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EXHIBIT 10.14
SILICON VALLEY RESEARCH, INC.
CHANGE OF CONTROL AND SEVERANCE BENEFITS AGREEMENT
This Change of Control and Severance Benefits Agreement (the
"Agreement") is effective as of February 19, 1997, by and between Xxxxxxxx X.
Xxxxxxxx, Xx. (the "Employee"), and Silicon Valley Research, Inc., a California
corporation (the "Company").
RECITALS
A. The Employee presently serves at the pleasure of the Board of
Directors as Senior Vice President, Finance and Administration and Chief
Financial Officer of the Company and performs significant strategic and
management responsibilities necessary to the continued conduct of the Company's
business and operations.
B. The Board of Directors of the Company (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 or occurrence of a Change of Control
(as defined below) of the Company.
C. The Board believes that it is imperative to provide the Employee
with certain severance benefits upon the Employee's termination of employment
which provide the Employee with enhanced financial security and provide
sufficient incentive and encouragement to the Employee to remain with the
Company even after a Change of Control.
D. Certain capitalized terms used in the 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. Terms of Employment. The Company and the Employee agree that the
Employee's employment is at will, and that their employment relationship may be
terminated by either party at any time, with or without cause. The provisions of
this Agreement shall terminate on March 1, 2002 (except that the Employee's
employment by the Company shall continue to be "at will"). Any termination of
this Agreement shall not affect any required payment or benefit that accrues
prior to such termination.
2. Severance Benefits. Subject to Sections 2(c) and 2(d) below,
(a) Termination Following A Change of Control. If the Employee's
employment is terminated within twelve (12) months following a Change of
Control, then the Employee shall be entitled to receive severance benefits as
follows:
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(i) Involuntary Termination. If the Employee's employment is
terminated as a result of Involuntary Termination (as defined in Section 3(b)
below), then the Employee shall be entitled to receive severance pay in an
amount equal to 100% of the Employee's annual base salary at the time of such
termination, plus the full amount of Employee's annual bonus at the "on-target"
level for the fiscal year in which Employee is terminated, which amount shall be
paid in lieu of any bonus or commission that may be owing, or becomes owed to
Employee at any time thereafter. 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 up to twelve
(12) months after any termination under this Section 2(a)(i), the Company shall,
if permitted under the Company's existing health insurance plan at no additional
premium to the Company, continue Employee's existing group health insurance
coverage, or if not so permitted, reimburse the Employee for any COBRA premiums
paid by the Employee for continued group health insurance coverage (the
"Employment Benefits"). Such Employment Benefits shall terminate upon the
earlier of (i) twelve (12) months from the date of the Employee's termination or
(ii) upon commencement of new employment by the Employee.
(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 following the date of such
termination under the terms of this Agreement, 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 except as
otherwise required by applicable 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 at any time due to the death of the
Employee, then the Employee shall not be entitled to receive severance or other
benefits following the date of such termination under the terms of this
Agreement, 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 except as otherwise required by applicable 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 under the terms of this
Agreement, 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 except as otherwise required by applicable law.
(v) Stock Option Exercisability. If the Employee's employment
terminates by reason of Involuntary Termination within twelve (12) months
following a Change of Control, the Employee shall be automatically credited with
an additional twelve (12) months of continuous service for purposes of
determining the exercisability
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and vesting with respect to any stock option granted to the Employee under the
Company's stock option plans, which shall be in addition to any credit under
Section 2(b) below.
(b) Stock Option Acceleration in Connection with Change of Control.
In the event of any Change of Control, the Employee shall be automatically
credited with an additional twelve (12) months of continuous service for
purposes of determining the exercisability and vesting with respect to any stock
option granted to the Employee under the Company's stock option plans.
(c) Termination Without a Change of Control
(i) Involuntary Termination. If the Employee's employment is
terminated as a result of Involuntary Termination (as defined in Section 3(b)
below), then the Employee shall be entitled to receive severance pay in an
amount equal to 50% of the Employee's annual base salary at the time of such
termination, plus the prorated amount of Employee's annual bonus at the
"on-target" level for the fiscal year in which Employee is terminated, which
amount shall be paid in lieu of any bonus or commission that may be owing, or
becomes owed to Employee at any time thereafter. 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 up to six (6) months after any termination under this Section 2(c)(i), the
Company shall, if permitted under the Company's existing health insurance plan
at no additional premium to the Company, continue Employee's existing group
health insurance coverage, or if not so permitted, reimburse the Employee for
any COBRA premiums paid by the Employee for continued group health insurance
coverage (the "Employment Benefits"). Such Employment Benefits shall terminate
upon the earlier of (i) six (6) months from the date of the Employee's
termination or (ii) upon commencement of new employment by the Employee.
(ii) Stock Option Acceleration. In the event of an Involuntary
Termination other than in a Change of Control event, the Employee shall be
automatically credited with an additional six (6) months of continuous service
for purposes of determining the exercisability and vesting with respect to any
stock option granted to the Employee under the Company's stock option plans.
(iii) 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 following the date of such
termination under the terms of this Agreement, 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 except as
otherwise required by applicable law.
(iv) Disability; Death. If the Company terminates the Employee's
employment as a result of the Employee's Disability, or such Employee's
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employment is terminated at any time due to the death of the Employee, then the
Employee shall not be entitled to receive severance or other benefits following
the date of such termination under the terms of this Agreement, 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
except as otherwise required by applicable law.
(v) 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 under the terms of this
Agreement, 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 except as otherwise required by applicable law.
(d) Release of Claims; Resignation. Employee's entitlement to any
benefits under Section 2(a) and 2(c) is conditioned upon Employee's execution
and delivery to the Company of (i) a general release of claims in a form
satisfactory to the Company and (ii) a resignation from all of Employee's
positions with the Company, or any Company subsidiary, including any
directorship on the Board of Directors or membership on or any committees
thereof on which Employee serves, in a form satisfactory to the Company.
(e) Limitation of Payments and Benefits.
(i) To the extent that any of the payments and benefits provided
for in this Agreement or otherwise payable to the Employee constitute "parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and, but for this Section 2(e), would be subject
to the excise tax imposed by Section 4999 of the Code or any similar or
successor provision, the aggregate amount of such payments and benefits shall be
reduced, but only to the extent necessary so that none of such payments and
benefits are subject to excise tax pursuant to Section 4999 of the Code.
(ii) Within sixty (60) days after the later of termination of
employment or the related Change in Control, the Company shall notify the
Employee in writing if it believes that any reduction in the payments and
benefits that would otherwise be paid or provided to the Employee under the
terms of this Agreement is required to comply with the provisions of Subsection
2(e)(i). If the Company determines that any such reduction is required, it will
provide the Employee with copies of the information used and calculations made
by the Company to determine the amount of such reduction. The Company shall
determine, in a fair and equitable manner after consultation with the Employee,
which payments and benefits are to be reduced so as to result in the maximum
benefit for the Employee.
(iii) Within thirty (30) days after the Employee's receipt of
the Company's notice pursuant to Subsection 2(e)(ii), the Employee shall notify
the
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Company in writing if the Employee disagrees with the amount of reduction
determined by the Company, or the selection of the payments and the benefits to
be reduced. As part of such notice, the Employee shall also advise the Company
of the amount of reduction, if any, that the Employee has, in good faith,
determined to be necessary to comply with the provisions of Subsection 2(e)(i)
and/or the payments and benefits to be reduced. Failure by the Employee to
provide this notice within the time allowed will be treated by the Company as
acceptance by the Employee of the amount of reduction determined by the Company
and/or the payments and benefits to be reduced. If any differences regarding the
amount of the reduction and/or the payments and benefits to be reduced have not
been resolved by mutual agreement within sixty (60) days after the Employee's
receipt of the Company's notice pursuant to Subsection 2(e)(ii), the amount of
reduction and/or the payments and benefits to be reduced as determined by the
Employee will be conclusive and binding on both parties unless, prior to the
expiration of such sixty (60) day period, the Company notifies the Employee in
writing of the Company's intention to have the matter submitted to arbitration
for resolution and proceeds to do so promptly. If the Company gives no notice to
the Employee of a required reduction as provided in Subsection 2(e)(ii), the
Employee may unilaterally determine the amount of reduction required, if any,
and/or the payments and benefits to be reduced, and, upon written notice to the
Company, the amount and/or the payments and benefits to be reduced will be
conclusive and binding on both parties.
(iv) If, as a result of the reductions required by Subsection
2(e)(i), the amounts previously paid to the Employee exceed the amount to which
the Employee is entitled, the Employee will promptly return the excess amount to
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 either of the following events:
(i) 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 fifty percent (50%) or
more of the total voting power represented by the Company's then outstanding
voting securities; or
(ii) (A) a merger in which the Company is not the surviving
corporation, and the shareholders of the Company immediately prior to the merger
do not own at least a majority of the outstanding shares of the surviving
corporation, (B) a dissolution or liquidation of the Company or (C) the sale of
all or substantially all of the assets of the Company.
(b) Involuntary Termination. "Involuntary Termination" shall mean
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the Employee's resignation within 60 days after any of the following:
(i) Without the Employee's express written consent, the
assignment to the Employee of any significant 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 death, Disability or
for Cause;
(ii) Any reduction by the Company in an amount greater than 10%
in the base salary of the Employee as in effect immediately prior to such
reduction, other than a reduction applied generally to executive officers of the
Company;
(iii) Any reduction by the Company in the kind or level of
employee benefits to which the Employee is entitled immediately prior to such
reduction, other than a reduction applied generally to executive officers of the
Company;
(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; or
(v) The failure of the Company to obtain the assumption of the
terms of this Agreement by any successors contemplated in Section 4 below.
provided, however, that the Employee's resignation as a result of any of the
foregoing conditions shall be a voluntary resignation, and not an involuntary
termination, unless the Employee gives written notice of any such condition(s)
to the Board and allows the Company at least 10 days thereafter to correct such
condition(s). It shall also be an Involuntary Termination if the Company
terminates the Employee for any reason other than Disability, death or for
Cause.
(c) Cause. For purposes of this Agreement, a termination "for Cause"
occurs if the Employee is terminated for any of the following reasons:
(i) Theft, dishonesty, or intentional falsification of any
employment or Company records;
(ii) Improper disclosure of the Company's confidential or
proprietary information;
(iii) Any action by the Employee that Employee knew or should
have known could have a material detrimental effect on the Company's reputation
or business;
(iv) The Employee's failure or inability to perform any
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reasonable assigned duties after written notice from the Company to the Employee
of, and a reasonable opportunity to cure, such failure or inability;
(v) Any employment-related misconduct by the Employee, including
but not limited to sexual harassment, threats of harm or acts of physical
violence toward employees, customers, consultants or suppliers of the Company;
or
(vi) The Employee's conviction (including any plea of guilty or
nolo contendre) for any criminal act that impairs his ability to perform his
duties for the Company.
(d) Disability. "Disability" shall mean that the Employee is unable
to perform his duties as an employee of the Company as the result of his
incapacity due to physical or mental illness for 120 days (not necessarily
consecutive) in any one year period. 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 duties as an employee of the
Company before the termination of his employment becomes effective, the notice
of intent to terminate shall automatically be deemed to have been revoked.
4. Employee Covenant Regarding Nonsolicitation. For a period of one (1)
year following termination of employment for any reason, the Employee shall not
recruit, solicit, or invite the solicitation of any employees of the Company to
terminate their employment with the Company.
5. Successors.
(a) Company's 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. For all purposes under this 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 Agreement by
operation of law.
(b) Employee's Successors. 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. Employee shall have no right to assign any
of his obligations or duties under this Agreement to any other person or entity.
6. Notice.
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(a) General. 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. In the case of the Employee,
mailed notices shall be addressed to him at the home address which he 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. Any termination by the Company for Cause
or by the Employee as a result of a voluntary resignation or an Involuntary
Termination shall be communicated by a notice of termination to the other party
hereto given in accordance with Section 6 of this Agreement. Such notice shall
indicate the specific termination provision in this Agreement relied upon, shall
set forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination under the provision so indicated, and shall specify the
termination date (which shall be not more than 15 days after the giving of such
notice).
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 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) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California.
(d) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(e) Arbitration. In the event of any dispute or claim relating to or
arising out of the Employee's employment relationship with the Company, this
Agreement, or the termination of the Employee's employment with the Company for
any reason (including, but not limited to, any claims of breach of contract,
wrongful termination, fraud or age, race, sex, national origin, disability or
other discrimination or
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harassment), the Employee and the Company agree that all such disputes shall be
fully, finally and exclusively resolved by binding arbitration conducted by the
American Arbitration Association in Santa Xxxxx County, California. The Employee
and the Company hereby knowingly and willingly waive their respective rights to
have any such disputes or claims tried to a judge or jury, provided, however,
that this arbitration provision shall not apply to any disputes or claims
relating to or arising out of the actual or alleged misuse or misappropriation
of the Company's property, including, but not limited to, its trade secrets or
proprietary information.
(f) 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 (f) shall be
void.
(g) Employment Taxes. All payments made pursuant to this Agreement
will be subject to withholding of applicable income and employment taxes.
(h) 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.
(i) 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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(j) Prior Agreements. This Agreement shall supersede all prior
arrangements whether written or oral, and understandings, regarding the subject
matter of this Agreement.
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.
COMPANY SILICON VALLEY RESEARCH, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Title: Chief Executive Officer
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EMPLOYEE By: /s/ Xxxxxxxx X. Xxxxxxxx, Xx.
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Xxxxxxxx X. Xxxxxxxx, Xx.
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