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EXHIBIT 10.8
GADZOOX MICROSYSTEMS, INC.
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (the "AGREEMENT") is made and entered
into by and between Xxxx Xxxxxxx (the "EMPLOYEE") and Gadzoox Microsystems,
Inc., a California corporation (the "COMPANY"), effective as of December __,
1996.
R E C I T A L S
A. It is expected that the Company from time to time will consider
the possibility of an acquisition by another company or other Change of Control.
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 (as
defined below) of the Company.
B. The Board believes that it is imperative to provide the Employee
with certain benefits upon a Change of Control which provides the Employee with
enhanced financial security and provides incentive and encouragement to the
Employee to remain with the Company notwithstanding the possibility of a Change
of Control.
The parties hereto agree as follows:
1. TERM OF AGREEMENT. This Agreement shall terminate on the earlier
of (i) the date that all obligations of the parties hereto with respect to this
Agreement have been satisfied or (ii) the date upon which this Agreement
terminates by consent of the parties hereto.
2. AT-WILL EMPLOYMENT. The Company and the Employee acknowledge
that the Employee's employment is and shall continue to be at-will, as defined
under applicable law. If the Employee's employment terminates for any reason,
including (without limitation) any termination prior to a Change of Control,
unless the termination is to avoid this agreement, the Employee shall not be
entitled to any payments, 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 and practice or pursuant to other
agreements with the Company.
3. DEFINITION OF CHANGE OF CONTROL. "CHANGE OF CONTROL" means the
occurrence of any of the following events:
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(a) Any "PERSON" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the
"BENEFICIAL OWNER" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 50% or more of the total
voting power represented by the Company's then outstanding voting securities
other than in a private financing transaction approved by the Board of
Directors; or
(i) the direct or indirect sale or exchange by the
stockholders of the Company of all or substantially all of the stock of the
Company;
(ii) a merger or consolidation in which the Company
is a party and in which the stockholders of the Company before such Ownership
Change do not retain, directly or indirectly, at a least majority of the
beneficial interest in the voting stock of the Company after such transaction;
(iii) or an agreement for the sale or disposition by
the Company of all or substantially all the Company's assets.
4. CHANGE OF CONTROL BENEFITS.
(a) Change of Control. Employee shall be entitled to receive
from the Company the benefits as provided in this Section 4 if there is a Change
of Control that occurs while Employee is employed by the Company, regardless of
whether Employee's employment relationship with the Company continues following
such Change of Control.
(b) Option and Restricted Stock Accelerated Vesting. In the
event of a Change of Control that occurs while Employee is employed by the
Company, fifty percent (50%) of the unvested portion of any stock option or
restricted stock held by the Employee shall automatically be accelerated and any
repurchase option applicable to restricted stock shall terminate so as to become
completely vested for such shares. The balance of any unvested shares not
accelerated (the "Remaining Shares") shall continue to vest on the same time
schedule as existed before the Change of Control with respect to such Remaining
Shares. Notwithstanding the foregoing, if such vesting acceleration would cause
a contemplated Change of Control transaction that was intended to be accounted
for as a "pooling-of-interests" transaction to become ineligible for such
accounting treatment under generally accepted accounting principles, as
determined by the Company's independent public accountants (the "ACCOUNTANTS")
prior to the Change of Control, Employee's stock options and restricted stock
shall not have their vesting so accelerated.
5. ATTORNEY FEES, COSTS AND EXPENSES. The prevailing party,
determined without regard to whether or not the action results in a final
judgment, shall be entitled to collect from the other party its reasonable
attorneys' fees, costs and expenses incurred in connection with any action
brought by either party in connection with the subject matter of this Agreement.
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6. LIMITATION ON PAYMENTS. In the event that the benefits provided
for in this Agreement or otherwise payable to the Employee (i) constitute
"parachute payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code") and (ii) but for this Section, would be
subject to the excise tax imposed by Section 4999 of the Code, then the
Employee's severance benefits under subsection 3(b) shall be payable either
(a) in full, or
(b) as to such lesser amount which would result in no
portion of such 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 taxes and the excise tax imposed by Section 4999, results
in the receipt by the Employee on an after-tax basis, of the greatest amount of
benefits under subsection 3(b), notwithstanding that all or some portion of such
benefits may be taxable under Section 4999 of the Code. Unless the Company and
the Employee otherwise agree in writing, any determination required under this
Section 6 shall be made in writing by the Company's independent public
accountants (the "Accountants"), whose determination shall be conclusive and
binding upon the Employee and the Company for all purposes. For purposes of
making the calculations required by this Section 6, 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 under this Section. The
Company shall bear all costs the Accountants may reasonably incur in connection
with any calculations contemplated by this Section 6.
7. SUCCESSORS.
(a) Company's Successors. Any successor to the Company
(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 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 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, distributes, devisees and legatees.
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8. NOTICE. Notices and all other communications contemplated by
this 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 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.
9. MISCELLANEOUS PROVISIONS.
(a) Waiver. No provision of this Agreement shall be
modified, waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by the Employee and by an authorized officer 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.
(b) Whole Agreement. No agreements, representations or
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.
(c) Choice of Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of California as applied to agreements entered into and performed
within California solely by residents of that state.
(d) Severability. The invalidity or unenforceability of any
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.
(e) Counterparts. This Agreement may be executed in
counterparts, 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
date set forth above.
COMPANY GADZOOX MICROSYSTEMS, INC.
_____________________________________________
K. Xxxxxxx Xxxxxxx, President
EMPLOYEE _____________________________________________
Xxxx Xxxxxxx
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