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Exhibit 10.13
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (the "Agreement") is made and entered
into effective as of September 15, 1998, by and between (Employee) (the
"Employee") and Xxxxx Corporation, a California 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, an executive officer of the Company, 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, which for purposes of this Agreement as it
relates to Employee's employment shall include a majority-owned subsidiary of
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, (C) as may be provided in Employee's Offer Letter/Employment
Agreement with the Company dated _____________, or (D) 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 as an executive officer of the Company, other than as a result of
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an involuntary termination by the Company without Cause (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.
(a) Termination Following A Change of Control. Subject to
Sections 4 and 5 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) or if the Company terminates the Employee's employment for Cause (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 and in accordance with the terms of the
Employee's Offer Letter/Employment Agreement 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 vested (or the repurchase option shall be released) on such
date as to that number of shares that would have vested in accordance with the
terms of such option (or underlying Common Stock Purchase Agreement) (assuming
that Employee had remained in Continuous Status as an Employee, as defined in
the relevant plan and agreement) for two (2) years after the next monthly
vesting date following such termination (e.g., if such option vested as to
additional shares on the 17th day of each month, and such termination were to
occur on the 18th of a month, then the foregoing two (2) year period would begin
after the 17th day of the following month). 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) Involuntary 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.
(b) 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 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
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with such plans and policies in effect on the date of termination and in
accordance with the terms of the Employee's Offer Letter/Employment Agreement 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:
(i) Ownership. Any "Person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is
or becomes the "Beneficial Owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing more than
thirty percent (30%) or more of the total voting power represented by the
Company's then outstanding voting securities without the approval of the Board
of Directors of the Company;
(ii) Merger/Sale of Assets. 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; or
(iii) Change in Board Composition. A change in the
composition of the Board of Directors of the Company, as a result of which fewer
than a majority of the directors are Incumbent Directors. "Incumbent Directors"
shall mean directors who either (A) are directors of the Company as of December
31, 1997 or (B) are elected, or nominated for election, to the Board of
Directors of the Company with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination (but shall
not include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company).
(b) Cause. "Cause" shall mean (i) gross negligence or willful
misconduct in the performance of the Employee's duties to the Company where such
gross negligence or willful misconduct has resulted or is likely to result in
substantial and material damage to the Company or its subsidiaries, (ii)
repeated unexplained or unjustified absence from the Company, (iii) a material
and willful violation of any federal or state law; (iv) commission of any act of
fraud with respect to the Company; or (v) conviction of a felony or a crime
involving moral
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turpitude causing material harm to the standing and reputation of the Company,
in each case as determined in good faith by the Board of Directors of 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 from the Employee's duties, responsibilities and requirements prior
to the Change of Control or in the materiality of those responsibilities (for
example, a division president is a material change from the CEO of the Company,
and a division controller is a material change from the CFO of the Company),
(ii) any reduction of the Employee's total compensation and benefits (including
a refusal by the Acquiror to assume any stock option or stock purchase agreement
in its entirety); or (iii) the Employee's refusal to relocate to a location more
than 50 miles from the Company's current location.
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
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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 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.
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
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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) 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.
XXXXX CORPORATION <>
By: ______________________________ ______________________________
Title: ___________________________
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