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Exhibit 10.8
EXECUTIVE SEVERANCE AGREEMENT
AGREEMENT, dated as of October 16, 1995, by and between Cognitronics
Corporation, a New York corporation having offices at 0 Xxxxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxxxxx 00000 (the "Company"), and
whose residence address
is
(the "Executive").
The Company's Board of Directors (the "Board") considers the continued
services of key executives of the Company to be in the best interests of the
Company and its shareholders.
The Board desires to assure, and has determined that it is appropriate and in
the best interests of the Company and its shareholders to reinforce and
encourage, the continued attention and dedication of key executives of the
Company to their duties of employment without personal distraction or conflict
of interest in circumstances arising from the possibility or occurrence of a
change in control of the Company.
The Board has approved that the Company enter into severance agreements with
key executives of the Company.
In consideration of the premises and the covenants and agreements contained
herein, and other good and valuable consideration, the Company and the
Executive agree as follows:
1. Services During Certain Events. In the event a proposal is made to effect
a Change in Control (as defined in Section 2 hereof), the Executive agrees
that he will not voluntarily leave the employ of the Company, and will render
the services contemplated in the recitals to this Agreement, until such
proposal for a Change in Control is terminated or abandoned or until a Change
in Control has occurred.
2. Termination. Except as provided in Section 4 hereof, the Company will pay
or cause to be paid to the Executive the Benefits described in Section 3
hereof in the event that the Executive's employment by the Company is
terminated within two years following a Change in Control: (a) by the Company
for reasons other than death, "disability" or "cause" (as such terms are
defined in Section 4 hereof); or (b) by the Executive following the occurrence
of any of the following events without the Executive's consent:
(i) the assignment of the Executive to any duties or responsibilities that
are inconsistent with his position, duties, responsibilities or status
immediately preceding such Change in Control, or a change in his reporting
responsibilities or titles in effect at such time resulting in a reduction of
his responsibilities at the Company;
(ii) a reduction of the Executive's annual salary, or a reduction in any year
of the ratio of the incentive compensation or fringe benefits received by the
Executive pursuant to any bonus, incentive or fringe benefit plan (the
"Benefit Plans") to his annual salary in such year, which reduction is greater
than the average reduction in the ratio of such incentive compensation or
fringe benefits to annual salary received by all participants under the
Benefit Plans;
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(iii) a material increase in the amount of travel normally required of the
Executive in connection with his employment by the Company, or relocation of
the Executive's place of employment to a place greater than fifty miles from
its current location; or
(iv) any failure by the Company to comply with and satisfy Section 10 of this
Agreement.
For purposes of this Agreement, a "Change in Control" will be deemed to have
occurred if:
(a) the shareholders of the Company approve (i) any consolidation or merger of
the Company or any of its subsidiaries where the shareholders of the Company,
immediately prior to the consolidation or merger, would not, immediately after
the consolidation or merger, beneficially own, directly or indirectly, shares
representing in the aggregate more than 50% of all votes to which all
shareholders of the corporation issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any) would
be entitled under ordinary circumstance to vote in an election of directors or
where the members of the Board, immediately prior to the consolidation or
merger, would not, immediately after the consolidation or merger, constitute a
majority of the Board of Directors of the corporation issuing cash or
securities in the consolidation or merger (or of its ultimate parent
corporation, if any), (ii) any sale, lease, exchange or other transfer (in one
transaction or a series of transactions contemplated or arranged by any person
as a single plan) of all or substantially all of the assets of the Company or
(iii) any plan or proposal for the liquidation or dissolution of the Company;
(b) persons who, as of the effective date hereof, constitute the entire Board
(as of the date hereof the "Incumbent Directors) cease for any reason to
constitute at least a majority of the Board, provided, however, that any
person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, is approved by a vote
of at least a majority of the then Incumbent Directors (other than an election
or nomination of a person whose assumption of office is the result of an
actual or threatened election contest relating to the election of directors of
the Company, as such terms are used in Rule 14a-11 under the Securities
Exchange Act of 1934, (the "Exchange Act)), shall be considered an Incumbent
Directors; or
(c) any "person", as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than the Company, any of its subsidiaries, any employee
benefit plan of the Company or any of its subsidiaries or any entity
organized, appointed or established by the Company for or pursuant to the
terms of such plan), together with all "affiliates" and "associates" (as such
terms are defined in Rule 12b-2 under the Exchange Act) of such person,
becomes the "beneficial owner" or "beneficial owners" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of securities
of the Company representing in the aggregate 20% or more of either (i) the
then outstanding shares of Stock or (ii) the combined voting power of all then
outstanding common stock of the Company ("Stock") having the right under
ordinary circumstances to vote in an election of directors to the Board
("Voting Securities")(in either such case other than as a result of
acquisitions of such securities directly from the Company).
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Notwithstanding the foregoing, a "Change in Control" will not have occurred
for purposes of clause (c) solely as the result of an acquisition of
securities by the Company which, by reducing the number of shares of Stock or
other Voting Securities outstanding, increases (i) the proportionate number of
shares of Stock beneficially owned by any person to 20% or more of the shares
of Stock then outstanding or (ii) the proportionate voting power represented
by the Voting Securities beneficially owned by any person to 20% or more of
the combined voting power of all then outstanding Voting Securities; provided,
however, that if any person referred to in clause (i) or (ii) of this sentence
thereafter becomes the beneficial owner of any additional shares of Stock or
other Voting Securities (other than pursuant to a stock split, stock dividend
or similar transaction), then a "Change in Control" will have occurred for
purposes of clause (c).
For purposes of this Agreement, a "Subsidiary" means any corporation whose
board of directors may be determined by the Company or another Subsidiary.
3. Benefits Payable Upon Termination. In the event of the termination of the
Executive's employment under any of the circumstances set forth in Section 2
hereof ("Termination"), the Company agrees to provide the following to the
Executive (collectively referred to as the "Benefits"):
(a) Severance Payment. The Company will pay the Executive no later than the
fifth business day following his Termination a cash lump sum severance payment
equal to 200% of the sum of (A) the greater of (i) the Executive's annual
salary as in effect immediately prior to the Termination or (ii) the
Executive's annual salary as in effect immediately prior to the Change in
Control (the "Base Salary") plus (B) the greater of (i) the Executive's annual
bonus for the prior annual period, including performance bonus, amounts vested
under the Company's Restricted Stock Plan and amounts under any other bonus
program of the Company ("Bonus Amounts") or (ii) the average Bonus Amounts for
the prior two years, whichever is greater.
(b) Welfare Benefits. During the period from Termination until the second
anniversary thereof (the "Benefits Period"), the Company will maintain in full
force and effect for the continued benefit of the Executive each employee
medical, life and disability insurance benefit plan (collectively, the
"Welfare Benefit Plans") maintained by the Company in which officers of the
Company are generally entitled to participate, unless an essentially
equivalent and no less favorable benefit is provided by a subsequent
employer. If the terms of any Welfare Benefit Plan do not permit continued
participation by the Executive, then the Company will arrange to provide to
the Executive a benefit substantially similar to, and no less favorable than,
the benefit he was entitled to receive under such plan at the end of the
period of coverage.
(c) 280G. Notwithstanding the foregoing, in the event that Section 280G
of the Internal Revenue Code (the "Code") is applicable to payments under this
Agreement and the Company's independent auditors determine that any payment by
the Company to or for the benefit of the Executive (whether payable pursuant
to the terms of this Agreement or otherwise) would not be deductible by the
Company for Federal income tax purposes solely by reason of Section 280G of
the Code, then the amounts payable to the Executive under this Agreement will
be reduced to such lesser amount as will permit all, or the maximum possible
amount, of the payments to be made by the Company to be deductible in
accordance with Section 280G of the Code. The Executive may determine which
of the amounts payable under this Agreement will be eliminated or reduced
consistent with the requirements set forth above; except that if the Executive
does not make such determination within 10 business days of receipt of the
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calculations made by the independent auditors referred to above, the Company
may elect which of the amounts payable under this Agreement will be eliminated
or reduced consistent with the requirements set forth above and will notify
the Executive promptly of such election.
4. Conditions to the Obligations of the Company. The Company will have no
obligation to pay or cause to be paid to the Executive the Benefits described
in Section 3 hereof if any of the following events occur:
(a) The Company terminates the Executive's employment for "cause". For
purposes of this Agreement, termination of employment for "cause" means (i)
willfully engaging in illegal conduct or gross misconduct which is materially
and demonstrably injurious to the Company, (ii) engaging in fraud,
misappropriation, embezzlement or any act or acts of dishonesty resulting or
intended to result directly or indirectly in a substantial gain or personal
enrichment to the Executive at the expense of the Company or any of its
Subsidiaries, (iii) willfully and continually failing substantially to perform
his or her duties with the Company (other than a failure resulting from the
Executive incapacity due to physical or mental illness), which failure has
continued for a period of a least 30 days after a written notice of demand for
a substantial performance has been delivered to the Executive specifying in
reasonable detail the manner in which the Executive has failed to substantially
perform, or (iv) the intentional and material violation of the provisions of
paragraph 5 and 6 (relating to confidential information) and paragraph 7
(relating to disparagement).
(b) The Executive has not, promptly after Termination and upon receiving a
written request to do so, resigned as a director and/or officer of each
Subsidiary and affiliate of the Company of which he is then serving as a
director and/or officer.
(c) The Company terminates the Executive's employment for "disability". For
purposes of this Agreement, "disability" means the physical or mental
incapacity or disability of the Executive which renders him unable to perform
his duties for the Company for a period of six months or longer, as confirmed
in writing by an independent physician selected by the Executive or his legal
representative.
5. Confidentiality. Executive shall not disclose to any person any
Confidential Information relating to the Company or any of its subsidiaries or
affiliates, except as expressly requested by the Company or as required by law
or by an order of a court or governmental agency with jurisdiction. Executive
shall give written notice to the Company of any such requirement, or
threatened requirement, by a court or government agency in order to allow the
Company the opportunity to resist such requirement. For purposes of this
Agreement, "Confidential Information" shall mean non-public information
concerning financial data, business plans, operating policies and manuals,
product development, patentable inventions or improvements, arrangements with
employees, customer lists, marketing or sales plans and any other proprietary
information of the Company or any of its Subsidiaries or affiliates, except
for specific items which have become publicly available information other than
through a breach by Executive of this fiduciary duty or of any confidentiality
agreement.
6. Discoveries. Executive will immediately call to the attention of the
Company any invention or improvement which Executive has discovered or may
discover solely or jointly with others relating to any device or process which
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is applicable or related to the Company's business, or which may be of use in
connection therewith, regardless of whether such invention or improvement was
conceived, made or developed on the Company's time and at the expense of the
Company, or on Executive's time and at the expense of Executive, provided that
such invention or improvement was conceived or discovered during the term of
his employment with the Company, or within six months following the
termination of such employment. Executive will, on demand, assign, transfer
and set over unto the Company, its successors or assigns, the entire right,
title and interest in and to any such invention or improvement that he has
made or conceived since his initial employment with the Company, or that he
may make or conceive, either solely or jointly with others during his
employment with the Company, or within six months following the termination of
such employment. The Company, at its own expense, may thereupon apply for all
letters patent which the Company deems necessary or advisable, which letters
patent shall be the exclusive property of the Company. Executive shall
execute all documents necessary or desirable to obtain any such letters patent
and assignment thereof to the Company
7. Disparagement.
(a) For a period of three (3) years following the termination of Executive's
employment with the Company, Executive will not disparage, denigrate or
ridicule the Company, nor shall Executive disparage, denigrate or ridicule any
of the Company's subsidiaries or directors, or any individual or entity with
whom the Company or any of its subsidiaries or affiliates has a business
relationship, whether by way of news interviews or the expression of personal
views, opinions or judgments to the news media, or otherwise. Nothing herein
will prevent Executive from promoting his subsequent employer or its products
after his voluntary resignation hereunder.
(b) The Company will not, for a period of three (3) years following the
termination of Executive's employment with the Company, disparage, denigrate
or ridicule Executive
8. Arbitration and Expenses.
(a) Any dispute or controversy arising under or in connection with this
Agreement will be settled by arbitration, conducted before a panel of three
arbitrators in Danbury, Connecticut, in accordance with the rules of the
American Arbitration Association then in effect. The arbitrators are to be
approved by both the Company and the Executive and their decision will be
binding on the parties and conclusive for all purposes. Judgment may be
entered on the arbitrators' award in any court having jurisdiction. All
expenses of such arbitration will be borne by the Company.
(b) The Company will pay or reimburse the Executive for all costs and
expenses (including, without limitation, attorneys' fees) incurred by the
Executive as a result of any claim action or proceeding (including, without
limitation, a claim, action or proceeding by the Executive against the
Company) arising out of, or challenging the validity, advisability or
enforceability of, this Agreement or any provision hereof, except to the
extent the arbitrators determine that the Executive's claim, action or
proceeding is frivolous or without merit.
9. Successors. The Company will promptly require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same
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manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement, "the
Company" includes any successor to all or substantially all of the Company's
business or assets which executes and delivers (or is required to execute and
deliver) an agreement provided for in this Section 9 or which otherwise
becomes bound by all the terms and provision of this Agreement by operation of
law.
10. Notice of Termination. Any termination of the Executive's employment by
the Company will be communicated to the Executive at the address set forth
above (or such other address as the Executive may have notified the Company in
writing for purposes of this Agreement) in a written notice and, except for
termination for "cause", will specify a termination date no sooner than 15
days after the giving of such notice.
11. Term of Agreement. This Agreement will terminate on October 16, 2000,
unless a Change in Control has occurred on or prior to such date, in which
case this Agreement will continue in effect for 24 months following the Change
in Control.
12. Miscellaneous.
(a) No Duty to Mitigate. The Executive's entitlement to Benefits hereunder
will not be governed by any duty to mitigate the amount of any payment by
seeking other employment or taking any other action nor will the amount of
Benefits be reduced by any compensation which he may receive from other
employment or otherwise after Termination, except as provided in paragraph
3(b).
(b) Assignment. No right, benefit or interest hereunder will be subject to
assignment, anticipation, alienation, sale, encumbrance, charge, pledge,
hypothecation or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process.
(c) Construction of Agreement. Nothing in this Agreement may be construed to
amend any provision of any plan or policy of the Company. Subject to Section
10 hereof, this Agreement is not, and nothing herein will be deemed to create,
a commitment of continued employment of the Executive by the Company.
(d) Amendment. This Agreement may not be amended, modified or canceled
except by written agreement of the parties.
(e) Waiver. No provision of this Agreement may be waived except by a writing
signed by the party to be bound thereby.
(f) Severability. In the event that any provision or portion of this
Agreement is determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement will remain in full force and effect to
the fullest extent permitted by law.
(g) Taxes. Any payment or delivery required under this Agreement will be
subject to all requirements of the law with regard to withholding of taxes,
filing, making of reports and the like, and the Company will use its best
efforts to satisfy promptly all such requirements.
(h) Governing Law. This Agreement will be governed and construed in
accordance with the laws of the State of New York.
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(i) Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties hereto with respect to the matters covered
hereby.
Executive:
COGNITRONICS CORPORATION
By: Its:
