefits.
(c) If the Company terminates the Executive's employment with the
Company for Cause following the Change in Control Date, then the
Company shall (i) pay the Executive, in a lump sum in cash within
30 days after the Date of Termination, the sum of (A) the
Executive's annual base salary through the Date of Termination and
(B) the amount of any compensation previously deferred by the
Executive, in each case to the extent not previously paid, and (ii)
timely pay or provide to the Executive the Other Benefits.
4.3. TAXES.
(a) Notwithstanding any other provision of this Agreement, in the event
that the Company undergoes a Change in Ownership or Control (as
defined below), the Company shall not be obligated to provide to
the Executive a portion of any "Contingent Compensation Payments"
(as defined below) that the Executive would otherwise be entitled
to receive to the extent necessary to eliminate any "excess
parachute payments" (as defined in Section 280G(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code")) for the
Executive. For purposes of this Section 4.3, the Contingent
Compensation Payments so eliminated shall be referred to as the
"Eliminated Payments" and the aggregate amount (determined in
accordance with applicable Treasury Regulations) of the Contingent
Compensation Payments so eliminated shall be referred to as the
"Eliminated Amount."
(b) For purposes of this Section 4.3, the following terms shall have
the following respective meanings:
(i) "Change in Ownership or Control" shall mean a change in the
ownership or effective control of the Company or in the
ownership of a substantial portion of the assets of the Company
determined in accordance with Section 280G(b)(2) of the Code;
and
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(ii) "Contingent Compensation Payment" shall mean any payment (or
benefit) in the nature of compensation that is made or made
available (under this Agreement or otherwise) to a
"disqualified individual" (as defined in Section 280G(c) of the
Code) and that is contingent (within the meaning of Section
280G(b)(2)(A)(i) of the Code) on a Change in Ownership or
Control of the Company.
(c) Any payments or other benefits otherwise due to the Executive
following a Change in Ownership or Control that could reasonably be
characterized (as determined by the Company) as Contingent
Compensation Payments shall not be made until the determination,
pursuant to this Section 4.3(c), of which Contingent Compensation
Payments shall be treated as Eliminated Payments. Within 30 days
after each date on which the Executive first becomes entitled to
receive (whether or not then due) a Contingent Compensation Payment
relating to such Change in Ownership or Control, the Company shall
determine and notify the Executive (with reasonable detail
regarding the basis for its determinations) (i) which of such
payments and benefits constitute Contingent Compensation Payments
and (ii) the Eliminated Amount. Within 30 days after delivery of
such notice to the Executive, the Executive shall notify the
Company which Contingent Compensation Payments, or portions thereof
(the aggregate amount of which, determined in accordance with
applicable Treasury Regulations, shall be equal to the Eliminated
Amount), shall be treated as Eliminated Payments. In the event that
the Executive fails to notify the Company pursuant to the preceding
sentence on or before the required date, the Contingent
Compensation Payments (or portions thereof) that shall be treated
as Eliminated Payments shall be determined by the Company in its
absolute discretion. In no event shall the Company be liable to the
Executive as a result of any factual or legal determination made by
it pursuant to this subsection (c) or for any information supplied
by it to the Executive or his advisors.
(d) The provisions of this Section 4.3 are intended to apply to any and
all payments or benefits available to the Executive under this
Agreement or any other agreement or plan of the Company under which
the Executive receives Contingent Compensation Payments.
4.4. MITIGATION. The Executive shall not be required to mitigate the amount
of any payment or benefits provided for in this Section 4 by seeking other
employment or otherwise. Further, except as provided in Section 4.2(a)(ii), the
amount of any payment or benefits provided for in this Section 4 shall not be
reduced by any compensation earned by the Executive as a 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.
5. DISPUTES.
All claims by the Executive for benefits under this Agreement shall be
directed to and determined by the Board and shall be in writing. Any denial by
the Board of a claim for benefits under this Agreement shall be delivered to the
Executive in writing and shall set forth the specific reasons for the denial and
the specific provisions of this Agreement relied upon. The Board shall afford a
reasonable opportunity to the Executive for a review of the decision denying a
claim.
6. SUCCESSORS.
6.1. SUCCESSOR TO COMPANY. The Company shall 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 expressly to assume
and agree to perform this Agreement to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain an assumption of this Agreement at or prior to the
effectiveness of any succession shall be a breach of this Agreement and shall
constitute Good Reason if the Executive elects to terminate employment, except
that
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for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used in
this Agreement, "Company" shall mean the Company as defined above and any
successor to its business or assets as aforesaid which assumes and agrees to
perform this Agreement, by operation of law or otherwise.
6.2. SUCCESSOR TO EXECUTIVE. This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
7. MISCELLANEOUS.
7.1. NOTICE. All notices, instructions and other communications given
hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (a) by registered or certified
mail, return receipt requested, postage prepaid, or (b) prepaid via a reputable
nationwide overnight courier service, in each case addressed to the Company at
000 Xxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxxxxx 00000, and to the Executive at
_____________ (or to such other address as either the Company or the Executive
may have furnished to the other in writing in accordance herewith). Any such
notice, instruction or communication shall be deemed to have been delivered five
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service. Either party may give any notice,
instruction or other communication hereunder using any other means, but no such
notice, instruction or other communication shall be deemed to have been duly
delivered unless and until it actually is received by the party for whom it is
intended.
7.2. SETTLEMENT OF DISPUTES. All claims by the Executive for benefits under
this Agreement shall be directed to and determined by the Board and shall be in
writing. Any denial by the Board of a claim for benefits under this Agreement
shall be delivered to the Executive in writing and shall set forth the specific
reasons for the denial and the specific provisions of this Agreement relied
upon. The Board shall afford a reasonable opportunity to the Executive for a
review of the decision denying a claim.
7.3. SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
7.4. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the internal laws of the
State of New Hampshire, without regard to conflicts of law principles.
7.5. WAIVERS. No waiver by the Executive at any time of any breach of, or
compliance with, any provision of this Agreement to be performed by the Company
shall be deemed a waiver of that or any other provision at any subsequent time.
7.6. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.
7.7. AMENDMENTS. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Executive.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
CUSEEME NETWORKS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
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President and Chief Executive Officer
XXXXXX X. XXXXX
/s/ Xxxxxx X. Xxxxx
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