SYNC RESEARCH, INC.
CHANGE OF CONTROL SEVERANCE AGREEMENT
This Change of Control Severance Agreement (the "AGREEMENT") is made and
entered into by and between Xxxxxxxx Xxxxx (the "CONSULTANT") and Sync Research,
Inc., a Delaware corporation (the "COMPANY"), effective as of October 24, 1997.
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 Consultant and can cause the
Consultant 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 Consultant, 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 Consultant with an incentive to continue his or
her employment and to motivate the Consultant 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 Consultant
with certain benefits upon Consultant's termination of provision of services as
a consultant or director following a Change of Control that provide the
Consultant with enhanced financial security and incentive and encouragement to
the Consultant 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
6 below.
The parties hereto agree as follows:
1. TERM OF AGREEMENT. This Agreement shall terminate upon the date that
all obligations of the parties hereto with respect to this Agreement have been
satisfied.
2. AT-WILL EMPLOYMENT. The Company and the Consultant acknowledge that
the Consultant's provision of services is and shall continue to be at-will, as
defined under applicable law. If the Consultant's consultancy or directorship
terminates for any reason, including (without limitation) any termination prior
to a Change of Control, the Consultant shall not be entitled to any benefits,
damages, awards or compensation other than as may otherwise be available in
accordance with the Company's established employee plans and practices or
pursuant to other agreements with the Company.
3. SEVERANCE BENEFITS.
(a) TERMINATION FOLLOWING A CHANGE OF CONTROL. If the Consultant's
consultancy or directorship terminates as a result of Involuntary Termination
other than for Cause at any time within 12 months following a Change of Control,
then 100% of the unvested portion of any stock option or restricted stock then
held by the Consultant 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, Consultant's stock options and
restricted stock shall not have their vesting so accelerated.
(b) VOLUNTARY RESIGNATION; TERMINATION FOR CAUSE. If the
Consultant's consultancy or directorship terminates by reason of the
Consultant's voluntary resignation (and is not an Involuntary Termination), or
if the Consultant is terminated for Cause, then the Consultant shall not be
entitled to receive any benefits except for those (if any) as may then be
established under the Company's then existing and applicable severance and
benefits plans and practices or pursuant to other agreements with the Company.
(c) DISABILITY; DEATH. If the Company terminates the Consultant's
consultancy or directorship as a result of the Consultant's Disability, or such
Consultant's consultancy or directorship is terminated due to the death of the
Consultant, then the Consultant shall not be entitled to receive any benefits
except for those (if any) as may then be established under the Company's then
existing and applicable severance and benefits plans and practices or pursuant
to other agreements with the Company.
(d) TERMINATION APART FROM CHANGE OF CONTROL. In the event the
Consultant's consultancy or directorship is terminated for any reason, either
prior to the occurrence of a Change of Control or after the twelve-month period
following a Change of Control, then the Consultant shall be entitled to receive
severance and any other benefits only as may then be established under the
Company's existing and applicable severance and benefits plans and practices or
pursuant to other agreements with the Company.
4. ATTORNEY FEES, COSTS AND EXPENSES. The Company shall promptly
reimburse Consultant, on a monthly basis, for the reasonable attorney fees,
costs and expenses incurred by the Consultant in connection with any action
brought by Consultant to enforce his or her rights hereunder. In the event
Consultant is not the prevailing party, determined without regard to whether or
not the action results in a final judgment, Consultant shall repay such
reimbursements.
5. DEFINITION OF TERMS. The following terms used in this Agreement shall
have the following meanings:
(a) CAUSE. "CAUSE" shall mean (i) gross negligence or willful
misconduct in the performance of the Consultant's duties to the Company; (ii) a
material and willful violation
-2-
of any federal or state law; (iii) refusal or failure to act in his capacity as
a consultant in accordance with any specific direction or order of the Company;
(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
by the Board of Directors of the Company other than Consultant.
(b) CHANGE OF CONTROL. "CHANGE OF CONTROL" means the occurrence of
any of the following events:
(i) The stockholders of the Company approve an agreement for
the sale of all or substantially all of the assets of the Company; or
(ii) 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
(iii) Completion of a tender or exchange offer or other
transaction or series of transactions resulting in less than a majority of the
outstanding voting shares of the surviving corporation being held, immediately
after such transaction or series of transactions, by the holders of the voting
shares of the Company outstanding immediately prior to such transaction or
series of transactions.
(c) DISABILITY. "DISABILITY" shall mean that the Consultant has been
unable to perform his or her Company duties as the result of his or her
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 Consultant or the Consultant's legal representative
and acceptable to the Company or its insurers (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 Consultant's consultancy or
directorship. In the event that the Consultant resumes the performance of
substantially all of his or her duties hereunder before the termination of his
or her consultancy or directorship becomes effective, the notice of intent to
terminate shall automatically be deemed to have been revoked.
(d) INVOLUNTARY TERMINATION. "INVOLUNTARY TERMINATION" shall mean
(i) without the Consultant's express written consent, the significant reduction
of the Consultant's duties, authority or responsibilities, relative to the
Consultant's duties, authority or responsibilities as in effect immediately
prior to such reduction, or the assignment to Consultant of such reduced duties,
authority or responsibilities; (ii) without the Consultant's express written
consent, a substantial reduction, without good business reasons, of the
facilities and prerequisites (including office space and location) available to
the Consultant immediately prior to such reduction; (iii) a reduction by the
Company in the base pay of the Consultant as in effect
-3-
immediately prior to such reduction; (iv) the relocation of the Consultant to a
facility or a location more than thirty (30) miles from the Consultant's then
present location, without the Consultant's express written consent; (v) any
purported termination of the Consultant by the Company as a consultant or
director which is not effected for Disability or for Cause, or any purported
termination for which the grounds relied upon are not valid; (vi) the failure of
the Company to obtain the assumption of this Agreement by any successors
contemplated in Section 7(a) below; or (vii) any act or set of facts or
circumstances which would, under California case law or statute, constitute a
constructive termination of the Consultant.
(e) 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 Consultant (provided that the Consultant
shall not have returned to the performance of the Consultant's duties on a
full-time basis during such thirty (30)-day period), (ii) if the Consultant's
consultancy or directorship 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 Consultant notice of termination,
the Consultant notifies the Company that a dispute exists concerning the
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 Consultant, the date on which the Consultant 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) CONSULTANT'S SUCCESSORS. The terms of this Agreement and all
rights of the Consultant hereunder shall inure to the benefit of, and be
enforceable by, the Consultant's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees 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 five (5) days after being mailed by U.S. registered
or certified mail, return receipt requested and postage prepaid. In the case of
the Consultant, mailed notices shall be addressed
-4-
to him or her at the home address which he or she 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 Consultant as a result of a voluntary resignation and any 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 Consultant to include in the notice
any fact or circumstance which contributes to a showing of Involuntary
Termination shall not waive any right of the Consultant hereunder or preclude
the Consultant from asserting such fact or circumstance in enforcing his or her
rights hereunder.
8. MISCELLANEOUS PROVISIONS.
(a) NO DUTY TO MITIGATE. The Consultant 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 Consultant 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 Consultant and by an authorized officer of the Company
(other than the Consultant). 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. This Agreement represents the entire agreement
between the Consultant and the Company with respect to the matters set forth
herein. 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.
(d) CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California as applied to agreements entered into and performed within California
solely by residents of that state.
(e) SEVERABILITY. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(f) WITHHOLDING. All payments made pursuant to this Agreement will
be subject to withholding of applicable income and employment taxes, if
applicable.
-5-
(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.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK.
-6-
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 date set
forth above.
COMPANY: SYNC RESEARCH, INC.
By:
-------------------------------
Title:
----------------------------
CONSULTANT: Signature:
------------------------
-----------------------------------
Xxxxxxxx Xxxxx
-7-
