Exhibit 10.20
SEVERANCE AGREEMENT
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THIS SEVERANCE AGREEMENT (the "Agreement"), dated___________________is entered
into by and between Xxxxxxx-Xxxxxxx Company, a California corporation ("the
Company"), and __________________________("Employee").
The Company's Board of Directors has determined that it is appropriate to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including Employee, to their assigned duties without
distraction in potentially disturbing circumstances arising from the possibility
of a Change in Control (as defined herein) of the Company.
This Agreement sets forth the severance compensation which the Company agrees to
pay to Employee if Employee's employment with the Company terminates under one
of the circumstances described herein.
1. Term.
(a) This Agreement shall terminate, except for any unpaid
obligation of the Company, upon the earliest of (i) three years
from the date hereof if a Change in Control of the Company has
not occurred within such three-year period; (ii) the termination
of the Employee's employment based on death, disability (as
defined in Section 3(b)) or cause (as defined in Section 3(c))
or by the Employee other than for Good Reason (as defined in
Section 3(d)); or (iii) three years from the date of a Change in
Control of the Company.
(b) Nothing in this Agreement shall confer upon Employee any
right to continue in the employ of the Company prior to a Change
in Control of the Company or shall in any way limit the rights
of the Company, which are hereby expressly reserved, to
discharge the Employee at any time prior to the date of a Change
in Control of the Company for any reason whatsoever, with or
without cause.
2. Change in Control.
(a) No compensation shall be payable under this Agreement unless
and until there shall have been a Change in Control of the
Company while the Employee is still an employee of the Company,
and the Employee's employment by the Company thereafter shall
have been terminated by the Company other than pursuant to
Sections 3(b) or 3(c) or by the Employee for Good Reason (as
defined in Section 3(d) below), or by the Employee pursuant to
Section 3(g).
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(b) Definition of Change in Control. A Change in Control shall
be deemed to have occurred if (i) there shall be consummated any
consolidation or merger of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which
shares of the Company's Common Stock would be converted into
cash, securities or other property, other than a merger of the
Company in which the holders of the Company's Common Stock
immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation
immediately after the merger, or any sale, lease, exchange or
other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the
Company, or (ii) the stockholders of the Company approve a plan
or proposal for the liquidation or dissolution of the Company,
or (iii) any "person" (as defined in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended, shall become
the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 30% or more of the
Company's outstanding Common Stock, or (iv) during any period of
two consecutive years, individuals who at the beginning of such
period constitute the entire Board of Directors of the Company
shall cease for any reason to constitute a majority thereof
unless the election, or the nomination for election by the
Company's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period.
3. Termination Following Change in Control.
(a) Termination of Employment. If a Change in Control occurs
while Employee is still an employee of the Company, Employee
shall be entitled to the compensation provided in Section 4 upon
the subsequent termination of the Employee's employment with the
Company unless the termination is a result of Employee's (i)
death; (ii) Disability (Section 3(b)); (iii) termination by the
Company for Cause (Section 3(c)); or (iv) Employee's decision to
terminate employment with the Company other than for Good Reason
(Section 3(d)), or pursuant to Section 3(g).
(b) Disability. If, as a result of the Employee's incapacity due
to physical or mental illness, the Employee shall have been
absent from duties with the Company on a full-time basis for six
consecutive months and within 30 days after written notice of
termination is thereafter given by the Company, the Employee
shall not have returned to the full-time performance of the
Employee's duties, the Company may terminate this Agreement for
"Disability."
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(c) Cause. For purposes of this Agreement only, the Company
shall have "Cause" to terminate Employee's employment hereunder
only on the basis of fraud, misappropriation, embezzlement or
willful engagement by the Employee in misconduct which is
demonstrably and materially injurious to the Company and its
subsidiaries taken as a whole. An act, or omission of the
Employee shall not be considered "willful" unless done, or
omitted to be done, by the Employee without good faith and a
reasonable belief that the act or omission was in the best
interests of the Company and its subsidiaries. The Employee may
not be terminated for Cause unless and until there shall have
been delivered to Employee a copy of a resolution duly adopted
by affirmative vote of not less than three-quarters of the
entire membership of the Company's Board of Directors at a
meeting of the Board called and held for the purpose (after
reasonable notice to the Employee and an opportunity for the
Employee, together with the Employee's counsel, to be heard
before the Board), finding the Employee was guilty of the
conduct set forth in the first sentence of this Section, and
specifying the particulars thereof in detail. Notwithstanding
the foregoing, the Employee shall have the right to contest such
termination for Cause (for purposes of this Agreement) by
arbitration in accordance with the provisions of Section 7.
(d) Good Reason. After a Change in Control of the Company, the
Employee may terminate employment for Good Reason at any time
during the term of this Agreement. For purposes of this
Agreement, "Good Reason" shall mean any of the following
(without the Employee's express written consent):
(i) the assignment to the Employee by the Company of
duties inconsistent with, or a substantial alteration in
the nature or status of, Employee's responsibilities
immediately prior to a Change in Control of the Company
other than any such alteration primarily attributable to
the fact that the Company's securities are no longer
publicly traded;
(ii) a reduction by the Company in the Employee's base
salary in effect on the date of a Change in Control of
the Company or as the same may be increased from time to
time during the term of this Agreement;
(iii) failure by the Company to continue in effect
without substantial change any compensation, incentive,
welfare or benefit plan or arrangement, as well as any
plan or arrangement whereby the Employee may acquire
securities of the Company, in which the Employee is
participating at the time of a Change in Control of the
Company (or any other plans providing the Employee with
substantially similar benefits, hereinafter referred to
as "Benefit Plans"), or the taking of any action by the
Company which would adversely affect the Employee's
participation in or materially reduce the Employee's
benefits under any such Benefit Plan or deprive the
Employee of any material fringe benefit enjoyed by the
Employee at the time of a Change in Control of the
Company; unless an equitable substitute arrangement
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(embodied in an ongoing substitute or alternative Benefit
Plan) has been made for the benefit of Employee with
respect to the Benefit Plan in question. For purposes of
the foregoing, Benefit Plans shall include, but not be
limited to, the Company's Employee Stock Ownership Plan,
Employees' Profit Sharing and Investment Plan, Deferred
Compensation (401K) Plan, 1991 Stock Option and Incentive
Plan, Top Management Incentive Bonus Plan, and/or any
other plan or arrangement to receive and exercise stock
options or stock appreciation rights, incentive, bonus or
other award plans, group life insurance plans, medical,
dental, accident and disability plans;
(iv) a relocation of the Company's principal executive
offices to a location outside the San
Francisco-Oakland-San Xxxx Bay Area, or the Employee's
relocation to any place other than the principal
executive offices of the Company, except for required
travel by the Employee on Company business to an extent
substantially consistent with the Employee's business
travel obligations at the time of a Change in Control of
the Company;
(v) any material breach by the Company of any provision
of this Agreement;
(vi) any failure by the Company to obtain the assumption
of this Agreement by any successor or assign of the
Company as required in paragraph 6; or
(vii) any purported termination of the Employee's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 3(e)
below. For purposes of this Agreement, no such purported
termination shall be effective.
(e) Notice of Termination. Any purported termination of
employment shall be communicated by a written Notice of
Termination to Employee in accordance with Section 8, and shall
state the specific termination provisions in this Agreement
relied upon, and set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of
Employee's employment.
(f) Date of Termination. "Date of Termination" shall mean (a)
for Disability, 30 days after Notice of Termination is given to
the Employee (provided the Employee has not returned to the
performance of the Employee's duties on a full-time basis during
such 30-day period), or (b) if the Employee's employment is
terminated by the Company for any other reason, the date on
which notice is given.
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(g) Notwithstanding any other provision of this Agreement, if a
Change in Control occurs while Employee is still an employee of
the Company, Employee may, after 90 days and within 120 days of
the Change in Control, terminate employment without Good Reason,
and shall thereupon be entitled to one-half (1/2) of the
compensation, described in paragraph 4.
4. Severance Compensation upon Termination of Employment. If the
Employee's employment shall be terminated (a) by the Company other than
pursuant to Sections 3(b) or 3(c), or (b) by the Employee for Good
Reason, the Company shall:
(a) pay to the Employee as severance pay in a lump sum, in cash,
on the fifth day following the Date of Termination, an amount
equal to 299.999% of the Employee's "Base Compensation" (as
defined below); provided, however, that if the lump sum
severance payment under this Section 4, either alone or together
with other payments which the Employee has the right to receive
from the Company, would not be deductible (in whole or in part)
by the Company as a result of such lump sum payment constituting
a "parachute payment" (as defined in Section 28OG of the
Internal Revenue Code of 1986, as amended (collectively the
"Code")), such lump sum severance payment shall be reduced to
the largest amount as will result in no portion of the lump sum
severance payment under this Section 4 not being fully
deductible by the Company as a result of Section 28OG of the
Code. The determination of any reduction in the lump sum
severance payment under this Section 4 pursuant to the foregoing
provision shall be made exclusively by the Company's auditors
prior to the Change in Control (whose fees and expenses shall be
born by the Company), and such determination shall be conclusive
and binding. The term "Base Compensation" shall mean an average
of the annual cash compensation paid to the Employee by the
Company and any of its subsidiaries in the form of salary or
bonuses during the five taxable years (or such lesser period as
Employee was employed by the Company or any of its subsidiaries)
immediately preceding the Change in Control of the Company which
was includable in gross income by the Employee for federal
income tax reporting purposes; and
(b) arrange to provide Employee, for a six-month period (or such
shorter period as Employee may elect), with disability,
accident, group life, medical and dental insurance substantially
similar to those insurance benefits which Employee is receiving
immediately prior to the Notice of Termination. Benefits
otherwise receivable by Employee pursuant to this Section 4(b)
shall be reduced to the extent comparable benefits are actually
received by the Employee during such six-month period following
termination (or such shorter period elected by the Employee),
and any such benefits actually received by Employee shall be
reported by Employee to the Company.
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5. No Obligation to Mitigate Damages. The Employee shall not be
required to mitigate damages or the amount of any payment provided for
under this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment provided for under this Agreement be
reduced by any compensation earned by the Employee as a result of
employment by another employer or by retirement benefits after the Date
of Termination, or otherwise, except to the extent provided in Section
4 above.
(a) No Effect on Other Contractual Rights. The provisions of
this Agreement, and any payment provided for hereunder, shall
not reduce any amounts otherwise payable, or in any way diminish
the Employee's existing rights, or rights which would accrue
solely as a result of the passage of time, under any Benefit
Plan, employment agreement or other contract, plan or
arrangement, except that the provisions of this Agreement and
any payment provided for hereunder, shall be in lieu of payments
otherwise due to the Employee under any of the Company's
severance pay policies.
6. Successor to the Company.
(a) The Company shall 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, by agreement satisfactory to Employee,
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. As used in this
Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor or assign to its business and/or
assets which executes and delivers the agreement provided for in
this Section 6 or which otherwise becomes bound by all the terms
and provisions of this Agreement by operation of law.
(b) Heirs of the 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 while any amounts are still payable to Employee
hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to
the Employee's devisee, legatee, or other designee or, if there
be no such designee, to the Employee's estate.
7. Arbitration. Any dispute, controversy or claim arising under or
in connection with this Agreement, or the breach hereof, shall be
settled exclusively by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in
effect. Judgment upon the award rendered by Arbitrator(s) may be
entered in any court having jurisdiction thereof. Any arbitration held
pursuant to this Section 7 shall take place in San Francisco,
California.
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8. Notice. 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 Company:
Xxxxxxx-Xxxxxxx Company
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: President of the Company
If to the Employee:
___________________
___________________
___________________
___________________
or 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.
9. Nonwaiver, Complete Agreement, Governing Law. No provisions of
this Agreement may be modified, waived or discharged unless in writing
signed by both parties. No waiver by either party hereto at any time of
any breach by the other party of, or compliance with, any condition or
provision of this agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been
made by either party which are not set forth expressly in this
Agreement. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
10. Legal Fees and Expenses. The Company shall pay all reasonable
legal fees and expenses which the Employee may incur as a result of the
Company's contesting the validity, enforceability or the Employee's
good faith interpretation of, or good faith determinations under, this
Agreement; provided, however, that the Company shall not pay any legal
fees and expenses incurred by Employee in contesting the termination of
Employee's employment for Cause if, as a result of such contest, it is
determined that the Employee was in fact terminated for Cause.
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11. Confidentiality. The Employee shall retain in confidence any and
all confidential information known to the Employee concerning the
Company and its business so long as such information is not otherwise
publicly disclosed.
12. Validity. The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force
and effect.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXXXXX-XXXXXXX COMPANY, a
California corporation
By_____________________
Title:__________________
Title:__________________
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