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EXHIBIT 10.16
CHANGE OF CONTROL AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT ("Agreement") is entered into as of
______ ___, 1998, between hi/fn, inc., a Delaware corporation (the "Company"),
and ____________ ("Director"). The parties to this Agreement shall be referred
to herein as each, a Party, and collectively, the Parties.
WHEREAS, it is expected that the Company from time to time will consider
the possibility of a Change of Control;
WHEREAS, Director is a member of the Board of Directors of the Company,
and currently holds (i) shares of the Company's Common Stock and/or (ii)
options, warrants or rights to purchase shares of the Company's Common Stock
(collectively, the "Securities") that are subject to certain vesting
restrictions and rights of repurchase in favor of the Company; and
WHEREAS, in order to ensure Director has an opportunity to acquire
and/or maintain an equity interest in the Company as an incentive for Director
to participate in the affairs of the Company, the Company is willing to provide
Director with certain benefits upon a Change of Control.
NOW THEREFORE, for good and valuable consideration, the sufficiency of
which is hereby acknowledged, the Parties agree as follows:
1. Accelerated Vesting of the Securities.
(a) In the event of a Change of Control (as defined in Section
1(b) below) of the Company, (i) the unvested portion of the Securities then held
by the Director, if any, shall automatically vest in full such that Director
shall have the right to exercise all or any portion of the Securities, and/or
(ii) the Company's repurchase right shall automatically lapse with respect to
the Securities then held by Director that are subject to such repurchase right.
(b) A "Change of Control" shall, for the purposes of this
Agreement, mean the occurrence of any of the following:
(i) the consummation of a merger or consolidation of
the Company with any other corporation or entity, 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 or any parent thereof) more than fifty percent (50%) of the
total voting power represented by the voting securities of the Company or such
surviving entity or any parent thereof outstanding immediately after such merger
or consolidation;
(ii) the consummation of 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; or
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(iii) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange act of 1934, as amended) becoming the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 25% or more of the total
voting power represented by the Company's then outstanding securities.
2. Adjustment for Changes in Capital Stock. All references to the
number of Securities in this Agreement shall be appropriately adjusted to
reflect any stock split, stock dividend, stock combination or other change in
the Securities which may be made by the Company after the date of this
Agreement.
3. Excise Tax Payments. In the event that the Change of Control
benefits provided for in this Agreement or otherwise payable to the Director (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 Director's Change of Control benefits under Section 1 shall be either
(a) delivered in full, or
(b) delivered as to such lesser extent which would result in no
portion of such Change of Control 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 Director on an after-tax basis, of the greatest amount of
Change of Control benefits, notwithstanding that all or some portion of such
Change of Control benefits may be taxable under Section 4999 of the Code. Unless
the Company and the Director otherwise agree in writing, any determination
required under this Section shall be made in writing by the Company's
independent public accountants (the "Accountants") immediately prior to Change
of Control, whose determination shall be conclusive and binding upon the
Director and the Company for all purposes. For purposes of making the
calculations required by this Section, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. The Company and the Director 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. Arbitration.
(a) The Company and Director agree that any dispute or
controversy arising out of, relating to, or in connection with this Agreement,
the interpretation, validity, construction, performance, breach, or termination
hereof, or any of the matters herein released shall be settled by binding
arbitration to be held in Santa Xxxxx County, California in accordance with the
National Rules for the Resolution of Employment Disputes then in effect of the
American Arbitration Association. The arbitrator may grant injunctions or other
relief in such dispute or controversy. The decision of the arbitrator shall be
final, conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator's decision in any court having jurisdiction.
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(b) The arbitrator(s) shall apply California law to the merits
of any dispute or claim, without reference to conflicts of law rules. Director
hereby consents to the personal jurisdiction of the state and federal courts
located in California for any action or proceeding arising from or relating to
this Agreement or relating to any arbitration in which the Parties are
participants.
(c) DIRECTOR HAS READ AND UNDERSTANDS THIS SECTION, WHICH
DISCUSSES ARBITRATION. DIRECTOR UNDERSTANDS THAT BY SIGNING THIS AGREEMENT,
DIRECTOR AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN
CONNECTION WITH THIS AGREEMENT, THE INTERPRETATION, VALIDITY, CONSTRUCTION,
PERFORMANCE, BREACH OR TERMINATION THEREOF, OR ANY OF THE MATTERS HEREIN TO
BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF
DIRECTOR 'S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES
RELATING TO ALL ASPECTS OF THIS AGREEMENT.
5. General Provisions.
(a) This Agreement shall be governed by the laws of the State of
California, without regard to the conflicts of law principles of the State of
California.
(b) Any notice, demand or request required or permitted to be
given by either Party pursuant to the terms of this Agreement shall be in
writing and shall be deemed given when delivered personally or via facsimile or
deposited in the U.S. mail, First Class with postage prepaid, and addressed to
the Parties at such addresses as have been previously furnished by the Parties
or such other address as a Party may request by notifying the other in writing.
(c) The rights and obligations of Director under this Agreement
may not be transferred or assigned without the prior written consent of the
Company.
(d) This Agreement is meant to supplement the terms of the
restricted stock purchase agreement, stock option agreement or other agreement
pursuant to which Director acquired the Securities. To the extent that the terms
and conditions of this Agreement are inconsistent with those found in the
restricted stock purchase agreement, stock option agreement or other agreement,
the terms and conditions of this Agreement shall be controlling.
(e) Any Party's failure to enforce any provision or provisions
of this Agreement shall not in any way be construed as a waiver of any such
provision or provisions, nor prevent any Party from thereafter enforcing each
and every other provision of this Agreement. The rights granted the Parties
herein are cumulative and shall not constitute a waiver of any Party's right to
assert all other legal remedies available to it under the circumstances.
(f) Director agrees upon request to execute any further
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.
(g) In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired.
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(h) This Agreement, in whole or in part, may be modified, waived
or amended (retrospectively or otherwise) upon the written consent of (i) the
Company and (ii) Director.
(i) By Director's signature below, Director represents that
Director is familiar with the terms and provisions of this Agreement, and hereby
accepts this Agreement subject to all of the terms and provisions set forth
herein. Director has reviewed this Agreement in its entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Agreement
and fully understands all provisions of this Agreement. Director agrees to
accept as binding, conclusive and final all decisions or interpretations of the
disinterested majority of the Board of Directors of the Company upon any
questions arising under this Agreement.
This Change of Control Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one instrument.
DIRECTOR HI/FN, INC.
By:
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Signature
Title:
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Print Name
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EXHIBIT A
CONSENT OF SPOUSE
I, ____________________, spouse of Director, have read and approve the
foregoing Change of Control Agreement. In consideration of granting to my spouse
the Securities of hi/fn, inc., as referenced in the recitals to the Change of
Control Agreement, I hereby appoint my spouse as my attorney-in-fact in respect
to the exercise of any rights under the Change of Control Agreement and agree to
be bound by the provisions of the Change of Control Agreement insofar as I may
have any rights in said Change of Control Agreement under the community property
laws or similar laws relating to marital property in effect in the state of our
residence as of the date of the signing of the foregoing Change of Control
Agreement.
Dated:
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Signature
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