EXHIBIT 10.27
EXECUTIVE
SEVERANCE BENEFITS AGREEMENT
THIS EXECUTIVE SEVERANCE BENEFITS AGREEMENT (the "AGREEMENT") is entered
into this 1st day of December, 1997, between XXXXXX X. XXXXX ("EXECUTIVE") and
AWARD SOFTWARE INTERNATIONAL, INC., a California corporation (the "COMPANY").
This Agreement is intended to provide Executive with the compensation and
benefits described herein upon the occurrence of specific events. Certain
capitalized terms used in this Agreement are defined in Article V.
The Company and Executive hereby agree as follows:
ARTICLE I
Employment by the Company
1.1 Executive is currently employed by the Company.
1.2 The Company and Executive wish to set forth the compensation and
benefits which Executive shall be entitled to receive in the event Executive's
employment with the Company is terminated under the circumstances described
herein.
1.3 The duties and obligations of the Company to Executive under this
Agreement shall be in consideration for Executive's past services to the
Company, Executive's continued employment with the Company and Executive's
execution of the general waiver and release described in Section 3.2.
1.4 This Agreement shall remain in full force and effect so long as Executive
is employed by the Company; provided, however, that Executive's rights to
payments and benefits under Article II shall continue until the Company's
obligation to provide such payments and benefits is satisfied.
1.5 This Agreement shall supersede any other agreement relating to
Executive's severance from employment with the Company.
ARTICLE II
Severance Benefits
2.1 SEVERANCE BENEFITS. If Executive's employment terminates due to an
Involuntary Termination Without Cause or a Constructive Termination at any time
after the date of execution of this Agreement, such termination of employment
will be deemed a Covered Termination. A Covered Termination entitles Executive
to receive the following benefits set forth in Sections 2.2 through 2.4.
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2.2 LUMP SUM CASH PAYMENT. Within thirty (30) days following the date of
Executive's Covered Termination, Executive shall receive a lump sum cash payment
equal to three hundred percent (300%) of the sum of Base Pay plus Deemed Bonus,
subject to applicable tax withholding.
2.3 ACCELERATION OF STOCK OPTION VESTING. Notwithstanding the language in
Executive's option agreement(s) or any other language to the contrary, the
vesting of Executive's stock option(s) shall accelerate and immediately become
vested and exercisable with respect to all of those option shares which
otherwise would not be vested and exercisable on the date of Executive's Covered
Termination.
2.4 COBRA CONTINUATION. Executive and Executive's covered dependents will be
eligible to continue their health care benefit coverage as permitted by COBRA
(Internal Revenue Code Section 4980B) at no cost to Executive for the eighteen
(18) month period following the date of Executive's Covered Termination;
provided, however, that payment of such COBRA premiums by the Company shall
cease upon Executive commencing employment with a new employer which provides
comparable benefits to Executive and Executive's covered dependents. Executive
and Executive's covered dependents shall be entitled to an additional period of
health care coverage of eighteen (18) months beyond the COBRA continuation
coverage period at no cost to Executive; provided, however, that payment of the
necessary premiums by the Company shall cease upon Executive commencing
employment with a new employer which provides comparable benefits to Executive
and Executive's covered dependents, and provided further, however, that if such
additional health care coverage cannot be provided under the Company's health
plan covering active employees, it shall be provided under such conversion or
other policy as may be available to Executive, and the Company shall pay all
premiums associated with such policy for such additional period of coverage.
2.5 MITIGATION. Except as otherwise specifically provided herein, Executive
shall not be required to mitigate damages or the amount of any payment provided
under this Agreement by seeking other employment or otherwise, nor shall the
amount of any payment provided for under this Agreement be reduced by any
compensation earned by Executive as a result of employment by another employer
or by any retirement benefits received by Executive after the date of the
Covered Termination, or otherwise.
ARTICLE III
Limitations And Conditions On Benefits
3.1 WITHHOLDING OF TAXES. The Company shall withhold appropriate federal,
state, local (and foreign, if applicable) income and employment taxes from any
payments hereunder.
3.2 EMPLOYEE AGREEMENT AND RELEASE PRIOR TO RECEIPT OF BENEFITS. Upon the
occurrence of a Covered Termination, and prior to the receipt of any benefits
under this Agreement on account of such Covered Termination, Executive shall
execute the Employee Agreement and Release (the "Release") in the form attached
hereto as Exhibit A. Such Release shall specifically relate to all of
Executive's rights and claims in existence at the time of such execution and
shall confirm Executive's obligations under the Company's standard form of
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proprietary information and inventions agreement. It is understood that
Executive has twenty-one (21) calendar days to consider whether to execute such
Release, and Executive may revoke such Release within seven (7) calendar days
after execution. In the event Executive does not execute such Release within
the twenty-one (21)-day period, or if Executive revokes such Release within the
subsequent seven (7)-day period, no benefits shall be payable under this
Agreement, and this Agreement shall be null and void.
ARTICLE IV
Other Rights And Benefits
4.1 NONEXCLUSIVITY. Nothing in the Agreement shall prevent or limit
Executive's continuing or future participation in any benefit, bonus, incentive
or other plans, programs, policies or practices provided by the Company and for
which Executive may otherwise qualify, nor shall anything herein limit or
otherwise affect such rights as Executive may have under other agreements with
the Company. Except as otherwise expressly provided herein, amounts which are
vested benefits or which Executive is otherwise entitled to receive under any
plan, policy, practice or program of the Company at or subsequent to the date of
a Covered Termination shall be payable in accordance with such plan, policy,
practice or program.
4.2 CERTAIN ADDITIONAL PAYMENTS. If it shall be determined that any
payments, distributions or other benefits by or from the Company to or for the
benefit of Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but determined without
regard to any additional payment required under this Section 4.2) (collectively,
the "Payment") would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code or any interest or penalties are incurred by Executive
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the "Excise
Tax"), then Executive shall be entitled to receive from the Company an
additional payment (a "Gross-Up Payment") in an amount such that after payment
by Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and the Excise Tax imposed
upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payment.
ARTICLE V
Definitions
For purposes of the Agreement, the following terms are defined as follows:
5.1 "BASE SALARY" means Executive's annual base salary in effect during the
last regularly scheduled payroll period immediately preceding any termination of
Executive's employment.
5.2 "BOARD" means the Board of Directors of the Company.
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5.3 "CAUSE" means termination of Executive's employment with the Company for
any of the following reasons as determined in good faith by the Company (or in
the case of the CEO, a majority of the Board) which is not cured within fifteen
(15) days following delivery of written notice of such infraction to Executive:
(A) an intentional act which materially injures the Company;
(B) an intentional refusal or failure to follow lawful and reasonable
directions of the Board or an individual to whom Executive reports (as
appropriate);
(C) a willful and habitual neglect of duties; or
(D) a conviction of a felony involving moral turpitude which is reasonably
likely to inflict or has inflicted material injury on the Company.
5.4 "CONSTRUCTIVE TERMINATION" means that Executive voluntarily terminates
employment after any of the following are undertaken without Executive's express
written consent:
(A) the assignment to Executive of any duties or responsibilities which
result in a diminution or adverse change of Executive's position,
status or circumstances of employment; provided, however, that a mere
change in Executive's title or reporting relationship shall not
constitute a Constructive Termination;
(B) a reduction by the Company in Executive's Base Salary;
(C) any failure by the Company to continue in effect any benefit plan or
arrangement, including incentive plans or plans to receive securities
of the Company, in which Executive is participating (hereinafter
referred to as "Benefit Plans"), or the taking of any action by the
Company which would adversely affect Executive's participation in or
reduce Executive's benefits under any Benefit Plans or deprive
Executive of any fringe benefit then enjoyed by Executive; provided,
however, that Executive's termination shall not be deemed a
Constructive Termination if the Company offers a range of benefit
plans and programs which, taken as a whole, are comparable to the
Benefit Plans, as determined in good faith by the Executive;
(D) a relocation of Executive's business office to a location more than
thirty (30) miles from the location at which Executive performs duties
as of the date of this Agreement, except for required travel by
Executive on the Company's business to an extent substantially
consistent with Executive's business travel obligations;
(E) any breach by the Company of any provision of this Agreement or any
other material agreement between Executive and the Company concerning
Executive's employment; or
(F) any failure by the Company to obtain the assumption of this Agreement
or any other material agreement between Executive and the Company
concerning Executive's employment by any successor or assign of the
Company
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5.5 "COVERED TERMINATION" means an Involuntary Termination Without Cause or a
Constructive Termination.
5.6 "DEEMED BONUS" means the bonus that would have been paid to Executive
under the Company's bonus plan with respect to the fiscal year of the Company in
which a Covered Termination occurs if one hundred percent (100%) of target
performance had occurred, whether or not such bonus at such level of performance
has actually been paid to Executive.
5.7 "INVOLUNTARY TERMINATION WITHOUT CAUSE" means Executive's dismissal or
discharge other than for Cause. The termination of Executive's employment as a
result of Executive's death or disability will not be deemed to be an
Involuntary Termination Without Cause.
Article VI
General Provisions
6.1 EMPLOYMENT STATUS. This Agreement does not constitute a contract of
employment or impose upon Executive any obligation to remain as an employee, or
impose on the Company any obligation (i) to retain Executive as an employee,
(ii) to change the status of Executive as an at-will employee, or (iii) to
change the Company's policies regarding termination of employment.
6.2 NOTICES. Any notices provided hereunder must be in writing, and such
notices or any other written communication shall be deemed effective upon the
earlier of personal delivery (including personal delivery by facsimile) or the
third day after mailing by first class mail, to the Company at its primary
office location and to Executive at Executive's address as listed in the
Company's payroll records. Any payments made by the Company to Executive under
the terms of this Agreement shall be delivered to Executive either in person or
at the address as listed in the Company's payroll records.
6.3 SEVERABILITY. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
6.4 WAIVER. If either party should waive any breach of any provisions of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
6.5 ARBITRATION. Unless otherwise prohibited by law or specified below, all
disputes, claims and causes of action, in law or equity, arising from or
relating to this Agreement or its enforcement, performance, breach, or
interpretation shall be resolved solely and exclusively by final and binding
arbitration held in Santa Xxxxx County, California through Judicial Arbitration
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& Mediation Services/Endispute ("JAMS") under the then existing JAMS arbitration
rules. However, nothing in this section is intended to prevent either party
from obtaining injunctive relief in court to prevent irreparable harm pending
the conclusion of any such arbitration. Each party in any such arbitration
shall be responsible for its own attorneys' fees, costs and necessary
disbursement; provided, however, that in the event one party refuses to
arbitrate and the other party seeks to compel arbitration by court order, if
such other party prevails, it shall be entitled to recover reasonable attorneys
fees, costs and necessary disbursements. Pursuant to California Civil Code
Section 1717, each party warrants that it was represented by counsel in the
negotiation and execution of this Agreement, including the attorneys' fees
provision herein.
6.6 COMPLETE AGREEMENT. This Agreement, including Exhibit A, constitutes the
entire agreement between Executive and the Company and is the complete, final,
and exclusive embodiment of their agreement with regard to this subject matter,
wholly superseding all written and oral agreements with respect to payments and
benefits to Executive in the event of employment termination. It is entered
into without reliance on any promise or representation other than those
expressly contained herein.
6.7 AMENDMENT OR TERMINATION OF AGREEMENT. This Agreement may be changed or
terminated only upon the mutual written consent of the Company and Executive.
The written consent of the Company to a change or termination of this Agreement
must be signed by an executive officer of the Company after such change or
termination has been approved by the Board.
6.8 COUNTERPARTS. This Agreement may be executed in separate counterparts,
any one of which need not contain signatures of more than one party, but all of
which taken together will constitute one and the same Agreement.
6.9 HEADINGS. The headings of the Articles and Sections hereof are inserted
for convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
6.10 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive and the Company, and their
respective successors, assigns, heirs, executors and administrators, except that
Executive may not assign any duties hereunder and may not assign any rights
hereunder without the written consent of the Company, which consent shall not be
withheld unreasonably.
6.11 CHOICE OF LAW. All questions concerning the construction, validity and
interpretation of this Agreement will be governed by the law of the State of
California, without regard to such state's conflict of laws rules.
6.12 NON-PUBLICATION. The parties mutually agree not to disclose publicly
the terms of this Agreement except to the extent that disclosure is mandated by
applicable law or to respective advisors (e.g., attorneys, accountants).
6.13 CONSTRUCTION OF AGREEMENT. In the event of a conflict between the text
of the Agreement and any summary, description or other information regarding the
Agreement, the text of the Agreement shall control.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year written above.
AWARD SOFTWARE INTERNATIONAL, INC. XXXXXX X. XXXXX
By:________________________________ __________________________________
Name:______________________________
Title:_____________________________
Exhibit A: Employee Agreement and Release
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Exhibit A
EMPLOYEE AGREEMENT AND RELEASE
I understand and agree completely to the terms set forth in the foregoing
agreement.
I hereby confirm my obligations under the Company's proprietary information and
inventions agreement.
I acknowledge that I have read and understand Section 1542 of the California
Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR." I hereby expressly waive and relinquish all rights
and benefits under that section and any law of any jurisdiction of similar
effect with respect to my release of any claims I may have against the Company.
Except as otherwise set forth in this Agreement, I hereby release, acquit and
forever discharge the Company, its parents and subsidiaries, and their officers,
directors, agents, servants, employees, shareholders, successors, assigns and
affiliates, of and from any and all claims, liabilities, demands, causes of
action, costs, expenses, attorneys fees, damages, indemnities and obligations of
every kind and nature, in law, equity, or otherwise, known and unknown,
suspected and unsuspected, disclosed and undisclosed (other than any claim for
indemnification I may have as a result of any third party action against me
based on my employment with the Company), arising out of or in any way related
to agreements, events, acts or conduct at any time prior to the date I execute
this Agreement, including but not limited to: all such claims and demands
directly or indirectly arising out of or in any way connected with my employment
with the Company or the termination of that employment, including but not
limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands related
to salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of compensation; claims pursuant to any
federal, state or local law or cause of action including, but not limited to,
the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination
in Employment Act of 1967, as amended ("ADEA"); the federal Employee Retirement
Income Security Act of 1974, as amended; the federal Americans with Disabilities
Act of 1990; the California Fair Employment and Housing Act, as amended; tort
law; contract law; wrongful discharge; discrimination; fraud; defamation;
emotional distress; and breach of the implied covenant of good faith and fair
dealing; provided, however, that nothing in this paragraph shall be construed in
any way to release the Company from its obligation to indemnify me pursuant to
the Company's indemnification agreement.
I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under ADEA. I also acknowledge that the consideration given
for the waiver and release in the preceding paragraph hereof is in addition to
anything of value to which I was already entitled. I further acknowledge that I
have been advised by this writing, as required by the ADEA, that: (A) my waiver
and release do not apply to any rights or claims that may arise on or after the
date I execute this Agreement; (B) I have the right to consult with an attorney
prior to executing this Agreement; (C) I have twenty-one (21) days to consider
this Agreement (although I may choose to voluntarily execute this Agreement
earlier); (D) I have seven (7) days following the execution of this Agreement by
the parties to revoke the Agreement; and (E) this Agreement shall not be
effective until the date upon which the revocation period has expired, which
shall be the eighth day after this Agreement is executed by me, provided that
the Company has also executed this Agreement by that date (the "Effective
Date").
AWARD SOFTWARE INTERNATIONAL, INC. XXXXXX X. XXXXX
By:__________________________________ ______________________________________
Title:_______________________________ Date:_________________________________
