EXHIBIT 10.11
SPYGLASS, INC.
Senior Management Retention Agreement
Xxxxx Xxxxxxxx
Naperville Corporate Center
0000 Xxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Dear Xxxxx:
Spyglass, Inc. (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.
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, including yourself, without distraction from the
possibility of a change in control of the Company and related events
and circumstances.
As inducement for and in consideration of your remaining in its
employ, the Company agrees that you shall receive the severance
benefits set forth in this letter agreement (the "Agreement") in the
event your employment with the Company is terminated under the
circumstances described below subsequent to a Change in Control of
the Company (as defined below).
1. Certain Definitions.
As used herein, the following terms shall have the following
respective meanings:
1.1 "Change in Control" shall mean:
(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 (within the meaning of Rule 13d_3 promulgated
under the Exchange Act) of 20% 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 voting 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: (i) any acquisition directly from 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), (ii) and (iii) of subsection (c) of this
Section 1.1; or
(b) individuals who, as of the date hereof, constitute
the members of the Board (the "Incumbent Directors") cease for any
reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a majority
of the Incumbent Directors shall be deemed to be an Incumbent
Director (except that this proviso clause shall not apply to any
individual whose initial election as a director occurs 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 reorganization, merger or
consolidation 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, (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 60% of the then-outstanding shares of common
stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such
Business Combination 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, (ii) no Person (excluding any resulting or
acquiring corporation in such Business Combination or any employee
benefit plan (or related trust) of the Company or of such resulting
or acquiring corporation in such Business Combination) beneficially
owns, directly or indirectly, 30% or more of the then outstanding
shares of common stock of such resulting or acquiring corporation in
such Business Combination, or of the combined voting power of the
then_outstanding voting securities of such corporation (except to the
extent that such ownership existed prior to the Business Combination)
and (iii) at least half of the members of the board of directors of
the resulting or acquiring corporation in such Business Combination
were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for
such Business Combination; or
(d) approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.
1.2 "Cause" shall mean:
(a) your willful failure to substantially perform your
reasonable assigned duties as an officer of the Company (other than
any such failure resulting from incapacity due to physical or mental
illness), which failure is not cured within 30 days after a written
demand for substantial performance is delivered to you by the Board
which specifically identifies the manner in which the Board believes
that you have not substantially performed your duties; or
(b) your willful engagement in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the
Company.
For purposes of this Section 1.2, no act or failure to act, on
your part shall be considered "willful" unless it is done, or omitted
to be done, by you in bad faith and without reasonable belief that
your action or omission was in the best interests of the Company.
1.3 "Good Reason" shall mean the occurrence, without your
written consent, of any of the following circumstances unless such
circumstance is fully corrected prior to the Date of Termination
specified in the Notice of Termination (each as defined below) given
in respect thereof (provided that such right of correction by the
Company shall only apply to the first Notice of Termination for Good
Reason given by you):
(a) the assignment to you (without your written consent)
of any duties inconsistent in any respect with your position
(including status, offices, titles and reporting requirements),
authority or responsibilities in effect as immediately prior to the
Change in Control, or any other action by the Company which results
in a diminution in such position, authority or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the Company
promptly after receipt of written notice thereof given by you;
(b) a reduction in your annual base salary as in effect
on the date hereof or as the same may be increased from time to time;
(c) the failure by the Company to (i) continue in effect
any material compensation or benefit plan in which you participate
immediately prior to the Change in Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, (ii) continue your
participation therein (or in such substitute or alternative plan) on
a basis not materially less favorable, both in terms of the amount of
benefits provided and the level of your participation relative to
other participants, as existed at the time of the Change in Control
or (iii) award cash bonuses to you in amounts and in a manner
substantially consistent with past practice in light of the Company's
financial performance;
(d) the failure by the Company to continue to provide
you with benefits substantially similar to those enjoyed by you under
any of the Company's life insurance, medical, health and accident, or
disability plans in which you were participating at the time of the
Change in Control, the taking of any action by the Company which
would directly or indirectly materially reduce any of such benefits,
or the failure by the Company to provide you with the number of paid
vacation days to which you are entitled on the basis of years of
service with the Company in accordance with the Company's normal
vacation policy in effect at the time of the Change in Control;
(e) a change by the Company in the location at which you
perform your principal duties for the Company to a new location that
is both (i) outside a radius of 35 miles from your principal
residence at the time of the Change in Control and (ii) more than 20
miles from the location at which you perform your principal duties
for the Company at the time of the Change in Control; or a
requirement by the Company that you travel on Company business to a
substantially greater extent than required immediately prior to the
Change in Control;
(f) the failure of the Company to obtain a reasonably
satisfactory agreement from any successor to assume and agree to
perform this Agreement, as required by Section 5; or
(g) a purported termination of your employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of Sections 3.2 and 6, which purported termination shall
not be effective for purposes of this Agreement.
For purposes of this Agreement, any good faith determination of
"Good Reason" made by the Board shall be conclusive, provided that
Incumbent Directors then comprise a majority of the Board.
1.4 "Disability" shall mean your absence from the full-
time performance of your duties with the Company for six consecutive
months as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician selected
by the Company or its insurers and acceptable to you or your legal
representative.
2. Term of the Agreement. The term of this Agreement (the
"Term") shall commence on as of the date hereof and shall continue in
effect through December 31, 1998; provided, however, that commencing
on January l, 1999 and each January l thereafter, the Term shall be
automatically extended for one additional year unless, not later than
October 31 of the preceding calendar year, the Company shall have
given you written notice that the Term will not be extended. This
Agreement, and all rights and obligations of the parties hereunder,
shall expire upon (a) the expiration of the Term if a Change in
Control has not occurred during the Term, (b) the date 24 months
after the date of the Change in Control, if you are still employed by
the Company as of such date, or (c) the fulfillment by the Company of
all of its obligations under Section 4 if your employment with the
Company terminates within 24 months following a Change in Control.
3. Employment Status; Termination Following Change in Control.
3.1 Not Employment Contract. You acknowledge that this
Agreement does not constitute a contract of employment or impose on
the Company any obligation to retain you as an employee and that this
Agreement does not prevent you from terminating your employment at
any time. If your employment with the Company terminates for any
reason and subsequently a Change in Control shall occur, you shall
not be entitled to any benefits hereunder.
3.2 Termination of Employment. Any termination of your
employment by the Company or by you within 24 months following a
Change in Control of the Company during the Term shall be
communicated by written notice of termination ("Notice of
Termination") to the other party hereto in accordance with Section 6.
If such employment termination is for Cause, Good Reason or
Disability, the Notice of Termination shall so state. The "Date of
Termination" shall mean the effective date of such termination as
specified in the Notice of Termination (provided that no such Notice
of Termination shall specify an effective date less than fifteen days
or more than 120 days after the date such Notice of Termination is
delivered).
4. Rights Upon Termination.
4.1 Compensation. You shall be entitled to the following
benefits if a Change in Control occurs during the Term and your
employment with the Company terminates within 24 months following
such Change in Control:
(a) Termination Without Cause or for Good Reason. If
your employment with the Company is terminated by the Company (other
than for Cause, Disability or your death) or by you for Good Reason
within 24 months following a Change in Control, then you shall be
entitled to the following benefits:
(i) the Company shall pay to you in a lump sum in
cash within 30 days after the Date of Termination the aggregate of
the following amounts:
(1)the sum of (A) your annual base salary
through the Date of Termination, (B) the product of (x) the annual
bonus paid or payable (including any bonus or portion thereof which
has been earned but deferred) for the most recently completed fiscal
year and (y) a fraction, the number of which is the number of days in
the current fiscal year through the Date of Termination, and the
denominator of which is 365 and (C) the amount of any compensation
previously deferred by you (together with any accrued interest or
earnings thereon) and any accrued vacation pay, in each case to the
extent not theretofore paid (the sum of the amounts described in
clauses (A), (B), and (C) shall be hereinafter referred to as the
"Accrued Obligations"); and
(2)the amount equal to the sum of (A) your
highest annual base salary during the five-year period prior to the
Change in Control and (B) your highest annual bonus during the five-
year period prior to the Change in Control.
(ii) for 12 months after your Date of Termination,
or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company shall
continue to provide benefits to you and your family at least equal to
those which would have been provided to you and them in accordance
with the applicable plans, programs, practices and policies in effect
on the Date of Termination (excluding any savings and/or retirement
plans) if your employment had not been terminated; provided, however,
that if you become reemployed with another employer and are eligible
to receive medical or other welfare benefits under another employer-
provided plan, the medical and other welfare benefits described
herein shall not be provided to the extent the same are provided
under such other plan during such applicable period of eligibility;
and
(iii) to the extent not theretofore paid or
provided, the Company shall timely pay or provide to you any other
amounts or benefits required to be paid or provided or which you are
eligible to receive following your termination of employment under
any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and benefits
shall be hereinafter referred to as the "Other Benefits").
(b) Resignation without Good Reason; Termination for
Death or Disability. If you voluntarily terminate your employment
within 24 months following a Change in Control, excluding a
termination for Good Reason, or if your employment is terminated by
reason of your death or Disability within 24 months following a
Change in Control, the Company shall (i) pay you, in a lump sum in
cash within 30 days after the Date of Termination, the Accrued
Obligations and (ii) timely pay or provide to you the Other Benefits.
(c) Termination for Cause. If your employment is
terminated by the Company for Cause within 24 months following a
Change in Control, the Company shall (i) pay you, in a lump sum in
cash within 30 days after the Date of Termination, the sum of (A)
your annual base salary through the Date of Termination and (B) the
amount of any compensation previously deferred by you, in each case
to the extent not theretofore paid, and (ii) timely pay or provide to
you the Other Benefits.
4.2 Taxes. Payments under this Agreement shall be made
without regard to whether the deductibility of such payments (or any
other payments to or for your benefit) would be limited or precluded
by Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code") and without regard to whether such payments (or any other
payments) would subject you to the federal excise tax levied on
certain "excise parachute payments" under Section 4999 of the Code;
provided, that if the total of all payments to or for your benefit,
after deduction of all federal taxes (including the tax set forth in
Section 4999 of the Code, if applicable) with respect to such
payments (the "total after-tax payments"), would be increased by the
limitation or elimination of any payment under this Agreement,
amounts payable under this Agreement shall be reduced to the extent,
and only to the extent, necessary to maximize the total after-tax
payments. The determination as to whether and to what extent
payments under this agreement are required to be reduced in
accordance with the preceding sentence shall be made by agreement
between you and the independent public accounting firm of the Company
(whose fees and expenses shall be borne solely by the Company). To
the extent that any elimination or reduction of payments is made in
accordance with this Section 4.2, the determination as to which
payments shall be eliminated or reduced shall be made by you.
4.3 Mitigation. Except as provided in Section 4.1(a)(ii)
hereof, you shall not be required to mitigate the amount of any
payment or benefits provided for in this Section 4 by seeking other
employment or otherwise, nor shall the amount of any payment or
benefits provided for in this Section 4 be reduced by any
compensation earned by you as a result of employment by another
employer, by retirement benefits or by offset against any amount
claimed to be owed by you to the Company or otherwise.
4.4 Expenses. The Company agrees to pay as incurred, to the
full extent permitted by law, all legal fees and expenses which you
may reasonably incur as a result of any claim or contest by the
Company, you 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 you
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.
5. Successors; Binding Agreement.
5.1 The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business or assets of the Company
expressly to assume and agree to perform this Agreement to the same
extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain an
assumption of this Agreement at or prior to the effectiveness of any
succession shall be a breach of this Agreement and shall constitute
Good Reason if you elect to terminate your employment, 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 above and any successor to its business or assets
as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
5.2 This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable
to you hereunder if you had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to your devisee, legatee or other
designee or if there is no such designee, to your estate.
6. 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) via a reputable nationwide overnight courier
service, in each case addressed to the Chief Executive Officer of the
Company, at Naperville Corporate Center, 0000 Xxxx Xxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, and to you at the address shown above (or
to such other address as either the Company or you may have furnished
to the other in writing in accordance herewith). Any such notice,
instruction or communication shall be deemed to have been delivered
two 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.
7. Miscellaneous.
7.1 For purposes of this Agreement, your employment with the
Company shall not be deemed to have terminated if you continue to be
employed by a subsidiary of the Company.
7.2 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.
7.3 The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
State of Delaware.
7.4 No waiver by you at any time of any breach of, or
compliance with, any provision of this Agreement to be performed by
the Company shall be deemed a waiver of that or any other provision
at any subsequent time.
7.5 This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but both of which together
will constitute one and the same instrument.
7.6 Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local
law.
7.7 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
canceled.
If this accurately reflects our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of
this letter, which will then constitute our agreement on this
subject.
Sincerely,
SPYGLASS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Agreed to this 7th day of July, 1999
/s/ Xxxxx X. Xxxxxxxx
(Signature)
Xxxxx X. Xxxxxxxx
(Print Name)
