EXHIBIT 10.5
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (the "Agreement") is made and entered
into effective as of October 1, 1999, by and between Xxxxxx Xxxx (the
"Employee") and SiteBrigade, Inc., a Delaware corporation (the "Company").
RECITALS
A. It is expected that another company or other entity may from time to
time consider the possibility of acquiring the Company or that a change in
control may otherwise occur, with or without the approval of the Company's Board
of Directors (the "Board"). The Board recognizes that such consideration can be
a distraction to the Employee, and can cause the Employee to consider
alternative employment opportunities. The Board has determined that it is in the
best interests of the Company and its stockholders to assure that the Company
will have the continued dedication and objectivity of the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company.
B. The Board believes that it is in the best interests of the Company
and its stockholders to provide the Employee with an incentive to continue his
or her employment with the Company.
C. The Board believes that it is imperative to provide the Employee
with certain benefits upon termination of the Employee's employment in
connection with a Change of Control, which benefits are intended to provide the
Employee with financial security and provide sufficient encouragement to the
Employee to remain with the Company notwithstanding the possibility of a Change
of Control.
D. To accomplish the foregoing objectives, the Board of Directors has
directed the Company, upon execution of this Agreement by the Employee, to agree
to the terms provided in this Agreement.
E. Certain capitalized terms used in the Agreement are defined in
Section 3 below.
In consideration of the mutual covenants contained in this Agreement,
and in consideration of the continuing employment of Employee by the Company,
the parties agree as follows:
1. AT-WILL EMPLOYMENT. The Company and the Employee acknowledge that
the Employee's employment is and shall continue to be at-will, as defined under
applicable law. If the Employee's employment terminates for any reason,
including (without limitation) any termination prior to a Change of Control, the
Employee shall not be entitled to any benefits, other than (A) as provided by
this Agreement, (B) as may be available in accordance with the terms of the
Company's established employee plans and written policies at the time of
termination, or (C) as may be approved by the Board of Directors of the Company
in its discretion. The terms of this Agreement shall terminate upon the earlier
of (i) the date on which Employee ceases to be employed with the Company prior
to a Change of Control, (ii) the date that all obligations of the
parties hereunder have been satisfied, or (iii) one (1) year after a Change of
Control. A termination of the terms of this Agreement pursuant to the preceding
sentence shall be effective for all purposes, except that such termination shall
not affect the provision of benefits on account of a termination of employment
occurring prior to the termination of the terms of this Agreement.
2. CHANGE OF CONTROL; ACCELERATION.
(a) ACCELERATION UPON A CHANGE OF CONTROL. Subject to Section
4 below, if a Change of Control occurs, then in addition to any shares which
have already vested, upon the consummation of such Change of Control, (i) in the
case of options, each stock option to purchase the Company's Common Stock
granted to Employee over the course of his or her employment with the Company
and held by Employee on the date of termination of employment shall become
vested as to fifty percent (50%) of the remainder subject to vesting, and (ii)
in the case of shares subject to repurchase by the Company, the repurchase
option applicable to all such shares will lapse as to fifty percent (50%) of the
shares still subject to the repurchase option.
(b) TERMINATION FOLLOWING A CHANGE OF CONTROL. Subject to
Section 4 below, if the Employee's employment with the Company is terminated at
any time within one (1) year after a Change of Control, then the Employee shall
be entitled to receive severance benefits as follows:
(i) VOLUNTARY RESIGNATION. If the Employee
voluntarily resigns from the Company (other than as an Involuntary Termination
(as defined below), then the Employee shall not be entitled to receive severance
payments. The Employee's benefits will be terminated under the Company's then
existing benefit plans and policies in accordance with such plans and policies
in effect on the date of termination or as otherwise determined by the Board of
Directors of the Company.
(ii) INVOLUNTARY TERMINATION. If the Employee's
employment is terminated as a result of an Involuntary Termination other than
for Cause, each stock option to purchase the Company's Common Stock granted to
Employee over the course of his or her employment with the Company (or share of
Common Stock purchased by Employee and subject to a repurchase option in favor
of the Company) and held by Employee on the date of termination of employment
shall become immediately fully vested (or the repurchase option shall fully
lapse) on such date as to the full number of shares that remain unvested under
such options (or that remain subject to the repurchase option under the Common
Stock Purchase Agreement). In the case of options, each such option shall be
exercisable in accordance with the provisions of the option agreement and plan
pursuant to which such option was granted.
(iii) TERMINATION FOR CAUSE. If the Employee's
employment is terminated for Cause, then the Employee shall not be entitled to
receive severance benefits. The Employee's benefits will be terminated under the
Company's then existing benefit plans and policies in accordance with such plans
and policies in effect on the date of termination.
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(c) TERMINATION APART FROM A CHANGE OF CONTROL. In the event
the Employee's employment terminates for any reason, either prior to the
occurrence of a Change of Control or after the one year period following the
effective date of a Change of Control, then the Employee shall not be entitled
to receive any severance benefits under this Agreement. The Employee's benefits
will be terminated under the terms of the Company's then existing benefit plans
and policies in accordance with such plans and policies in effect on the date of
termination or as otherwise determined by the Board of Directors of the Company.
3. DEFINITION OF TERMS. The following terms referred to in this
Agreement shall have the following meanings:
(a) CHANGE OF CONTROL. "Change of Control" shall mean the
occurrence of any of the following events: a merger or consolidation of the
Company, whether or not approved by the Board of Directors of the Company, other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets.
(b) CAUSE. "Cause" shall mean (i) Employee's willful failure
to perform his assigned job duties (other than as a result of sickness, accident
or similar cause beyond Employee's control) after receipt by Employee of written
warnings setting forth the specific performance deficiencies and a reasonable
period of time to cure such performance deficiencies; (ii) Employee's engaging
in willful misconduct that is demonstrably and materially injurious to the
interests of Company; (iii) Employee's unlawful misappropriation of Company's
material property or proprietary information; or (iv) Employee's conviction of a
felony, misdemeanor or gross misdemeanor, or committing an act of dishonesty or
fraud against the Company.
(c) INVOLUNTARY TERMINATION. "Involuntary Termination" shall
include any termination by the Company other than for Cause and the Employee's
voluntary termination, upon 30 days prior written notice to the Company,
following (i) a material reduction or change in job duties, responsibilities and
requirements inconsistent with the Employee's position with the Company and the
Employee's prior duties, responsibilities and requirements, taking into account
the differences in job title and duties that are normally occasioned by reason
of an acquisition of one company by another and that do not actually result in a
material change in duties, responsibilities and requirements inconsistent with
an employee's prior position with the acquired company, (ii) reduction of
greater than 5% in the Employee's CURRENT compensation (including salary,
benefits, incentive payments, bonuses) or (iii) relocation of principal place of
employment by more than 50 miles.
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4. LIMITATION ON PAYMENTS.
(a) In the event that the severance benefits provided for in
this Agreement to the Employee (i) constitute "parachute payments" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code") and (ii) but for this Section, would be subject to the excise tax
imposed by Section 4999 of the Code, then the Employee's benefits under Section
2 shall be payable either: (i) in full, or (ii) as to such lesser amount which
would result in no portion of such severance benefits being subject to excise
tax under Section 4999 of the Code, whichever of the foregoing amounts, taking
into account the applicable federal, state and local income taxes and the excise
tax imposed by Section 4999, results in the receipt by the Employee on an
after-tax basis, of the greatest amount of benefits under Section 2,
notwithstanding that all or some portion of such benefits may be taxable under
Section 4999 of the Code. Unless the Company and the Employee otherwise agree in
writing, any determination required under this Section 4 shall be made in
writing by the Company's independent public accountants (the "Accountants"),
whose determination shall be conclusive and binding upon the Employee and the
Company for all purposes. For purposes of making the calculations required by
this Section 4, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of Section 280G and 4999 of the
Code. The Company and the Employee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 4.
(b) The payment of severance benefits provided for in this
Agreement shall be subject to all applicable income, employment and social tax
rules and regulations.
5. SUCCESSORS. Any successor to the Company (whether direct or indirect
and whether by purchase, lease, merger, consolidation, liquidation or otherwise)
to all or substantially all of the Company's business and/or assets shall assume
the obligations under this Agreement and agree expressly to perform the
obligations under this Agreement in the same manner and to the same extent as
the Company would be required to perform such obligations in the absence of a
succession. The terms of this Agreement and all of the Employee's rights
hereunder shall inure to the benefit of, and be enforceable by, the Employee's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
6. NOTICE. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered, sent by overnight courier or when mailed by U.S.
registered or certified mail, return receipt requested and postage prepaid.
Mailed notices to the Employee shall be addressed to the Employee at the home
address which the Employee most recently communicated to the Company in writing.
In the case of the Company, mailed notices shall be addressed to its corporate
headquarters, and all notices shall be directed to the attention of its
Secretary.
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7. MISCELLANEOUS PROVISIONS.
(a) NO DUTY TO MITIGATE. The Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement (whether by
seeking new employment or in any other manner), nor, except as otherwise
provided in this Agreement, shall any such payment be reduced by any earnings
that the Employee may receive from any other source.
(b) WAIVER. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by the Employee and by an authorized officer of the
Company (other than the Employee). No waiver by either party of any breach of,
or of compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of the
same condition or provision at another time.
(c) WHOLE AGREEMENT. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof. This Agreement
supersedes any agreement of the same title and concerning similar subject matter
dated prior to the date of this Agreement, and by execution of this Agreement
both parties agree that any such predecessor agreement shall be deemed null and
void.
(d) CHOICE OF LAW. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
California without reference to conflict of laws provisions.
(e) SEVERABILITY. If any term or provision of this Agreement
or the application thereof to any circumstance shall, in any jurisdiction and to
any extent, be invalid or unenforceable, such term or provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
terms and provisions of this Agreement or the application of such terms and
provisions to circumstances other than those as to which it is held invalid or
unenforceable, and a suitable and equitable term or provision shall be
substituted therefor to carry out, insofar as may be valid and enforceable, the
intent and purpose of the invalid or unenforceable term or provision.
(f) ARBITRATION. Any dispute or controversy arising under or
in connection with this Agreement may be settled at the option of either party
by binding arbitration in the County of Santa Clara, California, 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.
Punitive damages shall not be awarded.
(g) LEGAL FEES AND EXPENSES. The parties shall each bear their
own expenses, legal fees and other fees incurred in connection with this
Agreement.
(h) NO ASSIGNMENT OF BENEFITS. The rights of any person to
payments or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation)
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bankruptcy, garnishment, attachment or other creditor's process, and any action
in violation of this subsection (h) shall be void.
(i) EMPLOYMENT TAXES. All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.
(j) ASSIGNMENT BY COMPANY. The Company may assign its rights
under this Agreement to an affiliate, and an affiliate may assign its rights
under this Agreement to another affiliate of the Company or to the Company;
provided, however, that no assignment shall be made if the net worth of the
assignee is less than the net worth of the Company at the time of assignment. In
the case of any such assignment, the term "Company" when used in a section of
this Agreement shall mean the corporation that actually employs the Employee.
(k) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
SITEBRIGADE, INC. -----------------------------
Print Name
By: /s/ XXXX XXXX /s/ XXXXXX XXXX
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Signature
Title: PRESIDENT AND CEO
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