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EXHIBIT 10.32
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (the "Agreement") is made and entered
into effective as of April 24, 1997, by and between Employee (the "Employee")
and ReSound Corporation, Inc., a California corporation (the "Company").
RECITALS
A. Another company or other entity may from time to time consider
the possibility of acquiring the Company or a change in control may otherwise
occur, with or without the approval of the Company's Board of Directors (the
"Board"). The Board recognizes that such consideration can be a distraction to
the Employee, a corporate officer of the Company, 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 shareholders to assure that the
Company will have the continued dedication and objectivity of the Employee,
notwithstanding the possibility, threat or occurrence of a Hostile Takeover (as
defined below) of the Company.
B. The Board believes that it is in the best interests of the
Company and its shareholders to provide the Employee with an incentive to
continue his or her employment with the Company.
C. The Board believes that it is imperative to provide the Employee
with certain benefits upon a Hostile Takeover and, under certain circumstances,
upon termination of the Employee's employment in connection with a Hostile
Takeover, which benefits are intended to provide the Employee with financial
security and provide sufficient income and encouragement to the Employee to
remain with the Company notwithstanding the possibility of a Hostile Takeover.
D. To accomplish the foregoing objectives, the Board of Directors
has directed the Company, upon execution of this Agreement by the Employee, to
agree to the terms provided in this Agreement.
E. Certain capitalized terms used in the Agreement are defined in
Section 4 below.
In consideration of the mutual covenants contained in this Agreement,
and in consideration of the continuing employment of Employee by the Company,
the parties agree as follows:
1. At-Will Employment. The Company and the Employee
acknowledge that the Employee's employment is and shall continue to be at-will,
as defined under applicable law, except as otherwise provided in a separate
written employment agreement between the Company and the Employee. If the
Employee's status as a corporate officer of the Company terminates for any
reason, including any termination prior to a Hostile Takeover (other than in
contemplation of
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a Hostile Takeover), the Employee shall not be entitled to any payments or
benefits, other than as provided by this Agreement, or as may otherwise be
available in accordance with the terms of the Company's then existing employee
plans, written agreements and written policies in effect at the time of
termination. The terms of this Agreement shall terminate upon the earlier of (i)
the date on which Employee's status as a corporate officer of the Company
ceases, other than in contemplation of a Hostile Takeover, (ii) the date that
all obligations of the parties hereunder have been satisfied, or (iii) two (2)
years after a Hostile Takeover. A termination of the terms of this Agreement
pursuant to the preceding sentence shall be effective for all purposes, except
that such termination shall not affect the payment or provision of compensation
or benefits on account of a termination of employment occurring prior to the
termination of the terms of this Agreement.
2. Stock Options. Subject to Section 5 below, in the event of
a Hostile Takeover and regardless of whether the Employee's employment with the
Company is terminated in connection with the Hostile Takeover, each stock option
granted for the Company's securities held by the Employee shall become fully
vested and immediately exercisable on the effective date of the transaction and
shall be exercisable to the extent so vested in accordance with the provisions
of the option agreement and stock option plan pursuant to which such stock
option was granted.
3. Hostile Takeover.
(a) Termination Following A Hostile Takeover. Subject
to Section 5 below, if the Employee's employment with the Company is terminated
at any time within two (2) years after a Hostile Takeover, then the Employee
shall be entitled to receive severance benefits as follows:
(i) Voluntary Resignation. If the Employee
voluntarily resigns from the Company (other than as an Involuntary Termination
(as defined below) or if the Company terminates the Employee's employment for
Cause (as defined below)), then the Employee shall not be entitled to receive
severance payments. The Employee's benefits will be terminated under the
Company's then existing benefit plans and policies in accordance with such plans
and policies in effect on the date of termination or as otherwise determined by
the Board of Directors of the Company.
(ii) Involuntary Termination. If the Employee's
employment is terminated as a result of an Involuntary Termination other than
for Cause, the Employee shall be entitled to receive the following benefits: (i)
severance payments during the period from the date of the Employee's termination
until the date 12 months after the effective date of the termination (the
"Severance Period") equal to the salary which the Employee was receiving at the
time of such termination, which payments shall be paid during the Severance
Period in accordance with the Company's standard payroll practices (in effect at
the time of said termination); (ii) monthly severance payments during the
Severance Period equal to 1/12th of the Employee's "Target Incentive Award" (as
defined below) as approved and as in effect for the fiscal year coinciding with
or preceding the Hostile Takeover, whichever is greater; (iii) continuation of
all health,
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dental and life insurance benefits through the end of the Severance Period
substantially identical to those to which the Employee was entitled immediately
prior to the termination, or to those being offered to officers of the Company,
or a successor corporation, if the Company's benefit programs are changed during
the Severance Period; and (iv) outplacement services with a total value not to
exceed $10,000. For purposes of this Agreement, the term "Target Incentive
Award" shall mean the Employee's base salary in effect on the termination date
multiplied by that percentage of such base salary that is prescribed by the
Company under its Incentive Plan as the percentage of such base salary payable
to the Employee as a bonus if the Company pays bonuses at one-hundred percent
(100%) of its operating plan.
(iii) Involuntary Termination for Cause. If the
Employee's employment is terminated for Cause, then the Employee shall not be
entitled to receive severance payments. The Employee's benefits will be
terminated under the Company's then existing benefit plans and policies in
accordance with such plans and policies in effect on the date of termination.
(b) Termination Apart from A Hostile Takeover. In the
event the Employee's employment terminates for any reason, either prior to the
occurrence of a Hostile Takeover or after the two year period following the
effective date of a Hostile Takeover, then the Employee shall not be entitled to
receive any severance payments under this Agreement. The Employee's benefits
will be terminated under the terms of the Company's then existing benefit plans
and policies in accordance with such plans and policies in effect on the date of
termination or as otherwise determined by the Board of Directors of the Company.
4. Definition of Terms. The following terms referred to in
this Agreement shall have the following meanings:
(a) Cause. "Cause" shall mean (i) gross negligence or
willful misconduct in the performance of the Employee's duties to the Company
where such gross negligence or willful misconduct has resulted or is likely to
result in substantial and material damage to the Company or its subsidiaries,
(ii) repeated unexplained or unjustified absence from the Company, (iii) a
material and willful violation of any federal or state law; (iv) commission of
any act of fraud with respect to the Company; or (v) conviction of a felony or a
crime involving moral turpitude causing material harm to the standing and
reputation of the Company, in each case as determined in good faith by the Board
of Directors of the Company. In the event that there has been a change in the
composition of the Board of Directors such that fewer than a majority of the
directors in service prior to the Hostile Takeover remain directors after the
effective date of the transaction, the determination shall be made by an
arbitrator on a binding and final basis in the County of San Mateo, California.
(b) Hostile Takeover. "Hostile Takeover" shall mean a
transaction or series of transactions that results in any "Person" (as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) becoming the "Beneficial Owner" (as defined in Rule 13(d)-3 under said
Act), directly or indirectly, of securities of the Company
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representing more than 50% of the total voting power represented by the
Company's then outstanding voting securities without the approval of the Board
of Directors of the Company.
(c) Involuntary Termination. "Involuntary Termination"
shall include any termination by the Company other than for Cause and the
Employee's voluntary termination, upon 30 days prior written notice to the
Company, following (i) a material reduction or change in job duties,
responsibilities and requirements inconsistent with the Employee's position with
the Company and the Employee's prior duties, responsibilities and requirements;
(ii) any reduction of the Employee's base compensation (other than in connection
with a general decrease in base salaries for most officers of the successor
corporation); or (iii) the Employee's refusal to relocate to a location more
than 30 miles from the Company's current location at which the Employee is
employed.
5. Limitation on Payments. In the event that the severance
and other benefits provided for in this Agreement 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, would be
subject to the excise tax imposed by Section 4999 of the Code, then the
Employee's benefits under Sections 2 and 3(a)(ii) shall be payable either:
(a) in full, or
(b) as to such lesser amount which would result in no
portion of such severance benefits being subject to excise tax under Section
4999 of the Code, whichever of the foregoing amounts, taking into account the
applicable federal, state and local income taxes and the excise tax imposed by
Section 4999, results in the receipt by the Employee on an after-tax basis, of
the greatest amount of benefits under Sections 2 and 3(a)(ii), notwithstanding
that all or some portion of such benefits may be taxable under Section 4999 of
the Code. Unless the Company and the Employee otherwise agree in writing, any
determination required under this Section 5 shall be made in writing by the
Company's independent public accountants (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 5, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Section 280G and 4999 of the Code.
The Company and the Employee shall furnish to the Accountants such information
and documents as the Accountants may reasonably request in order to make a
determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 5.
6. Successors. Any successor to the Company (whether direct
or indirect and whether by purchase, lease, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company's business and/or
assets shall assume the obligations under this Agreement and agree expressly to
perform the obligations under this Agreement in the same manner and to the same
extent as the Company would be required to perform such obligations in the
absence of a succession. The terms of this Agreement and all of the Employee's
rights hereunder shall inure
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to the benefit of, and be enforceable by, the Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
7. Notice. 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 international air courier or
by U.S. registered or certified mail, return receipt requested and postage
prepaid. Mailed notices to the Employee shall be addressed to the Employee at
the home address which the Employee 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, with a copy to Xxxxx X. Xxxxxx, Venture Law Group, a Professional
Corporation, 0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx, XX 00000.
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
(whether by seeking new employment or in any other manner), nor, except as
otherwise provided in this Agreement, shall any such payment be reduced by any
earnings that the Employee may receive from any other source.
(b) Waiver. No provision of this Agreement shall be
modified, waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by the Employee and by an authorized officer of
the Company (other than the Employee). No waiver by either party of any breach
of, or of compliance with, any condition or provision of this Agreement by the
other party shall be considered a waiver of any other condition or provision or
of the same condition or provision at another time.
(c) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or 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 any agreement of the same title and concerning similar subject matter
dated prior to the date of this Agreement, and by execution of this Agreement
both parties agree that any such predecessor agreement shall be deemed null and
void.
(d) Choice of Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of California without reference to conflict of laws provisions.
(e) Severability. If any term or provision of this
Agreement or the application thereof to any circumstance shall, in any
jurisdiction and to any extent, be invalid or unenforceable, such term or
provision shall be ineffective as to such jurisdiction to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining terms and provisions of this Agreement or the application of such
terms and provisions to circumstances other than those as to which it is held
invalid or unenforceable, and a suitable and
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equitable term or provision shall be substituted therefor to carry out, insofar
as may be valid and enforceable, the intent and purpose of the invalid or
unenforceable term or provision.
(f) Arbitration. Any dispute or controversy arising
under or in connection with this Agreement may be settled at the option of
either party by binding arbitration in the County of San Mateo, California, in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction. Punitive damages shall not be awarded.
(g) Legal Fees and Expenses. The parties shall each
bear their own expenses, legal fees and other fees incurred in connection with
this Agreement.
(h) No Assignment of Benefits. The rights of any person
to payments or benefits under this Agreement shall not be made subject to option
or assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this subsection (h) shall be
void.
(i) Employment Taxes. All payments made pursuant to
this Agreement will be subject to withholding of applicable income and
employment taxes.
(j) Assignment by Company. The Company may assign its
rights under this Agreement to an affiliate, and an affiliate may assign its
rights under this Agreement to another affiliate of the Company or to the
Company; provided, however, that no assignment shall be made if the net worth of
the assignee is less than the net worth of the Company at the time of
assignment. In the case of any such assignment, the term "Company" when used in
a section of this Agreement shall mean the corporation that actually employs the
Employee.
(k) 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.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
RESOUND CORPORATION "EMPLOYEE"
By: __________________________ ______________________________
Title: _______________________
