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EXHIBIT (e)(4)
CHANGE IN CONTROL AGREEMENT
This Agreement, dated ___________ is made by and between _____________
(hereinafter referred to as "Executive") and Xircom, Inc. (hereinafter referred
to as the "Company"), a corporation organized under the laws of the State of
California.
R E C I T A L S
WHEREAS, the Board of Directors of the Company (the "Board of
Directors") has determined that it is in the best interests of the Company and
its shareholders that appropriate steps should be taken to reinforce and
encourage the continued dedication of Executive to Executive's assigned duties
without distraction in case of potentially disturbing circumstances arising from
the possibility of a Change in Control of the Company, as defined in Section 1.2
herein;
WHEREAS, in order to induce Executive to remain in the employ of the
Company and to induce Executive to give Executive's continued attention and
dedication to Executive's assigned duties in the event of a Change in Control of
the Company, as defined in Section 1.2 herein, the Company desires to provide
Executive with certain benefits and inducements, as set forth herein;
WHEREAS, Executive covenants and agrees to perform Executive's assigned
duties with continued attention and dedication in the event of a Change in
Control of the Company, as defined in Section 1.2 herein;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the Company and Executive do hereby agree as follows:
SECTION 1
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall
have the meaning specified below for the purposes of this Agreement, and no
other, unless the context clearly indicates to the contrary. The masculine
pronoun shall include the feminine and neuter, and the singular the plural,
where the context so indicates. The following definitions shall not apply for
determining the meaning of the following terms as such terms may be used in any
other agreement, plan, policy or program to which the Company is a party unless
such definition is expressly adopted in writing for such purpose.
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SECTION 1.1 CAUSE.
"Cause" shall mean termination of employment with the Company upon the
occurrence of one or more acts of willful misconduct or willful failure to
substantially perform assigned duties for the Company (other than for the reason
of physical or mental illness) if such failure or misconduct, taken as a whole,
is materially damaging or materially detrimental to the Company, as determined
in good faith by the Board of Directors.
SECTION 1.2 CHANGE IN CONTROL.
a. A "Change in Control" shall be deemed under this Agreement to
have occurred upon either of the following events:
(1) any "person" (as defined in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) is or becomes,
directly or indirectly, the "beneficial owner" (as defined in Rule 13d-3
promulgated under the 0000 Xxx) of securities of the Company representing
greater than 50% of the combined voting power of the Company's then outstanding
securities; or
(2) the Company is a party to a merger, consolidation, sale of
assets or other reorganization, or a proxy contest, as a consequence of which
members of the Board of Directors in office immediately prior to such
transaction or event constitute less than a majority of the Board of Directors
thereafter.
SECTION 1.3 COMPANY.
"Company" shall mean Xircom, Inc., its subsidiaries and affiliates, and
any successor to its business, whether direct or indirect, by purchase of
securities, merger, consolidation, or purchase of all or substantially all of
the Company's assets or otherwise.
SECTION 1.4 DATE OF TERMINATION.
"Date of Termination" shall mean (i) in the case of Executive's
termination of employment by the Company for Disability (as defined in Section
1.5 herein), fifteen (15) days after Notice of Termination (as defined in
Section 1.7 herein) is given, provided that Executive shall not have returned to
the performance of Executive's assigned duties on a full-time basis during such
fifteen (15)-day period; or (ii) in the case of termination of Executive's
employment by
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the Company for Cause (as defined in Section 1.2 herein), or by Executive for
Good Reason (as defined in Section 1.6 herein) or for any other reason, the date
specified in the Notice of Termination, which date shall not be less than thirty
(30) days after the date of such Notice of Termination is given.
SECTION 1.5 DISABILITY.
"Disability" shall mean Executive's inability to perform assigned
duties for the Company on a full-time basis as a result of incapacity due to
medically documented physical or mental illness. Written Notice of Termination
for the reason of Disability may not be given prior to the expiration of a
twelve (12)-month period of Disability nor prior to receipt of medical
documentation that Executive's incapacity is permanent.
SECTION 1.6 GOOD REASON.
"Good Reason" shall mean the occurrence of any of the following events
after a Change in Control without Executive's express written consent: (i) the
assignment to Executive of duties which are wholly and clearly inconsistent with
the position and status of an executive of the Company, or a substantial
alteration in the nature, status or prestige of Executive's responsibilities
from those in effect immediately prior to a Change in Control; or (ii) a
reduction of Executive's annual base salary as in effect on the effective date
hereto or as such annual base salary may be increased from time to time, except
for across-the-board salary reductions similarly affecting all executives of the
Company and all executives of any "person" in control of the Company; or (iii) a
reduction in or elimination of Executive's eligibility to participate on a level
equal to other officers or executives of the Company of comparable position or
grade in such bonus or incentive compensation programs or plans as may be
approved from time to time by the Board of Directors, except for (A) an
across-the-board reduction in or elimination of any such plan or program which
similarly affects all executives of the Company and all executives of any
"person" in control of the Company, or (B) the payment of a lesser bonus
compared to prior years as a result of the failure of the Company to achieve
performance versus Company financial performance targets; or (iv) the
reassignment of Executive to a location more than thirty five (35) miles from
Executive's current principal place of performance of services for the Company
(except for required travel on Company business to an extent substantially
consistent with Executive's travel obligations existing at the effective date of
the agreement); (v) the failure of the Company to obtain a satisfactory
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agreement from any successor to the business of the Company (whether by purchase
of voting securities or by purchase of all or substantially all of the assets of
the Company) to assume and perform under the terms of this Agreement; or (vi)
any purported termination of the employment of Executive by the Company which is
not affected according to the requirements of a Notice of Termination as defined
in Section 1.7 herein.
SECTION 1.7 NOTICE OF TERMINATION.
"Notice of Termination" shall mean a notice, in writing, between
Executive and the Company, communicated in accordance with Section 4.2 herein,
which indicates the specific termination provision enumerated in this Agreement
relied upon, and which sets forth in reasonable detail the facts and
circumstances alleged to provide a basis for termination of Executive's
employment with the Company.
SECTION 1.8 SEVERANCE PAYMENT.
a. "Severance Payment" shall mean a single lump sum payment
delivered to Executive within thirty (30) days after the Date of Termination
equal the percentage noted in Section 1.8 b. below of the sum of the following
amounts:
(i) Executive's highest annual base salary in effect at any time
prior to Executive's termination, plus
(ii) The highest aggregate amount included by the Company on
Executive's form W-2 for fringe benefits provided in any of the three (3)
calendar years prior to this termination, "fringe benefits" being automobile
allowance and other benefits not otherwise described in this Section 1.8 or
Section 1.9, plus
(iii) Executive's highest bonus for any of the three (3) full
fiscal years of the Company immediately preceding Executive's termination, plus
(iv) An amount equal to the employer contribution made for
Executive's benefit under all pension, profit sharing and similar employee
benefit plans of the Company for the last fiscal year of the Company ending
prior to the Change in Control.
b. If the Date of Termination occurs within the first 12 months
following the Change in Control, the Severance Payment shall be an amount equal
to 100% of the sums noted above. If the Date of Termination occurs within months
13-24 following the Change in Control, the Severance Payment shall be an amount
equal to 50% of the sums noted above. If the Date of Termination occurs after
the end of month 24 following the Change in Control, no amounts will be payable
to Executive under this Agreement as a Severance Payment.
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SECTION 1.9 INSURANCE BENEFITS.
"Insurance Benefits" shall mean the right of Executive to participate
fully, for a period following the Date of Termination of (i) twelve (12) months,
if the Date of Termination occurs within the first 12 months following the
Change in Control, or (ii) six (6) months, if the Date of Termination occurs
within months 13-24 following the Change in Control, in all life insurance
plans, accident, medical/health plans and other welfare plans, maintained or
sponsored by the Company immediately prior to the Change in Control, or to
receive substantially equivalent coverage (or the full value thereof in cash)
from the Company.
SECTION 1.10 STOCK OPTIONS AND RIGHTS.
The terms "Option", "Option Agreement" and "Right" shall have the same
meaning as provided in applicable sections of the Xircom, Inc. 1992 Stock Option
Plan, 1995 Stock Option Plan, and/or 2000 Stock Option Plan, as any such plan
has been and may in the future be amended, modified, or superseded, from time to
time.
SECTION 1.11 OUTPLACEMENT SERVICE.
"Outplacement Services" shall mean the right to receive, for a period
following the Date of Termination of (i) twelve (12) months, if the Date of
Termination occurs within the first 12 months following the Change in Control,
or (ii) six (6) months, if the Date of Termination occurs within months 13-24
following the Change in Control, full executive level outplacement services from
a nationally recognized provider of executive outplacement services. Such
service provider shall be reasonably acceptable to Executive, and services are
to be provided to Executive from the local office of the service provider
located in such geographic location as may be selected by Executive. Should
Executive decline such services, elect not to use such services, or find
continuation of such services no longer necessary, Executive shall not have any
right to receive the full value equivalent of such service (or any remainder
value for services which have been discontinued by Executive) in cash. Executive
will retain the right to change providers of service in the event of a bona fide
dissatisfaction on the part of Executive with the quality of services, provided
that Executive shall have first notified the Company of the basis for such
dissatisfaction and the Company and the service provider shall have been unable,
to Executive's reasonable satisfaction, to remedy the cause of Executive's
dissatisfaction with the services provided.
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SECTION 2
TERM OF AGREEMENT
SECTION 2.1 TERM.
This Agreement shall remain in effect through the end of the fiscal
year of the Company in which this Agreement is first made; provided, however,
that on each October 1 thereafter, the term of this Agreement shall
automatically be extended for one (1) year unless, not later than July 31 of the
preceding year, the Company shall have given Executive notice that it does not
desire to extend the term of this Agreement; and provided, further, that if a
Change in Control shall have occurred during the Agreement, then,
notwithstanding such notice by the Company not to extend, this Agreement shall
continue in effect for the lesser of (i) a period of thirty-six (36) months
beyond the then scheduled expiration of this Agreement, or (ii) a period ending
on the date of Executive's death.
SECTION 3
BENEFITS
SECTION 3.1 WHEN BENEFITS PAYABLE.
Except for acceleration of certain Options and Rights as provided in
Section 3.2 below, no benefits shall be payable under this Agreement and the
provisions of this Agreement shall be of no force or effect unless (i) there
shall have been a Change in Control, and (2) Executive's employment with the
Company shall have been terminated after the Change in Control during the term
of this Agreement or Executive shall have incurred a Disability after the Change
in Control during the term of this Agreement.
SECTION 3.2 ACCELERATION OF OPTIONS OR RIGHTS INDEPENDENT OF
TERMINATION OF EMPLOYMENT
Upon the occurrence of a Change in Control, and independent of and
unrelated to any other actions following the Change in Control which may affect
Executive's employment with the Company, Executive shall be entitled to
acceleration of up to twelve (12) months vesting of then existing Company
Options or Rights. A lesser period of acceleration, as required to provide for
100% vesting of a given Option or Right, will apply to any then existing Option
or Right which by its terms as of the Change in Control has less than twelve
(12) months remaining before Executive becomes 100% vested in such Option or
Grant.
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SECTION 3.3 BENEFITS UPON DISABILITY.
In the event that Executive shall incur a Disability within three (3)
years after a Change in Control during the term of this Agreement, and
regardless of whether such Disability results in the termination of Executive's
employment, Executive shall be entitled to the same salary, salary continuation,
and other benefits in accordance with the Company's disability policy as in
effect immediately prior to such Change in Control.
SECTION 3.4 BENEFITS UPON TERMINATION FOR CAUSE.
In the event that Executive's employment with the Company is terminated
for Cause after a Change in Control during the term of this Agreement, Executive
shall receive Executive's full base salary as earned through the Date of
Termination at the rate in effect at the time Notice of Termination is given.
Following payment of said amount, the Company shall have no further obligations
to Executive under this Agreement.
SECTION 3.5 BENEFITS UPON TERMINATION OTHER THAN FOR CAUSE OR
DISABILITY; OR TERMINATION FOR GOOD REASON.
In the event that Executive's employment with the Company is terminated
after a Change in Control during the term of this Agreement (i) by the Company
for any reason other than for Cause or Disability or (ii) by Executive for Good
Reason, Executive shall be entitled to receive each of the following:
a. Executive's full base salary as earned through the Date of
Termination.
b. In consideration of Executive's prior services and the
performance of Executive's obligations under this Agreement, the Severance
Payment, Insurance Benefits and Outplacement Service.
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c. In further consideration of Executive's prior services and
performance of Executive's obligations under this Agreement, acceleration of
vesting of certain Options and Rights under then existing grants under an Option
Agreement. Vesting will be accelerated for those Options and Rights that, but
for Executive's Termination, would have continued to vest according to the
vesting schedule provided in Executive's Option Agreement(s) during, as
applicable depending upon when Termination shall have occurred, the six (6)
months or twelve (12) months following the Date of Termination. The accelerated
vesting period shall be up to twelve (12) months if the Date of Termination
occurs within twelve (12) months following the Change of Control and up to six
(6) months if the Date of Termination occurs in months 13-24 following the
Change of Control. A lesser period of acceleration, as required to provide for
100% vesting of the given Option or Right, will apply to any then existing
Option or Right which by its terms as of the Date of Termination has less than
the applicable period of acceleration remaining before Executive becomes 100%
vested in such Option or Grant. Other than to provide for the acceleration of
vesting of certain Options and Rights specified in this Section 3.5.c., the
other terms and conditions of Executive's Option Agreement(s) remain unaffected
by this Agreement, and nothing in this Section 3.5.c. shall operate to alter any
other terms or conditions of any Option or Right.
SECTION 3.6 NO MITIGATION.
Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Agreement be
reduced or offset by any compensation earned by Executive as a result of
employment with another employer or by retirement benefits after the Date of
Termination or otherwise.
SECTION 3.7 LIMITATION ON BENEFITS.
Notwithstanding any other provision of this Agreement, the payments or
benefits to which Executive will be entitled under this Agreement will be
reduced to the extent necessary so that Executive will not be liable for any
federal excise tax levied on certain "excess parachute payments" under Section
4999 of the Internal Revenue Code, and to any further extent necessary to
prevent the deniability of any deduction for the Company under Section 280G of
the Code.
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SECTION 4
MISCELLANEOUS
SECTION 4.1 SUCCESSORS; BINDING AGREEMENT.
The Company will require any successor (whether direct or indirect, by
purchase, merger, conversion, or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform
this Agreement without any change in its terms or conditions. Failure of the
Company to obtain such assumption agreement prior to the effectiveness of any
succession shall be a breach of this Agreement and shall entitle Executive to
compensation, benefits and acceleration of Options and Rights from the Company
in the same amount and on the same terms to which he would be entitled if a Date
of Termination had occurred within the first 12 months following the Change of
Control and such assumption agreement had been obtained. Compensation, benefits,
Options and Rights under this Section 4.1 shall be net of the value of all
compensation, benefits, Options and Rights received by Executive from any
successor. For purposes of implementing the foregoing, the date of which any
such succession becomes effective shall be deemed the Date of Termination.
SECTION 4.2 NOTICE.
Notices and all other communications provided for in this Agreement
shall be in writing and shall be deemed to have been received when delivered or
mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth at the end of this
Agreement; provided that all notices to the Company shall be directed to the
attention of the Board of Directors with a copy to the Secretary of the Company,
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
SECTION 4.3 NO WAIVER.
No provision of this Agreement may be modified, waived or discharged
unless in writing and signed by Executive and such Officer of the Company as may
be specifically designated or authorized by the Board of Directors or by a
Committee of the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
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SECTION 4.4 RIGHT TO TERMINATE EMPLOYMENT.
Nothing in this Agreement shall, prior to a Change in Control, confer
upon Executive any right to continue in the employ of the Company or shall
interfere with or restrict in any way the rights of the Company, which are
hereby expressly reserved, to discharge Executive at any time for any reason
whatsoever with or without cause.
SECTION 4.5 ENTIRE AGREEMENT.
No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement and this Agreement
constitutes the entire agreement of the parties.
SECTION 4.6 CONTROLLING LAW.
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of California.
SECTION 4.7 INVALID PROVISION.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
SECTION 4.8 ARBITRATION.
If Executive's employment is alleged to be terminated for Cause, if
Executive's right to resign for Good Reason is disputed, or if any other dispute
arises between the parties pertaining to or arising from this Agreement, either
party may initiate binding arbitration in Ventura County, California, before a
single neutral arbitrator in accordance with California arbitration procedure
(Cal. Code Civ. Proc. Section 1280 et seq.) and the National Rules For The
Resolution Of Employment Disputes of the American Arbitration Association. The
arbitrator shall render a written award which shall include conclusions and
specific allocations in concert with the provisions of Section 4.9 below
regarding allocation and award of costs, expenses, and legal fees incurred by
Executive in relation to any such proceeding.
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Judgment upon the award rendered by the arbitrator shall be final and may be
entered in any court having jurisdiction. The Company shall pay:
a. The arbitrator's fees and other administrative costs and expenses
of the arbitration proceeding, and
b. Executive's attorney fees, if authorized pursuant to the
provisions of Section 4.9 below, and
c. Interest to Executive on any amounts ultimately found to be due
to Executive hereunder during any period of time that such amounts are withheld
pending arbitration. Such interest will be at the Applicable Federal Rate for
short term obligations, as that rate may adjust during the period of time that
such amounts are withheld from Executive.
SECTION 4.9 EXPENSES.
It is the intent of the Company that the Executive not be required to
incur any expenses associated with the successful enforcement or defense of
Executive's rights under this Agreement by legal action or arbitration
proceedings because the cost and expense thereof would substantially detract
from the benefits intended to be extended to the Executive hereunder. The
Company also intends that it shall bear the cost of arbitration or legal
proceedings that are initiated by the Company in an attempt to deny the benefits
of this Agreement to Executive, unless such denial follows the justifiable
termination of Executive for cause. Accordingly, (i) if Executive secures an
award or judgment which rules or determines that the Company has failed to
comply with any of its obligations under this Agreement, or (ii) if the Company
or any other person takes any action to declare this Agreement void or
unenforceable, or institutes any legal action or arbitration proceeding designed
to deny Executive, or to recover from him, the benefits intended to be provided
hereunder, then the Company irrevocably authorizes Executive from time to time
to retain counsel of Executive's choice, at the expense of the Company as
hereafter provided, to represent Executive in connection with any and all
actions and proceedings, whether by or against the Company or any director,
officer, stockholder or other person affiliated with the Company, which may
adversely affect Executive's rights under this Agreement, unless the denial of
benefits is due to the termination of Executive for cause. Without limiting the
effect of paragraph 4.8 above, or of the foregoing provisions of this paragraph,
the Company shall pay or cause to be paid and shall be solely responsible for
any and all attorneys and related fees and expenses incurred by Executive as a
result of the Company's failure to perform under this Agreement.
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SECTION 4.10 WITHHOLDING.
All payments required to be made by the Company hereunder to Executive
or Executive's dependents, beneficiaries or estate will be subject to the
withholding of such amounts relating to tax and/or other payroll deductions as
may be required by law.
SECTION 4.11 NO ASSIGNMENT.
No right or interest to or in any payments shall be assignable by
Executive; provided, however, that this provision shall not preclude him from
designating one or more beneficiaries to receive any amount that may be payable
after Executive's death and shall not preclude the legal representative of
Executive's estate from assigning any right hereunder to the person or persons
entitled thereto under Executive's will or trust, or in the case of intestacy,
to the person or persons entitled thereto under the laws of intestacy applicable
to Executive's estate. The term "beneficiaries" as used in this Agreement shall
mean a beneficiary or beneficiaries so designated to receive any such amount, or
if no beneficiary has been so designated, the legal representative of the
Executive's estate.
Company and Executive have each caused this Agreement to be duly
executed and delivered as of the date set forth above.
XIRCOM, INC. EXECUTIVE
By: By:
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Xxxx X. Xxxxx, President Signature
By:
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Xxxxxxx X. Xxxxxxxx, Address
Secretary
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City, State, Zip Code
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000-0000
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CHANGE IN CONTROL AGREEMENT
ADDENDUM
Pursuant to authorization granted by the Compensation Committee of the Board of
Directors of Xircom, Inc., as regards special circumstances which may arise for
an Executive who is a resident of a jurisdiction outside of the United States of
America, the Change in Control Agreement ("Agreement") entered into effective
________, 19__, by and between _______________________ (hereinafter referred to
as "Executive") and Xircom, Inc. (hereinafter referred to as the "Company"), a
corporation organized under the laws of the State of California, is amended and
supplemented as follows:
1. Notwithstanding any other term or condition contained in the
Agreement to the contrary, nothing contained in the Agreement will operate or be
interpreted to supersede or negate any rights or entitlements as may be granted
or available to Executive under the laws of the jurisdiction of Executive's
residence to compensation or benefits in the event Executive's employment with
the Company is terminated after a Change in Control during the term of this
Agreement (i) by the Company for any reason other than for Cause or Disability
or (ii) by Executive for Good Reason. In circumstances where Executive may be
entitled under the law of the jurisdiction of Executive's residence to a benefit
or compensation greater or more advantageous to Executive than that provided to
Executive under the Agreement in the event Executive's employment with the
Company is terminated after a Change in Control during the term of this
Agreement (i) by the Company for any reason other than for Cause or Disability
or (ii) by Executive for Good Reason, Executive shall be entitled to elect to
receive, in lieu of and as substitution for the applicable benefit or
compensation provided for under the Agreement, the greater benefit or
compensation as provided for under the applicable law of Executive's
jurisdiction of residence. Nothing contained in this Addendum shall operate or
be interpreted to provide Executive with the opportunity or right to collect or
receive double compensation or benefits through both the Agreement and the local
law of the jurisdiction of Executive's residence under any applicable situation
in which the local law of Executive's jurisdiction of residence is considered to
provide for a greater benefit or compensation than that provided for under the
Agreement.
2. All definitions and capitalized terms used in this Addendum will
have the same meaning as provided for in the Agreement.
3. Except as expressly modified, amended, and supplemented by this
Addendum, the Agreement remains in full force and effect.
XIRCOM, INC. EXECUTIVE
By: By:
------------------------------------- --------------------------------
Xxxx X. Xxxxx, President Signature
By:
------------------------------------ --------------------------------
Xxxxxxx X. Xxxxxxxx, Address
Secretary
--------------------------------
City, State, Zip Code
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000-0000
