FORM OF AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT
Exhibit 99.3
FORM OF AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT
This Amended and Restated Change of Control Agreement (the “COC Agreement”) is effective as of
_____________ (the “Effective Date”) by and between _________________ (the “Employee”) and Sybase,
Inc., a Delaware corporation (the “Company”).
RECITALS
A. The Employee presently serves at the pleasure of the Board of Directors of the Company (the
“Board”) as the _______________ of the Company and performs significant strategic and
management responsibilities necessary to the continued conduct of the Company’s business and
operations.
B. The Employee and the Company previously entered into a _____________________ setting forth
the benefits to which the Employee is entitled upon a Change of Control (as defined below) of the
Company.
C. The Board has determined that it remains 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.
D. The Board believes that it is imperative to provide the Employee with certain severance
benefits upon the Employee’s termination of employment following a Change of Control which provide
the Employee with enhanced financial security and provide sufficient incentive and encouragement to
the Employee to remain with the Company following a Change of Control.
E. In order to accomplish the foregoing objectives, the Board has directed the Company, upon
execution of this COC Agreement, to commit to the terms provided herein.
F. Certain capitalized terms used in the COC Agreement are defined in Section 3 below.
In consideration of the mutual covenants herein contained, and in consideration of the
continuing employment of Employee by the Company, the parties agree as follows:
1. Term of Employment. The Company and the Employee acknowledge that the
Employee’s employment is at will, as defined under applicable law, except as may otherwise be
provided under the terms of any written employment agreement between the Company and Employee, that
is signed on behalf of the Company and now or hereafter in effect. If the Employee’s employment
terminates for any reason, the Employee shall not be entitled to any payments, benefits, damages,
awards or compensation other than as provided by this COC Agreement, together with any written
employment agreement then in effect between Employee and the Company, and as may otherwise be
available in accordance with the Company’s established written employee plans and
written policies which are in effect at the time of termination or as required by law.
2. Severance Benefits.
(a) Termination Following A Change of Control. If the Company terminates the
Employee’s employment at any time within eighteen (18) months after a Change of Control, then the
Employee shall be entitled to receive severance benefits as follows, subject to Section 4 below:
(i) Involuntary Termination. If the Employee’s employment is terminated as a result
of Involuntary Termination other than for Cause (as defined in Section 3(b) below), then the
Employee shall be entitled to receive severance pay in an amount equal to the sum of (A) twice the
greater of (x) the Employee’s annual base salary at the time of the Change of Control, or (y) the
Employee’s annual base salary at the time of such termination, plus (B) one and one-half times the
average of (x) the annual cash bonus, if any, received or deferred by the Employee in respect of
the most recently completed fiscal year (or, if such bonus, if any, has been earned but not yet
received or deferred, the annual cash bonus, if any, to be received or deferred with respect to
such fiscal year), and (y) the annualized annual cash bonus that Employee is then eligible to
receive for the Company’s fiscal year in effect on the date of termination (which shall be
calculated by annualizing the objective performance milestones based on the completed fiscal
quarters in such fiscal year, and by assuming 100% “on target” satisfaction of any subjective
performance milestones); provided, however, that if such termination occurs prior to the completion
of the first fiscal quarter, then, subject to the minimum payment obligation set forth below,
Employee shall receive severance pay in the amount described in Clause (A) above plus one and
one-half times the average of the annual cash bonuses, if any, received or deferred by the employee
in respect of the two most recently completed fiscal years (or, if such bonus, if any, has been
earned but not yet received or deferred with respect to the most recently completed fiscal year,
the average of the prior fiscal year’s annual cash bonus and the annual cash bonus, if any, to be
received or deferred with respect to the most recently completed fiscal year); provided further,
however, notwithstanding the above, if the amount calculated under Clause (B) above is less than
one and one half times the Employee’s target annual incentive compensation for the Company’s fiscal
year in effect at the time of the Change of Control (the “Current Year”), then the amount under
Clause (B) shall instead be deemed to be one and one half times the Employee’s target annual
compensation for the Current Year. Any severance payments to which the Employee is entitled
pursuant to this section shall be paid in a lump sum within thirty (30) days of the Employee’s
termination. In addition, for a period of twenty-four (24) months after any termination under this
Section 2(a)(i), the Company shall be obligated to continue to make available to the Employee and
to reimburse premiums for the Employee and his or her covered dependents within thirty (30) days of
the premium due date for all health, dental, vision, life, dependent life, long-term disability,
accidental death and dismemberment and other similar insurance plans existing on the date of the
Employee’s termination; provided, however, that such reimbursements shall be delayed six months and
one day from the date of Termination (and then paid in full in arrears) to the extent required to
avoid the imposition of additional tax under Internal Revenue Code Section 409A (“Code Section
409A”). The Company shall “gross-up” Employee for any income and employment taxes required to be
imputed by virtue of providing the benefits set forth in the preceding sentence, such that the net
economic result to the Employee will be as if such benefits were provided on a tax-free basis. In
addition, any outstanding equity awards (including but not limited to stock options,
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restricted stock, restricted stock units and stock appreciation rights) held by the Employee under
the Company’s equity compensation plans, under the Company’s subsidiaries’ equity compensation
plans and under the equity compensation plans of corporations that have merged with or into the
Company shall automatically have its vesting accelerated (including, for restricted stock,
accelerated lapse of a right of repurchase by the Company) as to 100% of the unvested portion of
such equity awards on the date of termination, in addition to any portion of the equity awards
vested prior to the date of termination after taking into account any acceleration of vesting
provided in the equity award agreement between the Company and the Employee pertaining to such
outstanding equity awards.
(ii) Voluntary Resignation. If the Employee’s employment terminates by reason of the
Employee’s voluntary resignation (and is not an Involuntary Termination or a termination for
Cause), then the Employee shall not be entitled to receive severance or other benefits except for
such benefits (if any) as may then be established under the Company’s then existing written
severance and benefits plans and written policies at the time of such termination, or as is
required by law.
(iii) Disability; Death. If the Company terminates the Employee’s employment as a
result of the Employee’s Disability, or such Employee’s employment is terminated due to the death
of the Employee, then the Employee shall not be entitled to receive severance or other benefits
except for those (if any) as may then be established under the Company’s then existing written
severance and benefits plans and written policies at the time of such Disability or death, or as is
required by law.
(iv) Termination for Cause. If the Employee is terminated for Cause, then the
Employee shall not be entitled to receive any severance or other benefits following the date of
such termination, and the Company shall have no obligation to provide for the continuation of any
health and medical benefit or life insurance plans existing on the date of such termination, other
than as is required by law.
(b) Termination Apart from Change of Control. If the Employee’s employment is
terminated for any reason either prior to the occurrence of a Change of Control or after the
18-month period following a Change of Control, then the Employee shall be entitled to receive
severance and any other benefits only as may then be established under the Company’s existing
written severance and benefit plans and written policies at the time of such termination, or as is
required by law.
(c) Internal Revenue Code Section 409A. Notwithstanding any other provision of this
Agreement, if the Employee is a “key employee” under Code Section 409A and a delay in making any
payment or providing any benefit under this Agreement is required by Code Section 409A and any
Treasury Regulations, and IRS guidance thereunder, or necessary in the good faith judgment of the
Company, to avoid the Employee incurring additional tax under Section 409A, such payments shall not
be made until the end of six (6) months following the date of the Employee’s separation from
service in accordance with Code Section 409A. In the event any payment or the provision of any
benefit to Employee is delayed by reason of this paragraph, in addition to the
delayed payment or benefit, the Employee shall also be entitled to receive interest on the such
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payment or benefit determined using the rate in effect from time to time under Section
1274(b)(2)(B) of the Code.
3. Definition of Terms. The following terms referred to in this COC Agreement shall
have the following meanings:
(a) Change of Control. “Change of Control” shall mean a (i) change in ownership of
the Company, (ii) change in effective control of the Company, or (iii) change in the ownership of a
substantial portion of the Company’s assets (with an asset value change in ownership exceeding more
than 50% of the total gross fair market value replacing the 40% default rule), all as defined under
Code Section 409A and the final Treasury Regulations thereunder.
(b) Involuntary Termination. Employee shall be deemed to have been terminated by the
Company other than for Cause in the event Employee resigns within two years after the initial
existence of an event constituting an Involuntary Termination. “Involuntary Termination” shall
mean (i) without the Employee’s express written consent, the assignment to the Employee of any
duties or the significant reduction of the Employee’s duties, either of which is materially
inconsistent with the Employee’s position with the Company and responsibilities in effect
immediately prior to such assignment, or the removal of the Employee from such position and
responsibilities, which is not effected for Disability or for Cause; (ii) a material reduction by
the Company in the base salary and/or bonus of the Employee as in effect immediately prior to such
reduction; (iii) a material reduction by the Company in the kind or level of employee benefits to
which the Employee is entitled immediately prior to such reduction with the result that the
Employee’s overall benefits package is significantly reduced; (iv) the relocation of the Employee
to a facility or a location more than 50 miles from the Employee’s then present location, without
the Employee’s express written consent; (v) any purported termination of the Employee by the
Company which is not effected for death or Disability or for Cause, or any purported termination
for Cause for which the grounds relied upon are not valid; or (vi) the failure of the Company to
obtain the assumption of the terms of this COC Agreement by any successors contemplated in Section
6 below; provided, however, that such events shall not constitute grounds for an Involuntary
Termination unless the Employee has provided notice to the Company of the existence of one or more
of the above conditions within 90 days of its initial existence and the Company has been provided
at least 30 days to remedy the condition.
(c) Cause. “Cause” shall mean (i) any act of personal dishonesty taken by the
Employee in connection with his or her responsibilities as an employee and intended to result in
substantial personal enrichment of the Employee, (ii) the conviction of a felony, (iii) a willful
act by the Employee which constitutes gross misconduct and which is injurious to the Company, and
(iv) continued violations by the Employee of the Employee’s obligations as an employee of the
Company which are demonstrably willful and deliberate on the Employee’s part after there has been
delivered to the Employee a written demand for performance from the Company which describes the
basis for the Company’s belief that the Employee has not substantially performed his or her duties.
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(d) Disability. “Disability” shall mean that the Employee (i) is unable to engage in
any substantial gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last for a continuous
period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable
physical or mental impairment which can be expected to last for a continuous period of not less
than twelve (12) months, receiving income replacement benefits for a period of not less than three
(3) months under an accident and health plan covering Company employees. Termination resulting
from Disability may only be effected after at least 30 days’ written notice by the Company of its
intention to terminate the Employee’s employment. In the event that the Employee resumes the
performance of substantially all of his of her duties as an employee of the Company before the
termination of his or her employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.
4. Limitation on Payments. In the event that the severance and other benefits
provided for in this COC Agreement or otherwise payable 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 4, would be subject to the excise tax imposed by Section 4999
of the Code (the “Excise Tax”), then the Employee’s severance benefits under Section 2(a)(i) shall
be either
| (i) | delivered in full, or | ||
| (ii) | delivered as to such lesser extent which would result in no portion of such severance benefits being subject to the Excise Tax, |
whichever of the foregoing amounts, taking into account the applicable federal, state and local
income taxes and the Excise Tax, results in the receipt by the Employee on an after-tax basis, of
the greatest amount of severance benefits, notwithstanding that all or some portion of such
severance 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 in good faith by a “Big Four” national accounting firm selected by the Company (the
“Accountants”), in good faith consultation with the Employee. In the event of a reduction in
benefits hereunder, the Employee shall be given the choice of which benefits to reduce. 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 Sections 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.
5. Remedy. If Employee’s benefits are reduced to avoid the Excise Tax pursuant to
Section 4 hereof and, notwithstanding such reduction, the U.S. Internal Revenue Service (“IRS”) or
other applicable taxing authority determines that Employee is liable for the Excise Tax as a result
of
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the receipt of severance benefits from the Company, then Employee shall be obligated to pay to
the Company (the “Repayment Obligation”) an amount of money equal to the “Repayment Amount.” The
Repayment Amount shall be the smallest such amount, if any, as shall be required to be paid to the
Company so that Employee’s net proceeds with respect to his or her severance benefits hereunder
(after taking into account the payment of the Excise Tax imposed on such benefits) shall be
maximized. Notwithstanding the foregoing, the Repayment Amount shall be zero if a Repayment Amount
of more than zero would not eliminate the Excise Tax. If the Excise Tax is not eliminated through
the performance of the Repayment Obligation, Employee shall pay the Excise Tax. The Repayment
Obligation shall be discharged within 30 days of either (i) Employee entering into a binding
agreement with the IRS or applicable taxing authority as to the amount of Excise Tax liability, or
(ii) a final determination by the IRS or applicable taxing authority or a court decision requiring
Employee to pay the Excise Tax from which no appeal is available or is timely taken.
6. Successors.
(a) Company’s Successors. Any successor to the Company (whether direct or indirect
and whether by purchase, lease, merger, consolidation, liquidation or otherwise) or to all or
substantially all of the Company’s business and/or assets shall assume the obligations under this
COC Agreement and agree expressly to perform the obligations under this COC 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. For all purposes under this COC Agreement, the term “Company” shall
include any successor to the Company’s business and/or assets which executes and delivers the
assumption agreement described in this subsection (a) or which becomes bound by the terms of this
COC Agreement by operation of law.
(b) Employee’s Successors. The terms of this COC Agreement and all rights of the
Employee 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.
7. Notice.
(a) General. Notices and all other communications contemplated by this COC Agreement
shall be in writing and shall be deemed to have been duly given when personally delivered or when
mailed by registered or certified mail, return receipt requested and postage prepaid. In the case
of the Employee, mailed notices shall be addressed to him or her at the home address which he or
she 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.
(b) Notice of Termination by the Company. Any termination by the Company of the
Employee’s employment with the Company at any time within eighteen (18) months following a Change
of Control shall be communicated by a notice of termination to the Employee at least five (5) days
prior to the date of such termination, given in accordance with Section 7(a) of this COC
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Agreement. Such notice shall indicate the specific termination provision or provisions in this COC
Agreement relied upon (if any), shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination under the provision or provisions so
indicated, and shall specify the termination date.
(c) Notice by the Employee of Involuntary Termination by the Company. In the event
the Employee determines that an Involuntary Termination has occurred at any time within eighteen
(18) months following a Change of Control, the Employee shall give written notice that such
Involuntary Termination has occurred as set forth in this Section 7(c). Such notice shall be
delivered by the Employee to the Company in accordance with Section 7(a) of this COC Agreement
within ninety (90) days following the date on which such Involuntary Termination occurred (or, if
such Involuntary Termination occurred as a result of more than one event set forth in Section 3(b),
within ninety (90) days following the latest of such events), shall indicate the specific provision
or provisions in this COC Agreement upon which the Employee relied to make such determination and
shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for
such determination. The failure by the Employee to include in the notice any fact or circumstance
which contributes to a showing of Involuntary Termination shall not waive any right of the Employee
hereunder or preclude the Employee from asserting such fact or circumstance in enforcing his or her
rights hereunder.
8. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Employee shall not be required to mitigate the amount of
any payment contemplated by this COC Agreement (whether by seeking new employment or in any other
manner), nor shall any such payment be reduced by any earnings that the Employee may receive from
any other source.
(b) Waiver. No provision of this COC 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 COC
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) Entire Agreement. The parties hereby terminate the Amended and Restated Change of
Control Agreement dated ____________ between the Company and the Employee, and this Agreement
supersedes in its entirety such Agreement. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly set forth in this
COC Agreement have been made or entered into by either party with respect to the subject matter
hereof.
(d) Choice of Law. The validity, interpretation, construction and performance
of this COC Agreement shall be governed by the laws of the State of California.
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(e) Severability. The invalidity or unenforceability of any provision or provisions
of this COC Agreement shall not affect the validity or enforceability of any other provision
hereof, which shall remain in full force and effect.
(f) Arbitration. Any dispute or controversy arising under or in connection with this
COC Agreement shall be settled exclusively by arbitration in Alameda County, 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) No Assignment of Benefits. The rights of any person to payments or benefits under
this COC Agreement shall not be made subject to option or assignment, either by voluntary or
involuntary assignment or by operation of law, including (without limitation) bankruptcy,
garnishment, attachment or other creditor’s process, and any action in violation of this subsection
(g) shall be void.
(h) Employment Taxes. Subject to Section 4, all payments made pursuant to this COC
Agreement will be subject to withholding of applicable income and employment taxes.
(i) Assignment by Company. The Company may assign its rights under this COC Agreement
to an affiliate, and an affiliate may assign its rights under this COC 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 COC Agreement
shall mean the corporation that actually employs the Employee.
(j) Counterparts. This COC 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.
IN WITNESS WHEREOF, each of the parties has executed this COC Agreement, in the case of the
Company by its duly authorized officer, as of the Effective Date.
| SYBASE, INC. | ||||||
| By | ||||||
| Vice President, Secretary and General Counsel | ||||||
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