EXHIBIT 10.28
AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into as of
April 1, 1997 (the "Effective Date"), by and between Network General
Corporation, a Delaware corporation (the "Company") and Xxxxx X. Xxxxxx
("Employee").
RECITALS
The Company recognizes that the possibility of a change of control or other
event may occur which may change the nature and structure of the Company and
that uncertainty regarding the consequences of such events may adversely affect
the Company's ability to retain its key employees. The Company also recognizes
that the Employee possesses an intimate and essential knowledge of the Company
upon which the Company may need to draw for objective advice and continued
services in connection with any acquisition of the Company or other change of
control that is potentially advantageous to the Company's stockholders. The
Company believes that the existence of this Agreement will serve as an incentive
to Employee to remain in the employ of the Company and will enhance its ability
to call on and rely upon the Employee in connection with a change of control.
The Company and the Employee desire to enter into this Agreement in order to
provide additional compensation and benefits to the Employee in recognition of
past services and to encourage Employee to continue to devote his full attention
and dedication to the Company and to continue his employment with the Company.
1. DEFINITIONS. As used in this Agreement, unless the context requires a
different meaning, the following terms shall have the meanings set forth herein:
(a) "CAUSE" means:
(i) theft, a material act of dishonesty, fraud, the falsification of
any employment or Company records or the commission of any criminal act
which impairs Employee's ability to perform his/her duties under this
Agreement;
(ii) improper disclosure of the Company's confidential, business or
proprietary information by the Employee;
(iii) any action by Employee which the Company's Board of Directors
(the "Board") reasonably believes has had or will have a material
detrimental effect on the Company's reputation or business; or
(iv) persistent failure of the Employee to perform the lawful duties
and responsibilities assigned by the Company which is not cured within a
reasonable time following the Employee's receipt of written notice of
such failure from the Company.
(b) "CHANGE OF CONTROL EVENT" means an Ownership Change in which the
shareholders of the Company before such Ownership Change do not retain, directly
or indirectly, at a least a majority of the beneficial interest in the voting
stock of the Company after such transaction or in which the Company is not the
surviving corporation. For purposes of this Agreement, an "Ownership Change"
shall be deemed to have occurred in the event any of the following occurs with
respect to the Company:
(i) the direct or indirect sale or exchange by the shareholders of the
Company of all or substantially all of the stock of the Company;
(ii) a merger or consolidation in which the Company is a party and in
which the shareholders of the Company before such Ownership Change do not
retain, directly or indirectly, at a least a majority
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of the beneficial interest in the voting stock of the Company after such
transaction or in which the Company is not the surviving corporation;
(iii) the sale, exchange, or transfer of all or substantially all of the
assets of the Company; or
(iv) a liquidation or dissolution of the Company.
(c) "CONSTRUCTIVE TERMINATION" means one or more of the following that
occurs within two (2) years after the occurrence of any Change of Control Event:
(i) without the Employee's express written consent, the assignment to
the Employee of any duties, or any limitation of the Employee's
responsibilities, substantially inconsistent with the Employee's positions,
duties, responsibilities and status with the Company immediately prior to
the date of the Change of Control Event;
(ii) without the Employee's express written consent, the removal of the
Employee from the Employee's position with the Company as held by the
Employee immediately prior to the Change of Control Event, except in
connection with the termination of the employment of the Employee by the
Company for Cause or as a result of the death or Permanent Disability of the
Employee;
(iii) without the Employee's express written consent, the relocation of
the principal place of the Employee's employment to a location that is more
than twenty-five (25) miles from the Employee's principal place of
employment immediately prior to the date of the Change of Control Event, or
the imposition of travel requirements on the Employee substantially
inconsistent with such travel requirements existing immediately prior to the
date of the Change of Control Event;
(iv) any failure by the Company to pay, or any reduction by the Company
of (a) the Employee's base salary in effect immediately prior to the date of
the Change of Control Event (unless reductions comparable in amount and
duration are concurrently made for all other employees of the Company with
responsibilities, organizational level and title comparable to the
Employee), or (b) the Employee's bonus compensation in effect immediately
prior to the date of the Change of Control Event (subject to applicable
performance requirements with respect to the actual amount of bonus
compensation earned by the Employee and all other participants in the bonus
program);
(v) any failure by the Company to (a) continue to provide the Employee
with the opportunity to participate, on terms no less favorable than those
in effect for the benefit of any executive, management or administrative
group which customarily includes a person holding the employment position or
a comparable position with the Company then held by the Employee, any
benefit or compensation plans and programs, including, but not limited to,
the Company's life, disability, health, dental, medical, savings, profit
sharing, stock purchase and retirement plans in which the Employee was
participating immediately prior to the date of the Change of Control Event,
or their equivalent, or (b) provide the Employee with all other fringe
benefits (or their equivalent) from time to time in effect for the benefit
of any executive, management or administrative group which customarily
includes a person holding the employment position or a comparable position
with the Company then held by the Employee;
(vi) any failure or refusal of a successor company to assume the
Company's obligations under this Agreement as required by Section 12; or
(d) "EFFECTIVE DATE" means the day and year first set forth above.
(e) "PERMANENT DISABILITY" means that:
(i) the Employee has been incapacitated by bodily injury or disease so
as to be prevented thereby from engaging in the performance of the
Employee's duties;
(ii) such total incapacity shall have continued for a period of six
consecutive months; and
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(iii) such incapacity will, in the opinion of a qualified physician, be
permanent and continuous during the remainder of the Employee's life.
(f) "TERMINATION UPON CHANGE OF CONTROL" means any one of the following:
(i) any termination of the employment of the Employee by the Company
without Cause within two (2) years after the occurrence of any Change of
Control Event;
(ii) any termination of the employment of the Employee by the Company
without Cause during the period commencing thirty (30) days prior to the
date of the Company's first public announcement that the Company has entered
into a definitive agreement to effect an Ownership Change (even though still
subject to approval by the Company's stockholders and other conditions and
contingencies) and ending on the date of the Change of Control Event; or
(iii) any resignation by the Employee immediately following any
Constructive Termination that occurs within two (2) years after the
occurrence of any Change of Control Event.
"Termination Upon Change of Control" shall not include any termination of
the employment of the Employee (a) by the Company for Cause; (b) by the Company
as a result of the Permanent Disability of the Employee; (c) as a result of the
death of the Employee; or (d) as a result of the voluntary termination of
employment by the Employee that is not deemed to be a Constructive Termination
pursuant to Subsection 1(c) above.
2. POSITION AND DUTIES. Employee shall continue to be an at-will employee
of the Company employed in his/her current position at his/her then current
salary. Employee shall also be entitled to continue to participate in and to
receive benefits on the same basis as other executive or senior staff members
under any of the Company's employee benefit plans as in effect from time to
time. In addition, Employee shall be entitled to the benefits afforded to other
employees similarly situated under the Company's vacation, holiday and business
expense reimbursement policies. Employee agrees to devote his/ her full business
time, energy and skill to his/her duties at the Company. These duties shall
include, but not be limited to, any duties consistent with his/her position
which may be assigned to Employee from time to time.
3. BENEFITS UPON VOLUNTARY TERMINATION, PERMANENT DISABILITY OR DEATH. In
the event that Employee voluntarily terminates his/her employment relationship
with the Company at any time and such termination is not deemed to be a
Constructive Termination as described in Subsection 1(c) above, or in the event
that Employee's employment terminates as a result of his/her death or Permanent
Disability, Employee shall be entitled to no compensation or benefits from the
Company other than those earned under Section 2 above through the date of
his/her termination of employment.
4. TERMINATION UPON CHANGE OF CONTROL.
(a) In the event of the Employee's Termination Upon Change of Control,
Employee shall be entitled to the following separation benefits:
(i) those benefits earned under Section 2 (other than any unpaid
incentive bonus) through the date of Employee's termination;
(ii) Employee's employment as an officer of the Company shall terminate
immediately; however, the Company shall continue Employee's employment as a
non-officer employee of the Company for one (1) year (the "Severance
Period"). During such period, Employee shall be entitled to Employee's then
current salary plus an amount equal to the entire target bonus and/or target
commission pursuant to target bonus or commission plans in effect for the
Employee at the time of the Change of Control Event, less applicable
withholding, payable in accordance with the Company's normal payroll
practices;
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(iii) within ten (10) days of submission of proper expense reports by the
Employee, the Company shall reimburse the Employee for all expenses
reasonably and necessarily incurred by the Employee in connection with the
business of the Company prior to his/her termination of employment;
(iv) continued provision of the Company's standard employee medical
insurance coverages through the end of the Severance Period; thereafter,
Employee shall be entitled to elect continued medical insurance coverage in
accordance with the applicable provisions of federal law (COBRA).
Notwithstanding the above, in the event Employee becomes covered under
another employer's group health plan during the period provided for herein,
the Company shall cease provision of continued group health insurance for
Employee; and
(v) notwithstanding any provisions to the contrary contained in any
stock option agreement between the Company and the Employee, upon a
Termination Upon Change of Control all stock options granted by the Company
to the Employee prior to the Change of Control Event shall become fully
vested and immediately exercisable in full to the extent such stock options
remain outstanding and unexercised at the time of such Termination Upon
Change of Control. This Subsection 4(a)(v) shall apply to all such stock
option agreements, whether heretofore or hereafter entered into, between the
Company and the Employee.
(b) In the event that Employee accepts employment with, or provides any
services to (whether as a partner, consultant, joint venturer or otherwise), any
person or entity which offers products or services that are competitive with any
products or services offered by the Company or with any products or services
that Employee is aware the Company intends to offer, Employee shall be deemed to
have resigned from his employment with the Company effective immediately upon
such acceptance of employment or provision of services. Upon such resignation,
Employee shall not be entitled to any further payments or benefits as provided
under this Section 4.
(c) In the event that Employee accepts employment with, or provides any
services to (whether as a partner, consultant, joint venturer or otherwise), any
person or entity while Employee continues to receive any separation benefits
pursuant to this Section 4, Employee shall immediately notify the Company of
such acceptance and provide to the Company information with respect to such
person or entity as the Company may reasonably request in order to determine if
that person's or entity's products or services are competitive with the
Company's.
5. LIMITATION OF PAYMENTS AND BENEFITS.
(a) 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 (the "Code")
and, but for this Section 5, would be subject to the excise tax imposed by
Section 4999 of the Code, the aggregate amount of such payments and benefits
shall be reduced such that none of the payments and benefits are subject to
excise tax pursuant to Section 4999 of the Code.
(b) Within sixty (60) days after the later of termination of employment or
the related Change of Control Event, 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 5(a). 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.
(c) Within thirty (30) days after the Employee's receipt of the Company's
notice pursuant to Subsection 5(b), the Employee shall notify the 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
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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 5(b)
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 5(b), the amount of
reduction and/or the payments and benefits to be reduced 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 5(b), 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.
(d) If, as a result of the reductions required by Subsection 5(a), 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.
6. EXCLUSIVE REMEDY. Under any claim for breach of this Agreement or
wrongful termination, the payments and benefits provided for in Section 4 shall
constitute the Employee's sole and exclusive remedy for any alleged injury or
other damages arising out of the cessation of the employment relationship
between the Employee and the Company in the event of Employee's termination.
Except as expressly set forth herein, the Employee shall be entitled to no other
compensation, benefits, or other payments from the Company as a result of any
termination of employment with respect to which the payments and/or benefits
described in Section 4 have been provided to the Employee.
7. PROPRIETARY AND CONFIDENTIAL INFORMATION. The Employee agrees to
continue to abide by the terms and conditions of the Company's confidentiality
and/or proprietary rights agreement between the Employee and the Company, a copy
of which is attached hereto as EXHIBIT A.
8. CONFLICT OF INTEREST. Employee agrees that for a period of one (1) year
after termination of his/her employment with the Company, he/she will not,
directly or indirectly, solicit the services of or in any other manner persuade
employees or customers of the Company to discontinue that person's or entity's
relationship with or to the Company as an employee or customer, as the case may
be.
9. ARBITRATION. Any claim, dispute or controversy arising out of this
Agreement, the interpretation, validity or enforceability of this Agreement or
the alleged breach thereof shall be submitted by the parties to binding
arbitration by the American Arbitration Association in San Mateo County or Santa
Xxxxx County, California; provided, however, that this arbitration provision
shall not preclude the Company from seeking injunctive relief from any court
having jurisdiction with respect to any disputes or claims relating to or
arising out of the misuse or misappropriation of the Company's trade secrets or
confidential and proprietary information. All costs and expenses of arbitration
or litigation, including but not limited to attorneys fees and other costs
reasonably incurred by the Employee, shall be paid by the Company. Judgment may
be entered on the award of the arbitration in any court having jurisdiction.
10. INTERPRETATION. Employee and the Company agree that this Agreement
shall be interpreted in accordance with and governed by the laws of the State of
California.
11. CONFLICT IN BENEFITS. This Agreement shall supersede all prior
arrangements, whether written or oral, and understandings regarding the subject
matter of this Agreement; provided, however, that this Agreement is not intended
to and shall not affect, limit or terminate (i) any plans, programs, or
arrangements of the Company that are either in writing or regularly made
available to a significant number
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of employees of the Company, (ii) any agreement or arrangement with the Employee
that has been reduced to writing and which does not relate to the subject matter
hereof, or (iii) any agreements or arrangements hereafter entered into by the
parties in writing, except as otherwise expressly provided herein.
12. SUCCESSORS AND ASSIGNS.
(a) SUCCESSORS OF THE COMPANY. The Company will require any successor
or assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession or assignment
had taken place. Failure of the Company to obtain such agreement prior to
the effectiveness of any such succession transaction shall be a breach of
this Agreement and shall entitle the Employee to terminate his or her
employment with the Company within three months thereafter and to receive
the benefits provided under Section 4(c) of this Agreement in the event of
Termination Upon Change of Control. As used in this Agreement, "Company"
shall mean the Company as defined above and any successor or assign to its
business and/ or assets as aforesaid which executes and delivers the
agreement provided for in this Section 12 or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of law.
(b) HEIRS OF EMPLOYEE. This Agreement shall inure to the benefit of
and be enforceable by the Employee's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devises and
legatees. If the Employee should die after the conditions to payment of
benefits set forth herein have been met and any amounts are still payable to
him or her hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the
Employee's beneficiary, successor, devisee, legatee or other designee or, if
there be no such designee, to the Employee's estate. Until a contrary
designation is made to the Company, the Employee hereby designates as his or
her beneficiary under this Agreement the person whose name appears below his
or her signature on this Agreement.
13. NOTICES. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
if to the Network General Corporation
Company: 0000 Xxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attn: Legal Department
and if to the Employee at the address specified at the end of this Agreement.
Notice may also be given at such other address as either party may have
furnished to the other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
14. NO REPRESENTATIONS. Employee acknowledges that he/she is not relying
and has not relied on any promise, representation or statement made by or on
behalf of the Company which is not set forth in this Agreement.
15. VALIDITY. If any one or more of the provisions (or any part thereof)
of this Agreement shall be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
(or any part thereof) shall not in any way be affected or impaired thereby.
16. MODIFICATION. This Agreement may only be modified or amended by a
supplemental written agreement signed by Employee and the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year written below.
NETWORK GENERAL CORPORATION EMPLOYEE
By: /s/ XXXXXX X. XXXXXX By: /s/ XXXXX X. XXXXXX
---------------------------------------- ----------------------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
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