Exhibit 10.50
EXECUTIVE SEVERANCE AGREEMENT
This Executive Severance Agreement dated as of the 14th day of February,
1997 (the "Agreement") is made by and between VideoLan Technologies, Inc., a
Delaware corporation (the "Company"), and Xxxx Xxxxxxx (the "Executive"), who is
presently Chief Executive Officer of the Company, in consideration of the mutual
covenants herein contained and in further consideration of services performed
and to be performed by the Executive for the Company.
Recitals
A. The Company considers the establishment and maintenance of sound and
vital management of the Company and its subsidiaries to be essential to
protecting and enhancing the best interests of the Company and its shareholders.
B. The Company recognizes that, as is the case with many companies, the
possibility of a change of control may exist. Such possibility, and the
uncertainty and questions which it may raise among management of the Company and
its subsidiaries may result in the departure or distraction of key members of
management to the detriment of the Company's shareholders.
C. The Company's Board of Directors has determined that appropriate steps
should be taken to encourage key members of management of the Company, such as
the Executive, to remain in the employ of the Company and perform their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a change of control of the Company.
NOW, THEREFORE, in consideration of the foregoing and of the covenants
herein contained, the parties hereto agree as follows:
Section 1 --Definitions
For purposes of this Agreement, the following words and terms shall have the
following meanings:
1.1 The following actions, failures or events by or affecting the Executive
shall constitute "Cause" (1) conviction of having committed a felony; (2) acts
of dishonesty or moral turpitude that are materially detrimental to the Company
and/or its Affiliates; (3) acts or omissions which the Executive knew or should
have reasonably known were likely to materially damage the business of the
Company and/or any Affiliate of the Company; (4) failure by the Executive to
obey the reasonable and lawful directions of the Board of Directors (or, in the
case of an Executive other than the President, the directives of the President)
of the Company; (5) gross negligence by the Executive in the performance of, or
continuing failure by the Executive to perform, the duties of his position
with the Company; or (6) the Executive's willful breach of any material
agreement or covenant in a contract between the Executive and the Company or any
fiduciary duty owed to the Company.
1.2 A "Change in Control" of the Company shall mean (i) an event or series
of events which have the effect of any "person" as such term is used in Section
13(d) and 14(d) of the Exchange Act becoming the "beneficial owner" as defined
in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of
the Company representing than 40% or more of the combined voting power of the
Company's then outstanding stock; or (ii) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors of the Company cease for any reason to constitute a majority thereof,
unless the election, or the nomination for election by the stockholders, of each
new director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period or who were
nominated by members of the Board so approved for nomination; or (iii) the
business of the Company is being disposed of by the Company pursuant to a
partial or complete liquidation of the Company, sale of assets of the Company,
or otherwise. A Potential Change in Control shall be deemed to occur if (i) the
Company or the Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control, (ii) any person (including the
Company) publicly announces an intention to take or to consider taking actions
which have consummated would constitute a Change in Control, or (iii) the
Company Board adopts a resolution to the effect that a Potential Change in
Control for purposes of this Agreement has occurred.
1.3 "Compensation" shall mean the Executive's annual base salary at the
greater of (A) the highest rate in effect at any time during the twelve months
immediately preceding the applicable Date of Termination, or (B) the rate in
effect immediately prior to the applicable Change in Control.
1.4 "Contract Period" shall mean the period defined in Section 2 hereof.
1.5 "Date of Termination" shall mean (A) if the Executive's employment is
terminated for Good Reason, as defined below, the date specified in the Notice
of Termination, as defined in this Section 1.8 below; and (B) if the Executive's
employment is terminated for any other reason, the date on which a Notice of
Termination is given.
1.6 "Disability" shall mean a physical or mental incapacity of the
Executive which entitles the Executive to benefits under any long-term
disability plan or wage continuation plan applicable to him and maintained by
the Company as in effect immediately prior to the applicable Change in Control.
If no such plan exists at the date of a Change in Control, then Disability shall
mean an injury or illness that renders (or is certain to render) Executive
unable to perform his duties for a period of 90 or more days or for shorter
periods aggregating a period of ninety or more days, whether or not consecutive,
occurring within any period of 12 consecutive months.
1.7 "Good Reason" shall mean:
(a) without the Executive's express written consent, the assignment to
Executive of any duties inconsistent with, or the reduction of powers or
functions associated with, his
positions, duties, responsibilities and status with the Company immediately
prior to a Change in Control, or any removal of Executive from, or any failure
to reelect Executive to, any positions or offices Executive held immediately
prior to a Potential Change in Control, except in connection with the
termination of Executive's employment at death, for Cause or Disability pursuant
to the requirements of this Agreement;
(b) the failure by the Company to obtain an assumption of the
obligations of the Company under this Agreement by any successor to the Company
which does not assume it by operation of law;
(c) a reduction by the Company in the Executive's base salary as in
effect on the date hereof or as the same may be increased from time to time,
except as part of an across-the-board reduction of base salaries applicable to
all salaried employees of the Company, provided the reduction (or series of
reductions) does not exceed 10% of the Executive's base salary prior to such
change;
(e) the Disability of the Executive; or
(f) any purported termination of the Executive's employment during the
Contract Period which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 3 below; and for purposes of this
Agreement, no such purported termination shall be effective.
1.8 A "Notice of Termination" shall mean a notice, from the Company or from
the Executive, which shall indicate the specific termination provision in this
Agreement relied upon and shall 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.
Section 2 --Application of Agreement
This Agreement shall apply only to termination of employment of the
Executive during a period (the "Contract Period") commencing on the date
immediately preceding the date of a Change in Control and terminating on the
second anniversary of the date of that Change in Control; provided, however,
that each such Change in Control occurs during the period commencing as of
January 23, 1997 and terminating at midnight on December 31, 1998 or as further
extended pursuant to the following sentence (the "Coverage Period"). At midnight
on December 31, 1998, and on each annual anniversary of that time and date
thereafter, the Coverage Period shall be automatically extended for two
additional years, unless on or before such anniversary the Company notifies the
Executive in writing that it elects not to extend such period. There is one
Contract Period for each Change in Control and there may be multiple Change(s)
in Control. With respect to a termination pursuant to Section 3.2 only, the
Contract Period shall also include the period from and after a Potential Change
in Control. If a Potential Change in Control occurs but a Change in Control does
not follow within one year of the Potential Change in Control, the Contract
Period shall expire on the one year anniversary of the Potential Change in
Control.
Section 3 --Termination
3.1 Procedure for Termination. Any termination by the Company or by the
Executive, pursuant to this Agreement, shall be communicated by Notice of
Termination to the other parties hereto. The Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to the Executive a copy of a resolution duly adopted by the affirmative vote of
not less than a majority of the entire membership of the Board of Directors of
the Company (the "Company Board") at a meeting of the Company Board called and
held for that purpose (after reasonable notice to the Executive and an
opportunity for the Executive, together with his counsel, to be heard before the
Company Board), finding that in the good faith opinion of the Company Board, the
Executive was guilty of conduct set forth in Section 1.1 and specifying the
particulars thereof in detail.
3.2 Termination By the Company. Upon a termination of the Executive's
employment for Cause before or during the Contract Period, the Executive shall
have no right to receive any compensation or benefits hereunder. Upon a
termination of the Executive's employment without Cause during the Contract
Period, the Executive shall be entitled to receive the benefits provided in
Section 3.4 hereof. This Agreement shall not apply to, and the Executive shall
have no right to receive any compensation or benefits hereunder in connection
with any termination of the Executive's employment by the Company other than
during a Contract Period, and Executive shall remain an "at will" employee until
a Contract Period begins, except as may be otherwise provided by a written
employment contract between the Executive and the Company.
3.3 Termination By Executive. During the Contract Period, the Executive
shall be entitled to terminate his employment with the Company and, if such
termination is for Good Reason, to receive the benefits provided in Section 3.4
hereof. The Executive shall give the Company Notice of Termination of his
employment pursuant to this Section 3.3, and termination of the Executive's
employment shall be effective five business days after the Executive gives
notice thereof to the Company. This Agreement shall not apply to, and the
Executive shall have no right to receive any compensation or benefits hereunder
in connection with, any termination of the Executive's employment by the
Executive other than during a Contract Period, and shall not apply to
termination of the Executive's employment on account of the Executive's death,
whether or not during the Contract Period.
3.4 Compensation Upon Termination or During Disability. If during a
Contract Period the Executive's employment shall be terminated by the Company
other than pursuant to death or for Cause, or if the Executive shall terminate
his employment for Good Reason, then the Company shall pay, or the Company shall
cause the Company to pay, to the Executive as severance compensation in a lump
sum (discounted to present value using the prime rate of interest as published
in the Wall Street Journal) on the fifth day following the Date of Termination:
(a) the unpaid balance of the Executive's full base salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given; and
(b) an amount equal the Executive's Compensation if paid for 24 months
following the Date of Termination, plus an additional 20% of his
Compensation for lost bonus potential (or the maximum bonus he could
have received for the year of termination under any written bonus plan
of the Company in effect at the Date of Termination, if greater).
In addition to the severance benefits set forth in (a) and (b) of this
Section 3.4, the Company shall, or the Company shall cause the Company to:
(c) pay all legal fees and expenses incurred by the Executive
resulting from termination (including all such fees and expenses, if
any, incurred in contesting any such termination or in seeking to
obtain or enforce any right or benefit provided by this Agreement, if
the Executive is successful in that enforcement);
(d) maintain in full force and effect, for the continued benefit of
the Executive for the shorter of two years after the Date of
Termination, or (2) until the Executive's death (provided that
benefits payable to his beneficiaries shall not terminate upon his
death), or (3) with respect to any particular plan, the date he is
afforded a comparable benefit at a comparable cost to the Executive by
a subsequent employer, all employee pension and welfare benefit plans
(as defined in Section 3(1) and 3(2) of the Employer Retirement Income
Security Act of 1974, as amended) in which Executive was entitled to
participate immediately prior to the Change of Control (unless plans
generally available to employees of the Company have been modified
since the Change in Control, in which case the plans to be continued
shall be those in effect at the Date of Termination, at the level most
comparable to that available to the Executive at the Change in
Control). In the event that the Executive's participation in any plan
of the Company is prohibited, the Company shall arrange to provide the
Executive with benefits substantially similar to those which the
Executive is entitled to receive under plan, for such period. At the
end of the period of coverage, the Executive shall have the option to
have assigned to him at no cost and with no apportionment of prepaid
premiums, any assignable insurance policy owned by the Company
relating specifically to the Executive; and
(e) cause all stock options and stock appreciation rights and/or the
rights held by the Executive with respect to stock in the Company
immediately prior to the termination, if not otherwise presently
exercisable, to become presently exercisable.
3.5 Disability. If during the Contract Period, the Executive's employment
shall be terminated, either by the Company or by the Executive, due to the
Executive's Disability, the Company shall pay the Executive as severance
compensation the same benefits as set forth in Section 3.4(a)-(e).
3.6 No Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for in this Section 3 by seeking other employment
or otherwise, nor shall the amount of any payment provided for in this Section 3
be reduced by any compensation earned by the Executive as the result of
employment by another employer after the Date of Termination, or otherwise.
Section 4 --Miscellaneous
4.1 Successors Shall Assume. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company or the
Company, by agreement in form and substance satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company or the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitled the Executive to compensation from the Company
in the same amount and on the same terms as the Executive would be entitled
hereunder if the Executive terminated the Executive's employment for Good
Reason, except that 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 in the preamble hereto and any successor to its business and/or assets
as aforesaid or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
4.2 Binding Effect. 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. If the
Executive should die while any amounts would still be payable to the Executive
hereunder if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee, or other designee or, if there be
no such designee, to the Executive's estate.
4.3 Reduction of Amounts Payable. In no event shall any amount payable
under any provision of this Agreement equal or exceed an amount which would
cause the Company to forfeit, pursuant to Section 280G(a) of the Internal
Revenue Code of 1986, as amended, its deduction for any or all such amounts
payable. Pursuant to this Section 4.3, the Company's Board of Directors (or a
Committee of the Board to which compensation matters are delegated) has the
power to reduce severance benefits payable under this
Agreement, if such benefits alone or in conjunction with termination benefits
provided under any other Company plan or program, would cause the Company to
forfeit otherwise deductible payments; provided, however that no benefits
payable under this Agreement shall be reduced pursuant to this Section 4.3 to
less than $1.00 below the amount of benefits which the Company can properly
deduct under Section 280G(a) of the Internal Revenue Code of 1986, as amended,
and that the Committee; and further provided that the Executive shall choose
which of the payments and benefits to retain if some payments and benefits will
not be paid hereunder.
4.4 Notice. Any notice or request required or permitted to be given under
this Agreement shall be in writing and shall be deemed sufficiently given for
all purposes if mailed by certified mail, postage prepaid and return receipt
requested, addressed to the intended recipient at
(a) the addresses set forth below:
(i) If to the Company:
000 Xxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
All notices to the Company shall be directed to the attention of the Chief
Executive Officer of the Company with a copy to the Secretary of the Company.
(ii) If to the Executive:
Xxxx Xxxxxxx
000 Xxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
(b) Such other address as any of the parties shall specify by written
notice to the other parties of this Agreement.
4.5 Payment Obligations Absolute. The Company's obligation to pay the
Executive the amounts provided for hereunder shall be absolute and unconditional
and shall not be affected by any circumstances, including, without limitation,
any set-off, counterclaim, recoupment, defense or other right which the Company
may have against him or anyone else, except with respect to tax withholding
required pursuant to Section 4.11. All amounts payable by the Company hereunder
shall be paid without notice or demand. Except as expressly provided herein, the
Company waives all rights which it may now have or may hereafter have conferred
upon it, by statute or otherwise, to amend, terminate, cancel or rescind this
Agreement in whole or in part. Each and every payment made hereunder by
the Company shall be final and the Company shall not seek to recover all or any
part of such payment from the Executive or from whomsoever may be entitled
thereto, for any reason whatsoever.
4.6 Modifications and Waivers. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board of Directors of the Company. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or any prior or subsequent time.
4.7 Entire Agreement. In the event that Executive is entitled to receive
any payment under ss.3.4 of this Agreement, Executive shall not be entitled to
receive any payments pursuant to the Employment Agreement between the Executive
and the Company dated September 27, 1997 that relate to compensation payable
upon or after termination of employment. No agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
4.8 Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the Commonwealth
of Kentucky.
4.9 Validity. The invalidity or unenforceability of any provisions 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.
4.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
4.11 Payroll and Withholding Taxes. The Company may withhold from any
amounts payable to the Executive hereunder all federal, state, city or other
taxes that the Company may reasonably determine are required to be withheld
pursuant to any applicable law or regulation.
IN WITNESS WHEREOF the parties hereto have executed this Agreement, as of the
day and year first above written.
VIDEOLAN TECHNOLOGIES, INC.
_________________________ By________________________________
Xxxx Xxxxxxx Xxxxxx Xxxxxxxxxx
Title: Chief Financial Officer
Date: February 14, 1997
