1
EXHIBIT 10.23
COMSHARE, INCORPORATED
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT, dated as of June 1, 1998, is between Comshare,
Incorporated (the "Company") and Xxxxxx Xxxxxx, who is currently employed by the
Company in the position of Senior Vice President, Marketing (the "Executive").
WITNESSETH:
WHEREAS, the Company recognizes that the Executive has contributed to
the growth and success of the Company; and
WHEREAS, the Company believes that it is in the best interests of the
Company and its shareholders if the Executive is assured of appropriate
financial protection in the event of a Change in Control (as defined in Section
4 below), thus ensuring that the Executive shall have an incentive to perform
valuable services for the Company and shall not be distracted in the event of a
Change in Control;
WHEREAS, the Company believes that the assurance of appropriate
financial protection to the Executive in the event of a Change in Control shall
encourage the Executive to remain in the employ of the Company through the
transition period following a Change in Control, which is in the best interests
of the Company and its shareholders; and
WHEREAS, the Executive is willing to provide dedicated services to the
Company on the condition that the Executive receives adequate assurance of
appropriate financial protection in the event of a Change in Control;
NOW THEREFORE, in consideration of the premises and mutual covenants,
the parties hereto agree as follows:
AGREEMENT
1. OPERATION OF AGREEMENT. This Agreement sets forth the severance
compensation that the Company shall pay the Executive if the Executive's
employment with the Company terminates under one of the applicable provisions
set forth herein following a Change in Control. As used in this Agreement,
employment with the Company shall be deemed to include employment with a
subsidiary of the Company.
2. TERM OF THE AGREEMENT. This Agreement shall be effective upon its
execution by both parties and shall terminate upon the first of the following
events to occur: (a) three years from the date hereof if a Change in Control has
not occurred within such three-year period; (b) the
2
termination of the Executive's employment with the Company prior to a Change in
Control; (c) the expiration of two years following a Change in Control (or two
years following the later of one or more successive Changes in Control that
occur within the two year period immediately following the initial Change in
Control); (d) the termination of the Executive's employment with the Company
following a Change in Control due to the Executive's death, Disability (as
defined in Section 3(a) below) or Retirement (as defined in Section 3(b) below);
(e) the termination of the Executive's employment by the Company for Cause (as
defined in Section 3(c) below) following a Change in Control; or (f) termination
of employment by the Executive for other than Good Reason (as defined in Section
5) following the date of a Change in Control. Unless the Agreement has first
terminated under clauses (a) through (f) hereof, commencing on the third
anniversary of the date of this Agreement, and on each one-year anniversary
thereafter, this Agreement shall be extended for one additional year, unless at
least 30 days prior to any such anniversary, the Company notifies the Executive
in writing that it shall not extend the term of this Agreement.
3. DEFINED TERMS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
(a) "Disability" shall mean the Executive's total and permanent
disability which prevents the Executive from performing for a continuous period
exceeding six months the duties assigned to the Executive immediately prior to
the Change in Control. The determination of Disability shall be made by a
medical board-certified physician mutually acceptable to the Company and the
Executive (or the Executive's legal representative, if one has been appointed),
and if the parties cannot mutually agree to the selection of a physician, then
each party shall select such a physician and the two physicians so selected
shall select a third physician who shall make this determination.
(b) "Retirement" shall mean retirement on or after age 65.
(c) "Cause" shall mean the Executive's willful gross misconduct,
willful and material breach of his duties or an act of fraud or dishonesty by
the Executive that directly or indirectly results in material harm to the
Company.
4. CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred upon the occurrence of any of the following events:
(a) the election of a Board of Directors of the Company, a majority
of the members of which were nominees of a person (including an individual, a
corporation, partnership, joint venture, trust or other entity) or a group of
persons acting together (other than persons who were members of the Board of
Directors or officers of the Company as of June 1, 1998 or a tax-qualified
retirement plan approved by the Board of Directors of the Company (including at
least a majority of the Incumbent Directors ("Exempted Persons")), following the
acquisition by such person, group of persons or plan of ownership (directly or
indirectly, beneficially or of record) of twenty-five (25%) percent, or more, of
the outstanding Common Stock of the Company;
2
3
(b) the acquisition of ownership by a person or group of persons
described in subparagraph (a) above (other than Exempted Persons) of fifty-one
(51%) percent, or more of the outstanding Common Stock of the Company;
(c) a sale of all or substantially all of the assets of the Company
to any entity not controlled by persons who were members of the Board of
Directors or officers of the Company as of June 1, 1998, or by any tax-qualified
retirement plan for the benefit of employees of the Company; or
(d) a merger, consolidation or other similar transaction between the
Company and another entity if a majority of the members of the Board of
Directors of the surviving company are not Continuing Directors, as defined
below.
The term "Incumbent Directors" means members of the Board of Directors of the
Company as of June 1, 1998 or new directors whose election by the Board of
Directors, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors in office at the time
of such election or nomination, who either were directors as of June 1, 1998, or
whose election or nomination was previously approved as provided above. In the
event that a majority of the Incumbent Directors do not approve the
tax-qualified retirement plan or there are no Incumbent Directors, the
tax-qualified retirement plan shall not be an Exempted Person. The term
"Continuing Directors" means persons (A) who are members of the Board of
Directors immediately before the Change in Control and (B) who also were members
of the Board of Directors of the Company as of June 1, 1998 or are new directors
whose election by the Board of Directors, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors in office at the time of such election or nomination who either were
directors as of June 1, 1998 or whose election or nomination for election was
previously approved as provided above.
5. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL. Subject to
Section 10(a) hereunder, the Executive shall be entitled to severance payments
under this Agreement only if there has been a Change in Control and the
Executive has incurred a Termination of Employment.
(a) For purposes of this Agreement during the two-year period
following any Change in Control that occurs during the term of this Agreement,
"Termination of Employment" shall be defined as:
(i) The Executive's involuntary termination by the Company for
any reason other than death, Disability, Retirement or Cause; or
(ii) The Executive's termination for "Good Reason," defined as
the occurrence of any of the following events without the Executive's written
consent:
3
4
(A) Any reassignment of the Executive to duties
inconsistent with the Executive's position, title, duties,
responsibilities and status with the Company immediately prior to the
Change in Control, or a change in the Executive's reporting
responsibilities, including a change in the identity or the corporate
position to which the Executive reports, or a change in title (except
for a promotion) in effect immediately prior to the Change in Control;
(B) Any reduction in the Executive's base salary in effect
immediately prior to the Change in Control, or failure by the Company
to continue any bonus, stock or incentive plans in effect immediately
prior to the Change in Control (without the implementation of
comparable successor plans that provide the same benefits), or any
removal of the Executive from participation in such aforementioned
plans;
(C) The discontinuance or reduction in benefits to the
Executive of any qualified or nonqualified retirement or welfare plan
maintained by the Company immediately prior to the Change in Control,
or the discontinuance of any fringe benefits or other perquisites that
the Executive received immediately prior to the Change in Control;
(D) Required relocation of the Executive's principal place
of employment more than 50 miles from his or her place of employment
prior to the Change in Control, or required business traveling by the
Executive on a significantly more frequent basis and for significantly
longer periods of time than the Executive was required to travel
immediately prior to the Change in Control, unless the increase in
required business traveling is on account of the Executive's promotion;
or
(E) The Company's breach of any provision in this
Agreement.
(b) An Executive who believes that he is entitled to a
Termination of Employment for Good Reason as defined in subparagraph (a)(ii)
above, may apply in writing to the Company for confirmation of such entitlement
prior to the Executive's actual separation from employment, by following the
claims procedure set forth in Section 14 hereof. The submission of such a
request by an Executive shall not constitute "Cause" for the Company to
terminate the Executive as defined under Section 3(c) hereof. If the Executive's
request for a Good Reason Termination of Employment is denied under both the
request and appeal procedures set forth in paragraphs (b) and (c) of Section 14
hereof, then the parties shall use their best efforts to resolve the claim
within 90 days after the claim is submitted to arbitration pursuant to Section
14(d).
6. SEVERANCE PAYMENT.
(a) Upon satisfaction of the requirements set forth in Sections
5 and 10(a) hereof and with respect to any one or more Changes in Control that
may occur during the term of this Agreement, the Executive shall be entitled to
a cash severance benefit equal to two times the Executive's annual base salary,
as in effect at the time of the Change in Control.
4
5
(b) The value of the cash severance benefit provided in
paragraph (a) above, when aggregated with any other "golden parachute" amounts
(defined under Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") as compensation that becomes payable or accelerated due to a Change
in Control) pursuant to any other plans, agreements or policies of the Company
and its subsidiaries, shall be reduced to the highest amount permissible under
Sections 280G and 4999 of the Code before the Executive becomes subject to the
excess parachute payment excise tax under Section 4999 of the Code and the
Company loses all or part of its compensation deduction for such payments.
7. TIME OF PAYMENT. Subject to Section 10(a) hereof, the
Executive's cash severance benefit under Section 6(a) shall be paid in a lump
sum cash payment within 10 days following the Executive's Termination of
Employment, as defined in Section 5. Any payment made later than 10 days
following the Executive's Termination of Employment (or applicable due date
under Section 10(a) hereof) for whatever reason, shall include interest at the
prime rate plus two percent, which shall begin accruing on the 10th day
following the Executive's Termination of Employment (or applicable due date
under Section 10(a) hereof). For purposes of this Section 7, "prime rate" shall
be determined by reference to the prime rate established by Xxxxxx Trust and
Savings Bank (or its successor), in effect from time to time commencing on the
10th day following the Executive's Termination of Employment (or applicable due
date under Section 10(a) hereof).
8. NO MITIGATION OR DUTY TO SEEK REEMPLOYMENT. The Executive shall
be under no duty or obligation to seek or accept other employment after
Termination of Employment and shall not be required to mitigate the amount of
any payments provided for by this Agreement by seeking employment or otherwise.
9. TAX WITHHOLDING. The Company may withhold from any cash amounts
payable to the Executive under this Agreement to satisfy all applicable Federal,
State, local or other income and employment withholding taxes. In the event the
Company fails to withhold such sums for any reason, or withholding is required
for any non-cash payments provided in connection with the Executive's
Termination of Employment, the Company may require the Executive to promptly
remit to the Company sufficient cash to satisfy all applicable income and
employment withholding taxes.
10. BINDING EFFECT.
(a) This Agreement shall be binding upon the successors and
assigns of the Company. The Company shall take whatever actions are necessary to
ensure that any successor to its operations (whether by purchase, merger,
consolidation, sale of substantially all assets or otherwise) assumes the
obligations under this Agreement and shall cause such successor to evidence the
assumption of such obligations in an agreement satisfactory to the Executive.
Notwithstanding any other provisions in this Agreement, if the Company fails to
obtain an agreement evidencing the assumption of the Company's obligations by
any such successor, the Executive shall be entitled to
5
6
immediate payment of the severance compensation provided under Section 6,
irrespective of whether the Executive's employment has then terminated. For
purposes of implementing the foregoing, the date on which any succession becomes
effective shall be deemed to constitute the date of the Executive's Termination
of Employment.
(b) This Agreement shall be binding upon the Executive and shall
inure to the benefit of and be enforceable by the Executive's legal
representatives and heirs. However, the rights of the Executive under this
Agreement shall not be assigned, transferred, pledged, hypothecated or otherwise
encumbered, except by operation of law.
11. AMENDMENT OF AGREEMENT. This Agreement may not be modified or
amended except by instrument in writing signed by the parties hereto.
12. VALIDITY. 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 continue in full force and effect.
13. LIMITATION ON RIGHTS.
(a) This Agreement shall not be deemed to create a contract of
employment between the Company and the Executive and shall create no right in
the Executive to continue in the Company's employment for any specific period of
time, or to create any other rights in the Executive or obligations on the part
of the Company, except as set forth herein. This Agreement shall not restrict
the right of the Company to terminate the Executive, or restrict the right of
the Executive to terminate employment.
(b) This Agreement shall not be construed to exclude the
Executive from participation in any other compensation or benefit programs in
which the Executive is specifically eligible to participate either prior to or
following the execution of this Agreement, or any such programs that generally
are available to other executive personnel of the Company, nor shall it affect
the kind and amount of other compensation to which the Executive is entitled.
(c) The rights of the Executive under this Agreement shall be
solely those of an unsecured general creditor of the Company.
14. CLAIMS PROCEDURE.
(a) The administrator for purposes of this Agreement shall be
the Company ("Administrator"), whose address is 000 Xxxxxxxxx Xxxxxx, X.X. Xxx
0000, Xxx Xxxxx, Xxxxxxxx 00000, and whose telephone number is (000) 000-0000.
The "Named Fiduciary" as defined in Section 402(a)(2) of ERISA, also shall be
the Company. The Company shall have the right to designate one or more Company
employees as the Administrator and the Named Fiduciary at any time, and to
change the address and telephone number of the same. The Company shall give the
6
7
Executive written notice of any change in the Administrator and Named Fiduciary,
or in the address or telephone number of the same.
(b) The Administrator shall make all determinations as to the
right of any person to receive benefits under the Agreement. Any denial by the
Administrator of a claim for benefits by the Executive ("the claimant") shall be
stated in writing by the Administrator and delivered or mailed to the claimant
within 10 days after receipt of the claim, unless special circumstances require
an extension of time for processing the claim. If such an extension is required,
written notice of the extension shall be furnished to the claimant prior to the
termination of the initial 10-day period. In no event shall such extension
exceed a period of 10 days from the end of the initial period. Any notice of
denial shall set forth the specific reasons for the denial, specific reference
to pertinent provisions of this Agreement upon which the denial is based, a
description of any additional material or information necessary for the claimant
to perfect the claim, with an explanation of why such material or information is
necessary, and any explanation of claim review procedures, written to the best
of the Administrator's ability in a manner that may be understood without legal
or actuarial counsel.
(c) A claimant whose claim for benefits has been wholly or
partially denied by the Administrator may request, within 10 days following the
date of such denial, in a writing addressed to the Administrator, a review of
such denial. The claimant shall be entitled to submit such issues or comments in
writing or otherwise, as the claimant shall consider relevant to a determination
of the claim, and the claimant may include a request for a hearing in person
before the Administrator. Prior to submitting the request, the claimant shall be
entitled to review such documents as the Administrator shall agree are pertinent
to the claim. The claimant may, at all stages of review, be represented by
counsel, legal or otherwise, of the claimant's choice. All requests for review
shall be promptly resolved. The Administrator's decision with respect to any
such review shall be set forth in writing and shall be mailed to the claimant
not later than 10 days following receipt by the Administrator of the claimant's
request unless special circumstances, such as the need to hold a hearing,
require an extension of time for processing, in which case the Administrator's
decision shall be so mailed not later than 20 days after receipt of such
request.
(d) A claimant who has followed the procedure in paragraphs (b)
and (c) of this Section, but who has not obtained full relief on the claim for
benefits, may, within 60 days following the claimant's receipt of the
Administrator's written decision on review, apply in writing to the
Administrator for binding arbitration of the claim before an arbitrator mutually
acceptable to both parties, the arbitration to be held in Ann Arbor, Michigan,
in accordance with the arbitration rules of the American Arbitration
Association, as then in effect. If the parties are unable to mutually agree upon
an arbitrator, then the arbitration proceedings shall be held before three
arbitrators, one of which shall be designated by the Company, one of which shall
be designated by the claimant and the third of which shall be designated
mutually by the first two arbitrators in accordance with the arbitration rules
referenced above. The arbitrator(s) sole authority shall be to interpret and
apply the provisions of this Agreement; the arbitrator(s) shall not change, add
to, or subtract from, any of the Agreement's provisions. The arbitrator(s) shall
have the power to compel attendance of witnesses
7
8
at the hearing. Any court having jurisdiction may enter a judgment based upon
such arbitration. All decisions of the arbitrator(s) shall be final and binding
on the claimant and the Company without appeal to any court. Upon execution of
this Agreement, the Executive shall be deemed to have waived any right to
commence litigation proceedings outside of arbitration without the express
written consent of the Company.
15. LEGAL FEES AND EXPENSES. In the event any arbitration or
litigation is brought to enforce any provision of this Agreement and the
Executive prevails, then the Executive shall be entitled to recover from the
Company the Executive's reasonable costs and reasonable expenses of such
arbitration or litigation, including reasonable fees and disbursements of
counsel (both at trial and in appellate proceedings). If the Company prevails,
then each party shall be responsible for its/his respective costs, expenses and
attorneys fees, and the costs of arbitration shall be equally divided. In the
event that it is determined that the Executive is entitled to compensation,
legal fees and expenses hereunder, the Executive also shall be entitled to
interest thereon, payable to the Executive at the prime rate of interest plus
two percent. For purposes of this Section 15, "prime rate" shall be determined
by reference to the prime rate established by Xxxxxx Trust and Savings Bank as
in effect from time to time during the period from the date such amounts should
have been paid to the date of actual payment. For purposes of determining the
date when legal fees and expenses are payable, such amounts are not due until 30
days after notification to the Company of such amounts.
16. NONALIENATION OF BENEFITS. Except in so far as this provision
may be contrary to applicable law, no sale, transfer, alienation, assignment,
pledge, collateralization or attachment of any benefits under this Agreement
shall be valid or recognized by the Company.
17. ERISA. This Agreement is an unfunded compensation arrangement
for a member of a select group of the Company's management and any exemptions
under ERISA, as applicable to such an arrangement, shall be applicable to this
Agreement.
18. REPORTING AND DISCLOSURE. The Company, from time to time, shall
provide government agencies with such reports concerning this Agreement as may
be required by law, and the Company shall provide the Executive with such
disclosure concerning this Agreement as may be required by law or as the Company
may deem appropriate.
19. NOTICES. Any notice required or permitted by this Agreement
shall be in writing, sent by registered or certified mail, return receipt
requested, addressed to the Board and the Company at the Company's then
principal office, or to the Executive at the Executive's last address on file
with the Company, as the case may be, or to such other address or addresses as
any party hereto may from time to time specify in writing for the purpose of
this Agreement in a notice given to the other parties in compliance with this
Section 19. Notices shall be deemed given when received.
20. MISCELLANEOUS/SEVERABILITY. A waiver of the breach of any term
or condition of this Agreement shall not be deemed to constitute a waiver of any
subsequent breach of the same or any other term or condition. This Agreement is
intended to be performed in accordance with, and only
8
9
to the extent permitted by, all applicable laws, ordinances, rules and
regulations. To the extent that any provision or benefit under this Agreement is
not deemed to be in accordance with any applicable law, ordinance, rule or
regulation, the noncomplying provision shall be construed, or benefit limited,
to the extent necessary to comply with all applicable laws, ordinances and
regulations and any such provision or benefit shall not affect the validity of
any other provision or benefit provided by this Agreement. The headings in this
Agreement are inserted for convenience of reference only and shall not be a part
of or control or affect the meaning of any provision hereof.
21. GOVERNING LAW. To the extent not preempted by Federal law, this
Agreement shall be governed and construed in accordance with the laws of the
State of Michigan.
22. ENTIRE AGREEMENT. This document represents the entire agreement
and understanding of the parties with respect to the subject matter of the
Agreement and it may not be altered or amended except by an agreement in
writing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
COMSHARE, INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Its Chairman of the Board
-------------------------------
/s/ Xxxxxx Xxxxxx
-----------------------------------
XXXXXX XXXXXX
9
