1
EXHIBIT 10.32
XXXX MICROPRODUCTS, INC.
MANAGEMENT RETENTION AGREEMENT
This Management Retention Agreement (the "Agreement") is made and
entered into by and between Xxxx Xxxxxxx (the "Employee") and Xxxx
Microproducts, Inc. (the "Company"), effective as of the latest date set forth
by the signatures of the parties hereto below (the Effective Date).
RECITALS
A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of control. The
Board of Directors of the Company (the "Board") recognizes that such
consideration can be a distraction to the Employee 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
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Employee
with certain severance benefits upon Employee's termination of employment
following a Change of Control which provides the Employee with enhanced
financial security and provides incentive and encouragement to the Employee to
remain with the Company notwithstanding the possibility of a Change of Control.
D. Certain capitalized terms used in the Agreement are defined in
Section 4 below.
The parties hereto agree as follows:
1. Term of Agreement. This Agreement shall terminate three years
following the Effective Date, unless and Change of Control has occurred at such
time, in which case this Agreement shall terminate upon the date that all
obligations of the parties hereto with respect to this Agreement have been
satisfied. This Agreement may be extended unilaterally by the Company by written
resolutions adopted by the Board prior to the termination of this Agreement.
2. At-Will Employment. The Company and the Employee acknowledge that
the Employee's employment is and shall continue to 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 payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in
2
accordance with the Company's written employee plans or pursuant to other
written agreements with the Company.
3. Severance Benefits.
a. Termination Following a Change of Control. If the
Employee's employment is terminated at any time within twelve (12)
months following a Change of Control, then, subject to Section 4, the
Employee shall be entitled to receive the following severance benefits:
(i) Involuntary Termination. If the Employee's employment
is terminated as a result of Involuntary Termination other
than for Cause, then the Employee shall receive the following
severance benefits from the Company.
(1) Severance Payment. A cash payment in an
amount equal to one hundred percent (100%) of the
Employee's Base Salary.
(2) Continued Employment Benefits. One
hundred percent (100%) Company-paid health, dental
and life insurance coverage at the same level of
coverage as was provided to such employee immediately
prior to the Change of Control (the "Company-Paid
Coverage") under the Company's plans. Such coverage
shall be provided under either (at the Company's
discretion) (i) the Company's plans, or (ii) no less
favorable plans or arrangements secured by the
Company. If such coverage included the Employee's
dependents immediately prior to the Change of
Control, such dependents shall also be covered at
Company expense. Company-Paid Coverage shall continue
until earlier or (i) one year from the date of the
Change of Control, or (ii) the date that the Employee
and his dependents become covered under another
employer's group health, dental or life insurance
plans that provide Employee and his dependents with
comparable benefits and levels of coverage. For
purposes of Title X of the Consolidated Budget
Reconciliation Act of 1985 ("COBRA"), the date of the
"qualifying event" or Employee and his dependents
shall be the date upon which the Company-Paid
Coverage terminates.
(3) Stock Option Accelerated Vesting. One
hundred percent (100%) of the unvested portion of any
stock option held by the Employees shall
automatically be accelerated in full so as to become
completely vested; provided, however, that if such
potential vesting acceleration would cause a
contemplated Change of Control transaction that was
intended to be accounted for as a
"pooling-of-interests" transaction to become
ineligible for such accounting treatment under
generally accepted accounting principles, as
determined by the Company's independent public
accountants (the "Accountants") prior to the Change
of Control, Employee's stock options and restricted
stock shall not have their vesting so accelerated.
b. Timing of Severance Payments. Any severance payment to
which Employee is entitled under Section 3(a)(i) shall be paid by the
Company to the Employee (or to the
2
3
Employee's successors in interest, pursuant to Section 6(b)) in cash
and in full, not later than thirty (30) calendar days following the
Termination Date.
c. Voluntary Resignation: Termination for Cause. If the
Employee's employment terminates by reason of the Employee's voluntary
resignation (and is not an Involuntary Termination), or if the Employee
is terminated for Cause, 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 employee
plans or pursuant to other written agreements with the Company.
d. 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 employee plans or pursuant to other
written agreements with the Company.
e. Termination Apart from Change of Control. In the event the
Employee's employment is terminated for any reason, either prior to the
occurrence of a Change of Control or after the twelve (12)-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 pursuant
to other agreements with the Company.
4. Limitation on Payments. In the event that the severance and other
benefits provided for in this 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, then the Employee's severance benefits under Section 3(a)(i) shall be
reduced as to such lesser extent as would result in no portion of such severance
benefits being subject to excise tax 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 immediately prior to Change of Control (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 assumption 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 Company shall bear all costs the Accountants
may reasonably incur in connection with any calculations contemplated by this
Section 4.
5. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
a. Base Salary. "Base Salary" means an amount equal to twelve
(12) times Employee's monthly Company salary for the last full month
preceding the Change in Control.
b. Cause. "Cause" shall mean (i) any act of personal
dishonesty taken by the
3
4
Employee in connection with his responsibilities as an employee and
intended to result in substantial personal enrichment of the Employee,
(ii) the conviction of a felony, or (iii) a willful act by the Employee
which constitutes gross misconduct and which is injurious to the
Company.
c. Change in Control. "Change in Control" means the occurrence
of any 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 50% or more of the
total voting power represented by the Company's then
outstanding voting securities; or
(ii) A change in the composition of the Board
occurring within a two-year period, 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 the date hereof, or (b) are
elected, or nominated for election, to the Board 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); or
(iii) The stockholders of the Company approve a
merger or consolidation of the Company with any other
corporation, 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 the
Company's assets.
d. Disability. "Disability" shall mean that the Employee has
been unable to perform his Company duties as the result of his
incapacity due to physical or mental illness, and such inability, at
least 26 weeks after its commencement, is determined to be total and
permanent by a physician selected by the Company or its insurers and
acceptable to the Employee or the Employee's legal representative (such
Agreement as to acceptability not to be unreasonably withheld).
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 hereunder
before the termination of his employment becomes effective, the notice
of intent to terminate shall automatically be deemed to have been
revoked.
e. Involuntary Termination. "Involuntary Termination" shall
mean (i) without the Employee's express written consent, the
significant reduction of the Employee's duties,
4
5
authority or responsibilities, relative to the Employee's duties,
authority or responsibilities as in effect immediately prior to such
reduction, or the assignment to Employee of such reduced duties,
authority or responsibilities, (ii) without the Employee's express
written consent, a substantial reduction, without good business
reasons, of the facilities and perquisites (including office space and
location) available to the Employee immediately prior to such
reduction; (iii) a reduction by the Company in the base salary of the
Employee as in effect immediately prior to such reduction unless part
of a management-wide or company-wide cost-reduction program in which a
majority of management or employees are affected; (iv) a material
reduction by the Company in the kind of level of employee benefits,
including bonuses, to which the Employee was entitled immediately prior
to such reduction with the result that the Employee's overall benefits
package is significantly reduced unless part of a management-wide or
company-wide cost-reduction program in which a majority of management
or employees are affected; (v) the relocation of the Employee to a
facility or a location more than thirty-five (35) miles from the
Employee's then present location, without the Employee's express
written consent; (vi) any purported termination of the Employee by the
Company which is not effected for Disability or for Cause; (vii) the
failure of the Company to obtain the assumption of this agreement by
any successors contemplated in Section 6(a) below; or (viii) any act or
set of facts or circumstances which would, under California case law or
statute, constitute a constructive termination of the Employee.
f. Termination Date. "Termination Date" shall mean (i) if this
Agreement is terminated by the Company for Disability, thirty (30) days
after notice of termination is given to the Employee (provided that the
Employee shall not have returned to the performance of the Employee's
duties on a full-time basis during such thirty (30)-day period), (ii)
if the Employee's employment is terminated by the company for any other
reason, the date on which a notice of termination is given, provided
that if within thirty (30) days after the Company gives the Employee
notice of termination or the benefits due pursuant to this Agreement,
then the Termination Date shall be the date on which such dispute is
finally determined, either by mutual written agreement of the parties,
or by a final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected), or (iii) if the Agreement is terminated
by the Employee, the date on which the Employee delivers the notice of
termination to the Company.
6. Successors.
a. Company's Successors. Any successor to the Company (whether
direct or indirect and whether by purchase, 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
Section 6(a) or which becomes bound by the terms of this Agreement by
operation of law.
b. Employee's Successors. The term of this agreement and all
rights of the
5
6
Employee hereunder shall inure to the benefit of, and be enforceable
by, the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, divisees and legatees.
7. Notice.
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
7(a) 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 30 days
after the giving of such notice). The failure by the Employee to
include in the notice any fact or circumstance which contributes to
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 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 Agreement, 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 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 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 in their entirety any prior or
contemporaneous agreements, whether written, oral, express or implied,
relating to the subject matter hereof.
d. Choice of Law. The validity, interpretation, construction
and performance of this
6
7
Agreement shall be governed by the laws of the State of California.
e. Severability. The invalidity of 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.
f. Withholding. All payments made pursuant to this Agreement
will be subject to withholding of applicable income and employment
taxes.
g. 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.
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 set forth below.
Company: Xxxx Microproducts, Inc.
By: /s/ X. X. Xxxx
---------------------------------
W. Xxxxxx Xxxx
President & CEO
Dated: 8/6/99
Employee: /s/ Xxxx Xxxxxxx
Dated: 7/31/99
7
8
XXXX MICROPRODUCTS, INC.
MANAGEMENT RETENTION AGREEMENT
This Management Retention Agreement (the "Agreement") is made and
entered into by and between Xxxxx Xxxxx (the "Employee") and Xxxx Microproducts,
Inc. (the "Company"), effective as of the latest date set forth by the
signatures of the parties hereto below (the Effective Date).
RECITALS
A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of control. The
Board of Directors of the Company (the "Board") recognizes that such
consideration can be a distraction to the Employee 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
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Employee
with certain severance benefits upon Employee's termination of employment
following a Change of Control which provides the Employee with enhanced
financial security and provides incentive and encouragement to the Employee to
remain with the Company notwithstanding the possibility of a Change of Control.
D. Certain capitalized terms used in the Agreement are defined in
Section 4 below.
The parties hereto agree as follows:
1. Term of Agreement. This Agreement shall terminate three years
following the Effective Date, unless and Change of Control has occurred at such
time, in which case this Agreement shall terminate upon the date that all
obligations of the parties hereto with respect to this Agreement have been
satisfied. This Agreement may be extended unilaterally by the Company by written
resolutions adopted by the Board prior to the termination of this Agreement.
2. At-Will Employment. The Company and the Employee acknowledge that
the Employee's employment is and shall continue to 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 payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's written employee plans or pursuant to
other written agreements with
8
9
the Company.
3. Severance Benefits.
a. Termination Following a Change of Control. If the
Employee's employment is terminated at any time within twelve (12)
months following a Change of Control, then, subject to Section 4, the
Employee shall be entitled to receive the following severance benefits:
(i) Involuntary Termination. If the Employee's
employment is terminated as a result of Involuntary
Termination other than for Cause, then the Employee shall
receive the following severance benefits from the Company.
(1) Severance Payment. A cash payment in an
amount equal to one hundred percent (100%) of the
Employee's Base Salary.
(2) Continued Employment Benefits. One
hundred percent (100%) Company-paid health, dental
and life insurance coverage at the same level of
coverage as was provided to such employee immediately
prior to the Change of Control (the "Company-Paid
Coverage") under the Company's plans. Such coverage
shall be provided under either (at the Company's
discretion) (i) the Company's plans, or (ii) no less
favorable plans or arrangements secured by the
Company. If such coverage included the Employee's
dependents immediately prior to the Change of
Control, such dependents shall also be covered at
Company expense. Company-Paid Coverage shall continue
until earlier or (i) one year from the date of the
Change of Control, or (ii) the date that the Employee
and his dependents become covered under another
employer's group health, dental or life insurance
plans that provide Employee and his dependents with
comparable benefits and levels of coverage. For
purposes of Title X of the Consolidated Budget
Reconciliation Act of 1985 ("COBRA"), the date of the
"qualifying event" or Employee and his dependents
shall be the date upon which the Company-Paid
Coverage terminates.
(3) Stock Option Accelerated Vesting. One
hundred percent (100%) of the unvested portion of any
stock option held by the Employees shall
automatically be accelerated in full so as to become
completely vested; provided, however, that if such
potential vesting acceleration would cause a
contemplated Change of Control transaction that was
intended to be accounted for as a
"pooling-of-interests" transaction to become
ineligible for such accounting treatment under
generally accepted accounting principles, as
determined by the Company's independent public
accountants (the "Accountants") prior to the Change
of Control, Employee's stock options and restricted
stock shall not have their vesting so accelerated.
b. Timing of Severance Payments. Any severance payment to
which Employee is entitled under Section 3(a)(i) shall be paid by the
Company to the Employee (or to the Employee's successors in interest,
pursuant to Section 6(b)) in cash and in full, not later than
9
10
thirty (30) calendar days following the Termination Date.
c. Voluntary Resignation: Termination for Cause. If the
Employee's employment terminates by reason of the Employee's voluntary
resignation (and is not an Involuntary Termination), or if the Employee
is terminated for Cause, 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 employee
plans or pursuant to other written agreements with the Company.
d. 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 employee plans or pursuant to other
written agreements with the Company.
e. Termination Apart from Change of Control. In the event the
Employee's employment is terminated for any reason, either prior to the
occurrence of a Change of Control or after the twelve (12)-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 pursuant
to other agreements with the Company.
4. Limitation on Payments. In the event that the severance and other
benefits provided for in this 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, then the Employee's severance benefits under Section 3(a)(i) shall be
reduced as to such lesser extent as would result in no portion of such severance
benefits being subject to excise tax 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 immediately prior to Change of Control (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 assumption 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 Company shall bear all costs the Accountants
may reasonably incur in connection with any calculations contemplated by this
Section 4.
5. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
a. Base Salary. "Base Salary" means an amount equal to twelve
(12) times Employee's monthly Company salary for the last full month
preceding the Change in Control.
b. Cause. "Cause" shall mean (i) any act of personal
dishonesty taken by the Employee in connection with his
responsibilities as an employee and intended to result in
10
11
substantial personal enrichment of the Employee, (ii) the conviction of
a felony, or (iii) a willful act by the Employee which constitutes
gross misconduct and which is injurious to the Company.
c. Change in Control. "Change in Control" means the occurrence
of any 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 50% or more of the
total voting power represented by the Company's then
outstanding voting securities; or
(ii) A change in the composition of the Board
occurring within a two-year period, 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 the date hereof, or (b) are
elected, or nominated for election, to the Board 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); or
(iii) The stockholders of the Company approve a
merger or consolidation of the Company with any other
corporation, 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 the
Company's assets.
d. Disability. "Disability" shall mean that the Employee has
been unable to perform his Company duties as the result of his
incapacity due to physical or mental illness, and such inability, at
least 26 weeks after its commencement, is determined to be total and
permanent by a physician selected by the Company or its insurers and
acceptable to the Employee or the Employee's legal representative (such
Agreement as to acceptability not to be unreasonably withheld).
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 hereunder
before the termination of his employment becomes effective, the notice
of intent to terminate shall automatically be deemed to have been
revoked.
e. Involuntary Termination. "Involuntary Termination" shall
mean (i) without the Employee's express written consent, the
significant reduction of the Employee's duties, authority or
responsibilities, relative to the Employee's duties, authority or
responsibilities as in
11
12
effect immediately prior to such reduction, or the assignment to
Employee of such reduced duties, authority or responsibilities, (ii)
without the Employee's express written consent, a substantial
reduction, without good business reasons, of the facilities and
perquisites (including office space and location) available to the
Employee immediately prior to such reduction; (iii) a reduction by the
Company in the base salary of the Employee as in effect immediately
prior to such reduction unless part of a management-wide or
company-wide cost-reduction program in which a majority of management
or employees are affected; (iv) a material reduction by the Company in
the kind of level of employee benefits, including bonuses, to which the
Employee was entitled immediately prior to such reduction with the
result that the Employee's overall benefits package is significantly
reduced unless part of a management-wide or company-wide cost-reduction
program in which a majority of management or employees are affected;
(v) the relocation of the Employee to a facility or a location more
than thirty-five (35) miles from the Employee's then present location,
without the Employee's express written consent; (vi) any purported
termination of the Employee by the Company which is not effected for
Disability or for Cause; (vii) the failure of the Company to obtain the
assumption of this agreement by any successors contemplated in Section
6(a) below; or (viii) any act or set of facts or circumstances which
would, under California case law or statute, constitute a constructive
termination of the Employee.
f. Termination Date. "Termination Date" shall mean (i) if this
Agreement is terminated by the Company for Disability, thirty (30) days
after notice of termination is given to the Employee (provided that the
Employee shall not have returned to the performance of the Employee's
duties on a full-time basis during such thirty (30)-day period), (ii)
if the Employee's employment is terminated by the company for any other
reason, the date on which a notice of termination is given, provided
that if within thirty (30) days after the Company gives the Employee
notice of termination or the benefits due pursuant to this Agreement,
then the Termination Date shall be the date on which such dispute is
finally determined, either by mutual written agreement of the parties,
or by a final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected), or (iii) if the Agreement is terminated
by the Employee, the date on which the Employee delivers the notice of
termination to the Company.
6. Successors.
a. Company's Successors. Any successor to the Company (whether
direct or indirect and whether by purchase, 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
Section 6(a) or which becomes bound by the terms of this Agreement by
operation of law.
b. Employee's Successors. The term of this agreement and all
rights of the Employee hereunder shall inure to the benefit of, and be
enforceable by, the Employee's
12
13
personal or legal representatives, executors, administrators,
successors, heirs, distributees, divisees and legatees.
7. Notice.
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
7(a) 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 30 days
after the giving of such notice). The failure by the Employee to
include in the notice any fact or circumstance which contributes to
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 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 Agreement, 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 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 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 in their entirety any prior or
contemporaneous agreements, whether written, oral, express or implied,
relating to the subject matter hereof.
d. Choice of Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the
State of California.
13
14
e. Severability. The invalidity of 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.
f. Withholding. All payments made pursuant to this Agreement
will be subject to withholding of applicable income and employment
taxes.
g. 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.
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 set forth below.
Company: Xxxx Microproducts, Inc.
By: /s/ X. X. Xxxx
W. Xxxxxx Xxxx
President & CEO
Dated: 11/17/97
Employee: /s/ Xxxxx Xxxxx
Dated: 11/25/97
14
15
XXXX MICROPRODUCTS, INC.
MANAGEMENT RETENTION AGREEMENT
This Management Retention Agreement (the "Agreement") is made and
entered into by and between Xxxx Xxxxxx (the "Employee") and Xxxx Microproducts,
Inc. (the "Company"), effective as of the latest date set forth by the
signatures of the parties hereto below (the Effective Date).
RECITALS
A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of control. The
Board of Directors of the Company (the "Board") recognizes that such
consideration can be a distraction to the Employee 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
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Employee
with certain severance benefits upon Employee's termination of employment
following a Change of Control which provides the Employee with enhanced
financial security and provides incentive and encouragement to the Employee to
remain with the Company notwithstanding the possibility of a Change of Control.
D. Certain capitalized terms used in the Agreement are defined in
Section 4 below.
The parties hereto agree as follows:
1. Term of Agreement. This Agreement shall terminate three years
following the Effective Date, unless and Change of Control has occurred at such
time, in which case this Agreement shall terminate upon the date that all
obligations of the parties hereto with respect to this Agreement have been
satisfied. This Agreement may be extended unilaterally by the Company by written
resolutions adopted by the Board prior to the termination of this Agreement.
2. At-Will Employment. The Company and the Employee acknowledge that
the Employee's employment is and shall continue to 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 payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's written employee plans or pursuant to
other written agreements with the Company.
16
3. Severance Benefits.
a. Termination Following a Change of Control. If the
Employee's employment is terminated at any time within twelve (12)
months following a Change of Control, then, subject to Section 4, the
Employee shall be entitled to receive the following severance benefits:
(i) Involuntary Termination. If the Employee's
employment is terminated as a result of Involuntary
Termination other than for Cause, then the Employee shall
receive the following severance benefits from the Company.
(1) Severance Payment. A cash payment in an
amount equal to one hundred percent (100%) of the
Employee's Base Salary.
(2) Continued Employment Benefits. One
hundred percent (100%) Company-paid health, dental
and life insurance coverage at the same level of
coverage as was provided to such employee immediately
prior to the Change of Control (the "Company-Paid
Coverage") under the Company's plans. Such coverage
shall be provided under either (at the Company's
discretion) (i) the Company's plans, or (ii) no less
favorable plans or arrangements secured by the
Company. If such coverage included the Employee's
dependents immediately prior to the Change of
Control, such dependents shall also be covered at
Company expense. Company-Paid Coverage shall continue
until earlier or (i) one year from the date of the
Change of Control, or (ii) the date that the Employee
and his dependents become covered under another
employer's group health, dental or life insurance
plans that provide Employee and his dependents with
comparable benefits and levels of coverage. For
purposes of Title X of the Consolidated Budget
Reconciliation Act of 1985 ("COBRA"), the date of the
"qualifying event" or Employee and his dependents
shall be the date upon which the Company-Paid
Coverage terminates.
(3) Stock Option Accelerated Vesting. One
hundred percent (100%) of the unvested portion of any
stock option held by the Employees shall
automatically be accelerated in full so as to become
completely vested; provided, however, that if such
potential vesting acceleration would cause a
contemplated Change of Control transaction that was
intended to be accounted for as a
"pooling-of-interests" transaction to become
ineligible for such accounting treatment under
generally accepted accounting principles, as
determined by the Company's independent public
accountants (the "Accountants") prior to the Change
of Control, Employee's stock options and restricted
stock shall not have their vesting so accelerated.
b. Timing of Severance Payments. Any severance payment to
which Employee is entitled under Section 3(a)(i) shall be paid by the
Company to the Employee (or to the Employee's successors in interest,
pursuant to Section 6(b)) in cash and in full, not later than thirty
(30) calendar days following the Termination Date.
2
17
c. Voluntary Resignation: Termination for Cause. If the
Employee's employment terminates by reason of the Employee's voluntary
resignation (and is not an Involuntary Termination), or if the Employee
is terminated for Cause, 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 employee
plans or pursuant to other written agreements with the Company.
d. 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 employee plans or pursuant to other
written agreements with the Company.
e. Termination Apart from Change of Control. In the event the
Employee's employment is terminated for any reason, either prior to the
occurrence of a Change of Control or after the twelve (12)-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 pursuant
to other agreements with the Company.
4. Limitation on Payments. In the event that the severance and other
benefits provided for in this 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, then the Employee's severance benefits under Section 3(a)(i) shall be
reduced as to such lesser extent as would result in no portion of such severance
benefits being subject to excise tax 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 immediately prior to Change of Control (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 assumption 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 Company shall bear all costs the Accountants
may reasonably incur in connection with any calculations contemplated by this
Section 4.
5. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
a. Base Salary. "Base Salary" means an amount equal to twelve
(12) times Employee's monthly Company salary for the last full month
preceding the Change in Control.
b. Cause. "Cause" shall mean (i) any act of personal
dishonesty taken by the Employee in connection with his
responsibilities as an employee and intended to result in substantial
personal enrichment of the Employee, (ii) the conviction of a felony,
or (iii) a willful
3
18
act by the Employee which constitutes gross misconduct and which is
injurious to the Company.
c. Change in Control. "Change in Control" means the occurrence
of any 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 50% or more of the
total voting power represented by the Company's then
outstanding voting securities; or
(ii) A change in the composition of the Board
occurring within a two-year period, 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 the date hereof, or (b) are
elected, or nominated for election, to the Board 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); or
(iii) The stockholders of the Company approve a
merger or consolidation of the Company with any other
corporation, 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 the
Company's assets.
d. Disability. "Disability" shall mean that the Employee has
been unable to perform his Company duties as the result of his
incapacity due to physical or mental illness, and such inability, at
least 26 weeks after its commencement, is determined to be total and
permanent by a physician selected by the Company or its insurers and
acceptable to the Employee or the Employee's legal representative (such
Agreement as to acceptability not to be unreasonably withheld).
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 hereunder
before the termination of his employment becomes effective, the notice
of intent to terminate shall automatically be deemed to have been
revoked.
e. Involuntary Termination. "Involuntary Termination" shall
mean (i) without the Employee's express written consent, the
significant reduction of the Employee's duties, authority or
responsibilities, relative to the Employee's duties, authority or
responsibilities as in effect immediately prior to such reduction, or
the assignment to Employee of such reduced
4
19
duties, authority or responsibilities, (ii) without the Employee's
express written consent, a substantial reduction, without good business
reasons, of the facilities and perquisites (including office space and
location) available to the Employee immediately prior to such
reduction; (iii) a reduction by the Company in the base salary of the
Employee as in effect immediately prior to such reduction unless part
of a management-wide or company-wide cost-reduction program in which a
majority of management or employees are affected; (iv) a material
reduction by the Company in the kind of level of employee benefits,
including bonuses, to which the Employee was entitled immediately prior
to such reduction with the result that the Employee's overall benefits
package is significantly reduced unless part of a management-wide or
company-wide cost-reduction program in which a majority of management
or employees are affected; (v) the relocation of the Employee to a
facility or a location more than thirty-five (35) miles from the
Employee's then present location, without the Employee's express
written consent; (vi) any purported termination of the Employee by the
Company which is not effected for Disability or for Cause; (vii) the
failure of the Company to obtain the assumption of this agreement by
any successors contemplated in Section 6(a) below; or (viii) any act or
set of facts or circumstances which would, under California case law or
statute, constitute a constructive termination of the Employee.
f. Termination Date. "Termination Date" shall mean (i) if this
Agreement is terminated by the Company for Disability, thirty (30) days
after notice of termination is given to the Employee (provided that the
Employee shall not have returned to the performance of the Employee's
duties on a full-time basis during such thirty (30)-day period), (ii)
if the Employee's employment is terminated by the company for any other
reason, the date on which a notice of termination is given, provided
that if within thirty (30) days after the Company gives the Employee
notice of termination or the benefits due pursuant to this Agreement,
then the Termination Date shall be the date on which such dispute is
finally determined, either by mutual written agreement of the parties,
or by a final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected), or (iii) if the Agreement is terminated
by the Employee, the date on which the Employee delivers the notice of
termination to the Company.
6. Successors.
a. Company's Successors. Any successor to the Company (whether
direct or indirect and whether by purchase, 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
Section 6(a) or which becomes bound by the terms of this Agreement by
operation of law.
b. Employee's Successors. The term of this 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,
5
20
divisees and legatees.
7. Notice.
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
7(a) 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 30 days
after the giving of such notice). The failure by the Employee to
include in the notice any fact or circumstance which contributes to
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 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 Agreement, 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 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 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 in their entirety any prior or
contemporaneous agreements, whether written, oral, express or implied,
relating to the subject matter hereof.
d. Choice of Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the
State of California.
6
21
e. Severability. The invalidity of 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.
f. Withholding. All payments made pursuant to this Agreement
will be subject to withholding of applicable income and employment
taxes.
g. 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.
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 set forth below.
Company: Xxxx Microproducts, Inc.
By: /s/ X. X. Xxxx
W. Xxxxxx Xxxx
President & CEO
Dated: 8/6/99
Employee: /s/ Xxxx X. Xxxxxx
Dated: 8/2/99
7
22
XXXX MICROPRODUCTS, INC.
MANAGEMENT RETENTION AGREEMENT
This Management Retention Agreement (the "Agreement") is made and
entered into by and between Xxxxxx Xxxxxxxx (the "Employee") and Xxxx
Microproducts, Inc. (the "Company"), effective as of the latest date set forth
by the signatures of the parties hereto below (the Effective Date).
RECITALS
A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of control. The
Board of Directors of the Company (the "Board") recognizes that such
consideration can be a distraction to the Employee 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
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Employee
with certain severance benefits upon Employee's termination of employment
following a Change of Control which provides the Employee with enhanced
financial security and provides incentive and encouragement to the Employee to
remain with the Company notwithstanding the possibility of a Change of Control.
D. Certain capitalized terms used in the Agreement are defined in
Section 4 below.
The parties hereto agree as follows:
1. Term of Agreement. This Agreement shall terminate three years
following the Effective Date, unless and Change of Control has occurred at such
time, in which case this Agreement shall terminate upon the date that all
obligations of the parties hereto with respect to this Agreement have been
satisfied. This Agreement may be extended unilaterally by the Company by written
resolutions adopted by the Board prior to the termination of this Agreement.
2. At-Will Employment. The Company and the Employee acknowledge that
the Employee's employment is and shall continue to 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 payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's written employee plans or pursuant to
other written agreements with the Company.
23
3. Severance Benefits.
a. Termination Following a Change of Control. If the
Employee's employment is terminated at any time within twelve (12)
months following a Change of Control, then, subject to Section 4, the
Employee shall be entitled to receive the following severance benefits:
(i) Involuntary Termination. If the Employee's
employment is terminated as a result of Involuntary
Termination other than for Cause, then the Employee shall
receive the following severance benefits from the Company.
(1) Severance Payment. A cash payment in an
amount equal to one hundred percent (100%) of the
Employee's Base Salary.
(2) Continued Employment Benefits. One
hundred percent (100%) Company-paid health, dental
and life insurance coverage at the same level of
coverage as was provided to such employee immediately
prior to the Change of Control (the "Company-Paid
Coverage") under the Company's plans. Such coverage
shall be provided under either (at the Company's
discretion) (i) the Company's plans, or (ii) no less
favorable plans or arrangements secured by the
Company. If such coverage included the Employee's
dependents immediately prior to the Change of
Control, such dependents shall also be covered at
Company expense. Company-Paid Coverage shall continue
until earlier or (i) one year from the date of the
Change of Control, or (ii) the date that the Employee
and his dependents become covered under another
employer's group health, dental or life insurance
plans that provide Employee and his dependents with
comparable benefits and levels of coverage. For
purposes of Title X of the Consolidated Budget
Reconciliation Act of 1985 ("COBRA"), the date of the
"qualifying event" or Employee and his dependents
shall be the date upon which the Company-Paid
Coverage terminates.
(3) Stock Option Accelerated Vesting. One
hundred percent (100%) of the unvested portion of any
stock option held by the Employees shall
automatically be accelerated in full so as to become
completely vested; provided, however, that if such
potential vesting acceleration would cause a
contemplated Change of Control transaction that was
intended to be accounted for as a
"pooling-of-interests" transaction to become
ineligible for such accounting treatment under
generally accepted accounting principles, as
determined by the Company's independent public
accountants (the "Accountants") prior to the Change
of Control, Employee's stock options and restricted
stock shall not have their vesting so accelerated.
b. Timing of Severance Payments. Any severance payment to
which Employee is entitled under Section 3(a)(i) shall be paid by the
Company to the Employee (or to the Employee's successors in interest,
pursuant to Section 6(b)) in cash and in full, not later than thirty
(30) calendar days following the Termination Date.
2
24
c. Voluntary Resignation: Termination for Cause. If the
Employee's employment terminates by reason of the Employee's voluntary
resignation (and is not an Involuntary Termination), or if the Employee
is terminated for Cause, 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 employee
plans or pursuant to other written agreements with the Company.
d. 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 employee plans or pursuant to other
written agreements with the Company.
e. Termination Apart from Change of Control. In the event the
Employee's employment is terminated for any reason, either prior to the
occurrence of a Change of Control or after the twelve (12)-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 pursuant
to other agreements with the Company.
4. Limitation on Payments. In the event that the severance and other
benefits provided for in this 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, then the Employee's severance benefits under Section 3(a)(i) shall be
reduced as to such lesser extent as would result in no portion of such severance
benefits being subject to excise tax 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 immediately prior to Change of Control (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 assumption 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 Company shall bear all costs the Accountants
may reasonably incur in connection with any calculations contemplated by this
Section 4.
5. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
a. Base Salary. "Base Salary" means an amount equal to twelve
(12) times Employee's monthly Company salary for the last full month
preceding the Change in Control.
b. Cause. "Cause" shall mean (i) any act of personal
dishonesty taken by the Employee in connection with his
responsibilities as an employee and intended to result in substantial
personal enrichment of the Employee, (ii) the conviction of a felony,
or (iii) a willful
3
25
act by the Employee which constitutes gross misconduct and which is
injurious to the Company.
c. Change in Control. "Change in Control" means the occurrence
of any 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 50% or more of the
total voting power represented by the Company's then
outstanding voting securities; or
(ii) A change in the composition of the Board
occurring within a two-year period, 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 the date hereof, or (b) are
elected, or nominated for election, to the Board 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); or
(iii) The stockholders of the Company approve a
merger or consolidation of the Company with any other
corporation, 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 the
Company's assets.
d. Disability. "Disability" shall mean that the Employee has
been unable to perform his Company duties as the result of his
incapacity due to physical or mental illness, and such inability, at
least 26 weeks after its commencement, is determined to be total and
permanent by a physician selected by the Company or its insurers and
acceptable to the Employee or the Employee's legal representative (such
Agreement as to acceptability not to be unreasonably withheld).
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 hereunder
before the termination of his employment becomes effective, the notice
of intent to terminate shall automatically be deemed to have been
revoked.
e. Involuntary Termination. "Involuntary Termination" shall
mean (i) without the Employee's express written consent, the
significant reduction of the Employee's duties, authority or
responsibilities, relative to the Employee's duties, authority or
responsibilities as in effect immediately prior to such reduction, or
the assignment to Employee of such reduced
4
26
duties, authority or responsibilities, (ii) without the Employee's
express written consent, a substantial reduction, without good business
reasons, of the facilities and perquisites (including office space and
location) available to the Employee immediately prior to such
reduction; (iii) a reduction by the Company in the base salary of the
Employee as in effect immediately prior to such reduction unless part
of a management-wide or company-wide cost-reduction program in which a
majority of management or employees are affected; (iv) a material
reduction by the Company in the kind of level of employee benefits,
including bonuses, to which the Employee was entitled immediately prior
to such reduction with the result that the Employee's overall benefits
package is significantly reduced unless part of a management-wide or
company-wide cost-reduction program in which a majority of management
or employees are affected; (v) the relocation of the Employee to a
facility or a location more than thirty-five (35) miles from the
Employee's then present location, without the Employee's express
written consent; (vi) any purported termination of the Employee by the
Company which is not effected for Disability or for Cause; (vii) the
failure of the Company to obtain the assumption of this agreement by
any successors contemplated in Section 6(a) below; or (viii) any act or
set of facts or circumstances which would, under California case law or
statute, constitute a constructive termination of the Employee.
f. Termination Date. "Termination Date" shall mean (i) if this
Agreement is terminated by the Company for Disability, thirty (30) days
after notice of termination is given to the Employee (provided that the
Employee shall not have returned to the performance of the Employee's
duties on a full-time basis during such thirty (30)-day period), (ii)
if the Employee's employment is terminated by the company for any other
reason, the date on which a notice of termination is given, provided
that if within thirty (30) days after the Company gives the Employee
notice of termination or the benefits due pursuant to this Agreement,
then the Termination Date shall be the date on which such dispute is
finally determined, either by mutual written agreement of the parties,
or by a final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected), or (iii) if the Agreement is terminated
by the Employee, the date on which the Employee delivers the notice of
termination to the Company.
6. Successors.
a. Company's Successors. Any successor to the Company (whether
direct or indirect and whether by purchase, 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
Section 6(a) or which becomes bound by the terms of this Agreement by
operation of law.
b. Employee's Successors. The term of this 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,
5
27
divisees and legatees.
7. Notice.
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
7(a) 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 30 days
after the giving of such notice). The failure by the Employee to
include in the notice any fact or circumstance which contributes to
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 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 Agreement, 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 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 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 in their entirety any prior or
contemporaneous agreements, whether written, oral, express or implied,
relating to the subject matter hereof.
d. Choice of Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the
State of California.
6
28
e. Severability. The invalidity of 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.
f. Withholding. All payments made pursuant to this Agreement
will be subject to withholding of applicable income and employment
taxes.
g. 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.
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 set forth below.
Company: Xxxx Microproducts, Inc.
By: /s/ X. X. Xxxx
W. Xxxxxx Xxxx
President & CEO
Dated: 8/6/99
Employee: /s/ Xxxxxx Xxxxxxxx
Dated: 7/20/99
7
