Exhibit 10.21
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is
made as of March 2, 1998, and amended and restated in its entirety effective as
of January 25, 1999, by and between W. Xxxxx Xxxxxxx (hereinafter called
"Employee") and XXXXXXX-XXXXXXX COMPANY, a California corporation (hereinafter
called the "Company").
In consideration of the mutual covenants herein contained the parties
hereto agree as follows:
1. Term and Scope of Employment.
(a) The Company agrees to employ Employee in Palo Alto,
California for a period of thirty-six (36) months, commencing March 9, 1998, and
ending March 9, 2001, for the purpose of rendering services in connection with
the Company's business. Employee agrees to accept employment with the Company
for such purpose. In performing his duties hereunder, Employee shall observe and
comply with all directions given by the Board of Directors of the Company or by
his superiors.
(b) Employee shall devote his full time, attention, and effort
to the business of the Company, and shall not during the term of this Agreement
engage in any other business (whether as an employee, partner, consultant or
otherwise) without the consent of the Company; but this shall not be construed
as preventing Employee from investing his assets in such form or manner as will
not interfere with the services he agreed to render to the Company hereunder.
(c) Employee agrees to inform the Board of Directors of the
Company, or his superiors, of all of his work and transactions on behalf of the
Company, and to disclose to them his knowledge of the Company's business and
affairs.
2. Salary.
For his services the Company agrees to pay Employee an annual
salary of not less than Four Hundred and Sixty-Five Thousand Dollars ($465,000)
payable in equal biweekly installments. In addition to the above amount, at the
sole discretion of the Board of Directors, Employee may be granted bonuses or
other compensation in an amount to be determined in accordance with Board
policy.
3. Termination.
(a) For Cause. During the term of this Agreement, Employee's
employment may be terminated by the Company for Cause (as defined below),
effective immediately upon the day it sends Notice of Termination (as required
by Section 10(b)) to Employee, at which time compensation will cease. "Cause"
for this purpose, shall mean fraud, misappropriation, embezzlement or willful
engagement by Employee in misconduct which is demonstrably and materially
injurious to the Company and its subsidiaries taken as a whole. An act or
omission of Employee shall not be considered "willful" unless done, or omitted
to be done, by Employee without good faith and a reasonable belief that the act
or omission was in the best interests of the Company and its subsidiaries.
Employee may not be terminated for Cause unless and until there shall have been
delivered to Employee a copy of a resolution duly adopted by affirmative vote of
not less than three-quarters of the entire membership of the Company's Board of
Directors at a meeting of the Board called and held for that purpose (after
reasonable notice to Employee and an opportunity for Employee, together with
Employee's counsel, to be heard before the Board), finding Employee was guilty
of the conduct set forth in the first sentence of this Section 3(a), and
specifying the particulars thereof in detail. Notwithstanding the foregoing,
Employee shall have the right to contest such termination for Cause (for
purposes of this Agreement) by arbitration in accordance with the provisions of
Section 9.
2
(b) Without Cause. Company may terminate Employee's employment
without Cause. In the event Company terminates Employee's employment without
Cause, in addition to the entire compensation provided for hereunder for the
remainder of the term specified in Section 1(a) (which shall be paid in a lump
sum), Employee shall be entitled to receive upon such termination without Cause
(in a lump sum) severance compensation equal to six (6) month's base salary,
less all amounts required by law to be withheld and deducted; provided, however,
that if the Company terminates Employee's employment other than for death,
Disability or Cause, or Employee terminates his Employment for Good Reason,
prior to the date of occurrence of a Change in Control if such termination is
effected by the Company (or the actions or decisions giving rise to Employee's
termination for Good Reason are taken or made by the Company) in anticipation of
a Change of Control such termination shall for all purposes hereunder have the
same consequences as a termination by Employee under subparagraph (c) of this
Section 3 (any such termination, action or decision effected, taken or made
within 90 days prior to the date of any such Change in Control shall be
conclusively deemed to be in anticipation of a Change in Control).
(c) Change in Control. This Agreement shall not be terminated
upon a Change in Control, as defined in subparagraph (d) of this Section 3. In
the event of a Change in Control, the provisions of this Agreement shall be
binding on and shall inure to the benefit of the surviving or resulting
corporation, or (in the case of a Change in Control of the kind referred to in
Section 3(c)(i)(z)) the corporation to which the applicable assets of the
Company have been transferred; provided, however, that (a) Employee may treat
the occurrence of a Change in Control as a material breach of this Agreement and
may terminate this Agreement upon written notice given (in accordance with
Section 10(b)) within 120 days of the occurrence of a Change in Control, unless
Employee's employment has theretofore been terminated in accordance with any
other provisions of this Agreement, and (b) Employee may terminate this
Agreement for Good Reason at any time following the occurrence of a Change in
Control and during the remainder of the term of this Agreement as specified in
Section 1(a). Upon such termination, or upon a
3
termination of Employee by the Company without Cause at any time following the
occurrence of a Change in Control, the Company shall:
(i) pay to Employee as severance pay in a lump sum,
in cash, on the fifth day following the Date of Termination (as defined in
subparagraph (g) of this Section 3), an amount equal to the aggregate of (x)
299.999% of Employee's "Base Compensation" (as defined below), plus (y) an
amount equal to (A) the amount previously determined by the Board as Employee's
target bonus for the calendar year in which Notice of Termination is given by
Employee or the Company, as the case may be, multiplied by (B) a fraction, the
numerator of which shall be the number of days that have elapsed during such
calendar year, through and including the date on which such Notice of
Termination is given, and the denominator of which shall be 365; provided,
however, that if the lump sum severance payment under this Section 3, either
alone or together with other payments (or the value of other benefits) which
Employee has the right to receive from the Company in connection with a Change
in Control, would not be deductible (in whole or in part) by the Company as a
result of such lump sum payment constituting a "parachute payment" (as defined
in Section 280G of the Internal Revenue Code of 1986, as amended (collectively,
the "Code")), such lump sum severance payment (or, at Employee's election, such
other payments and/or benefits, or a combination of such other payments and/or
benefits and such lump sum severance payment) shall be reduced to the largest
amount as will result in no portion of the lump sum severance payment under this
Section 3 not being fully deductible by the Company as a result of Section 280G
of the Code. The determination of the amount of any such required reduction
pursuant to the foregoing provision, and the valuation of any non-cash benefits
for purposes of such determination, shall be made exclusively by the firm that
was acting as the Company's auditors prior to the Change in Control (whose fees
and expenses shall be borne by the Company), and such determination shall be
conclusive and binding. The term "Base Compensation" shall mean an average of
the annual cash compensation paid to Employee by the Company and any of its
subsidiaries in the form of salary or bonuses (including any amount that is the
subject of an
4
elective deferral by Employee) during the five taxable years immediately
preceding the Change in Control which was includable in gross income (or would
have been so included but for any such elective deferral) by Employee for
federal income tax reporting purposes; and
(ii) arrange to provide Employee, for a thirty-six
month period (or such shorter period as Employee may elect), with disability,
accident, group life, medical and dental insurance, all of which shall be
prepaid, substantially similar to those insurance benefits which Employee is
receiving immediately prior to a termination by Employee under this Section
3(c). Benefits otherwise receivable by Employee pursuant to this Section 3(c)
shall be reduced to the extent comparable benefits are actually received by
Employee during such thirty-six month period (or such shorter period elected by
Employee), and any such benefits actually received by Employee shall be reported
by Employee to the Company.
(d) Definition of Change in Control. A Change in Control shall
be deemed to have occurred if (i) there shall be consummated (x) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation, (y) any other consolidation or merger to
which the Company is a party, regardless of whether shares of the Company's
Common Stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company's Common Stock
immediately prior to the merger have the same proportionate ownership of common
stock (or the equivalent fully voting securities) of the surviving corporation
or other entity immediately after the merger, or (z) any sale, lease, exchange
or other transfer (in one transaction or a series of related transactions) of
all, or substantially all, of the assets of the Company, or (ii) the Company
consummates (in one or a series of transactions) the disposition of
substantially all of its business operations, or (iii) any "person" (as defined
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended,
shall become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 30% or more of the Company's outstanding Common
Stock, or (iv) during any period of two consecutive years, individuals who at
the beginning of such period constitute the entire Board
5
of Directors of the Company shall cease for any reason to constitute a majority
thereof unless the election, or the nomination for election by the Company's
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.
(e) Disability. If, as a result of Employee's incapacity due
to physical or mental illness, Employee shall have been absent from his duties
with the Company on a full-time basis for six consecutive months and within 30
days after written Notice of Termination is thereafter given by the Company
Employee shall not have returned to the full-time performance of Employee's
duties, the Company may terminate this Agreement for "Disability."
(f) Good Reason. For purposes of this Agreement, "Good Reason"
shall mean any of the following (without Employee's express written consent):
(A) the assignment to Employee by the Company of
duties inconsistent with, or a substantial alteration in the nature or status
of, Employee's responsibilities immediately prior to a Change in Control other
than any such alteration primarily attributable to the fact that the Company's
securities are no longer publicly traded;
(B) a reduction by the Company in Employee's base
salary in effect on the date of a Change in Control or as the same may be
increased from time to time during the term of this Agreement;
(C) failure by the Company to continue in effect
without substantial change any compensation, incentive, welfare or benefit plan
or arrangement, as well as any plan or arrangement whereby Employee may acquire
securities, in which Employee is participating at the time of a Change in
Control (or any other plans providing Employee with substantially similar
benefits, hereinafter referred to as "Benefit Plans"), or the taking of any
action by the Company which would adversely affect Employee's
6
participation in or materially reduce Employee's benefits under any such Benefit
Plan or deprive Employee of any material fringe benefit enjoyed by Employee at
the time of a Change in Control; unless an equitable substitute arrangement
(embodied in an ongoing substitute or alternative Benefit Plan) has been made
for the benefit of Employee with respect to the Benefit Plan in question. For
purposes of the foregoing, Benefit Plans shall include, but not be limited to,
the Company's Employee Stock Ownership Plan, Employees' Profit Sharing and
Investment Plan, Deferred Compensation (401K) Plan, 1991 Stock Option and
Incentive Plan, Top Management Incentive Bonus Plan, and/or any other plan or
arrangement to receive and exercise stock options or stock appreciation rights,
incentive, bonus or other award plans, group life insurance plans, medical,
dental, accident and disability plans;
(D) a relocation of the Company's principal
executive offices to a location outside the San Francisco-Oakland-San Xxxx Bay
Area, or Employee's relocation to any place other than the principal executive
offices of the Company, except for required travel by Employee on Company
business to an extent substantially consistent with Employee's business travel
obligations at the time of a Change in Control;
(E) any material breach by the Company of any
provision of this Agreement;
(F) any failure by the Company to obtain the
assumption of this Agreement by any successor or assign of the Company as
required in Section 7; or
(G) any purported termination of Employee's
employment which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 10(b) below. For purposes of this Agreement, no such
purported termination shall be effective.
(g) Date of Termination. "Date of Termination" shall mean (a)
for Disability, 30 days after Notice of Termination is given to Employee
(provided Employee has not returned to the
7
performance of Employee's duties on a full-time basis during such 30-day
period), or (b) if Employee's employment is terminated for any other reason, the
date on which Notice of Termination is given by the Company or Employee, as the
case may be.
4. Nondisclosure and Assignment of Rights in Company Data. "Company
Data" is hereby defined to mean for purposes of this Agreement, programs,
improvements, records, ideas, files, drawings, documents, customer lists,
investment opportunities, sales and marketing techniques and devices, formulae,
specifications, research, studies, investigations, processes, data, and
information disclosed to or known by Employee as a consequence, whether directly
or indirectly, of his employment by Company which is not generally known in the
industry in which the Company is or may become engaged and which involves
special techniques or know-how in connection with the industry in which the
Company is or may become engaged, and, without limiting the generality of the
foregoing, anything not within the public domain and public knowledge, whether
or not patentable or copyrightable. The parties hereto acknowledge that in the
course of his employment, Employee will himself, or with others, have access to,
use, come in contact with, obtain, make, evolve or conceive Company Data. As
further consideration for Company's entering into this Agreement, Employee
hereby sells, assigns and transfers to Company all right, title, and interest he
has or at any time may have to Company Data, and to any and all other Company
Data at any time used in the business of Company in which Employee may have a
right, title, or interest, and such Company Data shall be the sole and exclusive
property of Company.
5. Assignment. The rights and obligations of Employee hereunder shall
not be assignable and any attempted assignment shall be void. The rights and
obligations of Company hereunder may be assigned as a part of any transaction
which includes the transfer of all or substantially all of the assets of the
Company, whether such transfer is made pursuant to a sale of assets or stock, or
a merger, reorganization, or otherwise.
8
6. No Obligation to Mitigate Damages. Employee shall not be required to
mitigate damages or the amount of any payment provided for 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
Employee as a result of employment by another employer or by retirement benefits
after the Date of Termination, or otherwise, except to the extent provided in
Section 3 above.
7. Successor to the Company. The Company shall require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement satisfactory to Employee, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor or
assign to its business and/or assets which executes and delivers the agreement
provided for in this Section 7 or which otherwise becomes bound by all the terms
and provisions of this Agreement by operation of law.
8. Heirs of Employee. This Agreement shall inure to the benefit of and
be enforceable by Employee's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Employee should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to Employee's devisees, legatee, or other designee
or, if there be no such designee, to Employee's estate.
9. Arbitration. Any dispute, controversy or claim arising under or in
connection with this Agreement, or the breach hereof, shall be settled
exclusively by arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association then in effect. Judgment upon the
9
award rendered by Arbitrator(s) may be entered in any court having jurisdiction
thereof. Any arbitration held pursuant to this Section 9 shall take place in San
Francisco, California.
10. Notice.
(a) General. For purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to the Company:
Xxxxxxx-Xxxxxxx Company
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Corporate Secretary
If to Employee:
W. Xxxxx Xxxxxxx
00000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxx Xxxxx, Xxxxxxxxxx 00000
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of address shall be effective only
upon receipt.
(b) Notice of Termination. Any purported termination of
employment shall be communicated by a written Notice of Termination to Employee
in accordance with paragraph (a) of this Section 10, and shall state the
specific termination provisions in this Agreement relied upon, and set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Employee's employment.
11. Nonwaiver, Complete Agreement, Governing Law. No provisions of this
Agreement may be modified, waived or discharged unless in writing signed by both
parties. No waiver by either party
10
hereto at any time of any breach by the other party of, or compliance with, any
condition or provision of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. 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. This Agreement shall be governed
by and construed in accordance with the laws of the State of California.
12. Legal Fees and Expenses. The Company shall pay all reasonable legal
fees and expenses which Employee may incur as a result of the Company's
contesting the validity, enforceability or Employee's good faith interpretation
of, or good faith determinations under, this Agreement; provided, however, that
the Company shall not pay any legal fees and expenses incurred by Employee in
contesting the termination of Employee's employment for Cause if, as a result of
such contest, it is determined that Employee was in fact terminated for Cause.
13. 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.
14. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
11
XXXXXXX-XXXXXXX COMPANY
By /s/ Xxxx X. Xxxxxxx
-------------------
Title: Chairman
/s/ Xxxxx Xxxxxxx
-------------------
Xxxxx Xxxxxxx
12
