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Exhibit 10.12
APPLIX, INC.
EXECUTIVE OPTION ACCELERATION AGREEMENT
THIS AGREEMENT is entered into between Applix, Inc., a Massachusetts
corporation (the "Company"), and Xxxxx Xxxxx (the "Executive") as of June 9,
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
which 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 Company's key personnel 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
benefits set forth in this Agreement.
1. STOCK OPTION ACCELERATION. Effective upon the occurrence of a Change in
Control Event (as defined below), each outstanding option to purchase shares of
Common Stock of the Company held by the Executive shall become immediately
exercisable in full.
2. "CHANGE IN CONTROL EVENT" means any of the following:
(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 (the "Exchange Act")) (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
Exchange Act) 50% 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 for purposes of this subsection (a), the
following acquisitions shall not constitute a Change in Control Event: (i) 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), (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i) and (ii)
of subsection (c) of this Section 1; or
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(b) such time as the Continuing Directors (as defined below) do not
constitute a majority of the Board (or, 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,
without limitation, a corporation which 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, 50%
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).
3. TAXES.
(a) Notwithstanding any other provision of this Agreement, except as
set forth in Section 3(b), 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 3, the Contingent
Compensation Payments so eliminated shall be referred to as the "Eliminated
Payments" and the aggregate amount (determined in accordance with Proposed
Treasury Regulation Section 1.280G-1, Q/A-
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30 or any successor provision) of the Contingent Compensation Payments so
eliminated shall be referred to as the "Eliminated Amount."
(b) Notwithstanding the provisions of Section 3(a), no such reduction
in Contingent Compensation Payments shall be made if (i) the Eliminated Amount
(computed without regard to this sentence) exceeds (ii) 105% of the aggregate
present value (determined in accordance with Proposed Treasury Regulation
Section 1.280G-1, Q/A-31 and Q/A-32 or any successor provisions) of the amount
of any additional taxes that would be incurred by the Executive if the
Eliminated Payments (determined without regard to this sentence) were paid to
him/her (including, state and federal income taxes on the Eliminated Payments,
the excise tax imposed by Section 4999 of the Code payable with respect to all
of the Contingent Compensation Payments in excess of the Executive's "base
amount" (as defined in Section 280G(b)(3) of the Code), and any withholding
taxes). The override of such reduction in Contingent Compensation Payments
pursuant to this Section 3(b) shall be referred to as a "Section 3(b) Override."
For purpose of this paragraph, if any federal or state income taxes would be
attributable to the receipt of any Eliminated Payment, the amount of such taxes
shall be computed by multiplying the amount of the Eliminated Payment by the
maximum combined federal and state income tax rate provided by law.
(c) For purposes of this Section 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.
(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.
(d) 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
(the "Potential Payments") shall not be made until the dates provided for in
this Section 3(d). 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 Potential Payments constitute Contingent
Compensation Payments, (ii) the Eliminated Amount and (iii) whether the Section
3(b) Override is applicable. Within 30 days after delivery of such notice to the
Executive, the Executive shall deliver a response to the Company (the "Executive
Response") stating either (A) that he/she agrees with the Company's
determination pursuant to the preceding sentence, in which case he/she shall
indicate, if applicable, which Contingent Compensation Payments, or portions
thereof (the aggregate amount of which, determined in accordance with Proposed
Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision, shall
be equal to the Eliminated Amount), shall be treated
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as Eliminated Payments or (B) that he/she disagrees with such determination, in
which case he/she shall set forth (i) which Potential Payments should be
characterized as Contingent Compensation Payments, (ii) the Eliminated Amount,
(iii) whether the Section 3(b) Override is applicable, and (iv) which (if any)
Contingent Compensation Payments, or portions thereof (the aggregate amount of
which, determined in accordance with Proposed Treasury Regulation Section
1.280G-1, Q/A-30 or any successor provision, shall be equal to the Eliminated
Amount, if any), shall be treated as Eliminated Payments. In the event that the
Executive fails to deliver an Executive Response on or before the required date,
the Company's initial determination shall be final and the Contingent
Compensation Payments that shall be treated as Eliminated Payments shall be
determined by the Company in its absolute discretion. If the Executive states in
the Executive Response that he/she agrees with the Company's determination, the
Company shall make the Potential Payments to the Executive within three business
days following delivery to the Company of the Executive Response (except for any
Potential Payments which are not due to be made until after such date, which
Potential Payments shall be made on the date on which they are due). If the
Executive states in the Executive Response that he/she disagrees with the
Company's determination, then, for a period of 60 days following delivery of the
Executive Response, the Executive and the Company shall use good faith efforts
to resolve such dispute. If such dispute is not resolved within such 60-day
period, such dispute shall be settled exclusively by arbitration in Boston,
Massachusetts, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction. The Company shall, within three business days
following delivery to the Company of the Executive Response, make to the
Executive those Potential Payments as to which there is no dispute between the
Company and the Executive regarding whether they should be made (except for any
such Potential Payments which are not due to be made until after such date,
which Potential Payments shall be made on the date on which they are due). The
balance of the Potential Payments shall be made within three business days
following the resolution of such dispute. Subject to the limitations contained
in Sections 3(a) and (b) hereof, the amount of any payments to be made to the
Executive following the resolution of such dispute shall be increased by amount
of the accrued interest thereon computed at the prime rate announced from time
to time by FleetBank, compounded monthly from the date that such payments
originally were due.
(e) The provisions of this Section 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. MISCELLANEOUS.
4.1 EXPENSES. The Company agrees to pay as incurred, to the full
extent permitted by law, all legal, accounting and other fees and expenses which
the Executive may reasonably incur as a result of any claim or contest
(regardless of the outcome thereof) by the Company, the Executive or others
regarding the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive regarding the amount of any payment or benefits
pursuant to this Agreement), plus in each case interest on any delayed payment
at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the
Code.
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4.2 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 (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) prepaid via a reputable
nationwide overnight courier service, in each case addressed to the Company, at
000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000, and to the Executive at 00
Xxxxxxxxxxxx Xxxx, Xxxxxxx, XX 00000 (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.
4.3 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.
4.4 INJUNCTIVE RELIEF. The Company and the Executive agree that any
breach of this Agreement by the Company is likely to cause the Executive
substantial and irrevocable damage and therefore, in the event of any such
breach, in addition to such other remedies which may be available, the Executive
shall have the right to specific performance and injunctive relief.
4.5 GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the internal laws of the
Commonwealth of Massachusetts, without regard to conflicts of law principles.
4.6 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.
4.7 TAX WITHHOLDING. Any payments provided for hereunder shall be
paid net of any applicable tax withholding required under federal, state or
local law.
4.8 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
of the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein is
hereby terminated and cancelled.
4.9 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 day and year first set forth above.
APPLIX, INC.
By: /s/ Xxxxxx Xxxxxx
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Title: CFO
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/s/ Xxxxx Xxxxx
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XXXXX XXXXX
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