SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (the "Agreement") is made and entered into as
of the 11th day of December, 1998, by and between ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ COMPUTER
CORPORATION, a Utah corporation (the "Company") and ______________________.
W I T N E S S E T H:
WHEREAS, the Company has determined that is appropriate and in the best
interests of the Company to provide to the Executive protection in the event of
certain terminations of the Executive's employment relationship with the Company
in accordance with the terms and conditions contained herein and the Executive
desires to have such protection.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the Company and the Executive
hereto mutually covenant and agree as follows:
1. DEFINITIONS.
Whenever used in this Agreement, the following terms shall have the
meanings set forth below:
a. "Accrued Benefits" shall mean the amount payable not later than ten
(10) days following an applicable Termination Date and which shall be equal
to the sum of the following amounts:
(i) All salary earned or accrued through the Termination Date;
(ii) Reimbursement for any and all monies advanced in connection
with the Executive's employment for reasonable and necessary expenses
incurred by the Executive through the Termination Date;
(iii) Any and all other cash benefits previously earned through
the Termination Date and deferred at the election of the Executive or
pursuant to any deferred compensation plans then in effect;
(iv) All other payments and benefits to which the Executive may
be entitled under the terms of any benefit plan of the Company.
b. "Act" shall mean the Securities Exchange Act of 1934;
c. "Affiliate" shall have the same meaning as given to that term in
Rule 12b-2 of Regulation 12B promulgated under the Act;
d. "Base Period Income" shall be an amount equal to the Executive's
"annualized includable compensation" for the "base period" as defined in
Sections 280G(d)(1) and (2) of the Code and the regulations adopted
thereunder;
e. "Beneficial Owner" shall have the same meaning as given to that
term in Rule 13d-3 of the General Rules and Regulations of the Act,
provided that any pledgee of Company voting securities shall not be deemed
to be the Beneficial Owner thereof prior to its disposition of, or
acquisition of voting rights with respect to, such securities;
f. "Board" shall mean the Board of Directors of the Company;
g. "Cause" shall mean any of the following:
(i) The engaging by the Executive in fraudulent conduct, as
evidenced by a determination in a binding and final judgment, order or
decree of a court or administrative agency of competent jurisdiction,
in effect after exhaustion or lapse of all rights of appeal, in an
action, suit or proceeding, whether civil, criminal, administrative or
investigative, which the Board determines, in its sole discretion, has
a significant adverse impact on the Company in the conduct of the
Company's business;
(ii) Conviction of a felony, as evidenced by a binding and final
judgment, order or decree of a court of competent jurisdiction, in
effect after exhaustion or lapse of all rights of appeal, which the
Board determines, in its sole discretion, has a significant adverse
impact on the Company in the conduct of the Company's business;
(iii) Neglect or refusal by the Executive to perform the
Executive's duties or responsibilities (unless significantly changed
without the Executive's consent); or
(iv) A significant violation by the Executive of the Company's
established policies and procedures;
Notwithstanding the foregoing, Cause shall not exist under Sections
1(g)(iii) and (iv) herein unless the Company furnishes written notice to
the Executive of the specific offending conduct and the Executive fails to
correct such offending conduct within the thirty (30) day period commencing
on the receipt of such notice.
h. "Change of Control" shall mean a change in ownership or managerial
control of the stock, assets or business of the Company resulting from one
or more of the following circumstances:
(i) A change of control of the Company, of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Act, or any successor regulation
of similar import, regardless of whether the Company is subject to
such reporting requirement;
(ii) A change in ownership of the Company through a transaction
or series of transactions, such that any Person or Persons (other than
any current officer of the Company or member of the Board) is (are) or
become(s), in the aggregate, the Beneficial Owner(s), directly or
indirectly, of securities of the Company representing twenty percent
(20%) or more of the Company's then outstanding securities;
(iii) 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 common stock of the Company would be converted
into cash (other than cash attributable to dissenters' rights),
securities or other property provided by a Person or Persons other
than the Company, other than a consolidation or merger of the Company
in which the holders of the common stock of the Company immediately
prior to the consolidation or merger have approximately the same
proportionate ownership of common stock of the surviving corporation
immediately after the consolidation or merger;
(iv) The shareholders of the Company approve a sale, transfer,
liquidation or other disposition of all or substantially all of the
assets of the Company to a Person or Persons;
(v) During any period of two (2) consecutive years, individuals
who, at the beginning of such period, constituted the Board of
Directors of the Company cease, for any reason, to constitute at least
a majority thereof, unless the election or nomination for election of
each new director was approved by the vote of at least two-thirds
(2/3) of the directors then still in office who were directors at the
beginning of the period;
(vi) The filing of a proceeding under Chapter 7 of the Federal
Bankruptcy Code (or any successor or other statute of similar import)
for liquidation with respect to the Company;
(vii) The filing of a proceeding under Chapter 11 of the Federal
Bankruptcy Code (or any successor or other statute of similar import)
for reorganization with respect to the Company if in connection with
any such proceeding, this Agreement is rejected, or a plan of
reorganization is approved an element of which plan entails the
liquidation of all or substantially all the assets of the Company.
A "Change of Control" shall be deemed to occur on the actual date on which
any of the foregoing circumstances shall occur; provided, however, that in
connection with a "Change of Control" specified in Section 1(h)(vii), a
"Change of Control" shall be deemed to occur on the date of the filing of
the relevant proceeding under Chapter 11 of the Federal Bankruptcy Code (or
any successor or other statute of similar import).
i. "Change of Control Period" shall mean the period commencing on the
date a Change of Control occurs and ending on the second anniversary of
such Change of Control;
j. "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time;
k. "Disability" shall mean a physical or mental condition whereby the
Executive is unable to perform on a full-time basis the customary duties of
the Executive under this Agreement;
l. "Federal Short Term-Rate" shall mean the rate defined in Section
1274(d)(1)(C)(i) of the Code;
m. "Good Reason" shall mean:
(i) The required relocation of the Executive, without the
Executive's consent, to an employment location which is more than
seventy-five (75) miles from the Executive's employment location on
the day preceding the date of this Agreement;
(ii) The removal of the Executive from or any failure to reelect
the Executive to any of the positions held by the Executive as of the
date of this Agreement or any other positions to which the Executive
shall thereafter be elected or assigned except in the event that such
removal or failure to reelect relates to the termination by the
Company of the Executive's employment for Cause or by reason of death,
Disability or voluntary retirement;
(iii) A significant adverse change, without the Executive's
written consent, in the nature or scope of the Executive's authority,
powers, functions, duties or responsibilities, or a material reduction
in the level of support services, staff, secretarial and other
assistance, office space and accoutrements available to a level below
that which was provided to the Executive on the day preceding the date
of this Agreement and that which is necessary to perform any
additional duties assigned to the Executive following the date of this
Agreement, which change or reduction is not generally effective for
all executives employed by the Company (or its successor) in the
Executive's class or category; or
(iv) Breach or violation of any material provision of this
Agreement by the Company;
n. "Gross Income" shall mean the average compensation earned by the
Executive for purposes of Section 61 of the Code for the prior two (2)
taxable years, plus any other compensation payable to the Executive by the
Company, whether taxable or non-taxable.
o. "Notice of Termination" shall mean the notice described in Section
3 herein;
p. "Person" shall mean any individual, partnership, joint venture,
association, trust, corporation or other entity, other than an employee
benefit plan of the Company or an entity organized, appointed or
established pursuant to the terms of any such benefit plan;
q. "Termination Date" shall mean, except as otherwise provided in
Section 3 herein,
(i) The Executive's date of death;
(ii) Thirty (30) days after the delivery of the Notice of
Termination if the Executive's employment is terminated by the
Executive voluntarily; and
(iii) Thirty (30) days after the delivery of the Notice of
Termination if the Executive's employment is terminated by the Company
for any reason other than death or Disability;
r. "Termination Payment" shall mean the payment described in Section 2
herein;
s. "Total Payments" shall mean the sum of the Termination Payment and
any other "payments in the nature of compensation" (as defined in Section
280G of the Code and the regulations adopted thereunder) to or for the
benefit of the Executive, the receipt of which is contingent on a Change of
Control and to which Section 280G of the Code applies.
2. TERMINATION PAYMENT.
a. If during a Change of Control Period, the Executive's employment is
terminated by the Executive for Good Reason or by the Company for any
reason other than death, Disability, or Cause, the Termination Payment
payable to the Executive by the Company or an affiliate of the Company
shall be two and one-half (2.5) times the Executive's Gross Income for the
year preceding the Termination Date.
b. If the Executive's employment is terminated by the Executive within
one hundred eighty (180) days of a Change of Control, which has not been
approved by a majority of the directors in office immediately preceding
such Change of Control, the Termination Payment payable to the Executive by
the Company or an affiliate of the Company shall be two and one-half (2.5)
times the Executive 's Gross Income for the year preceding the Termination
Date.
c. It is the intention of the Company and the Executive that no
portion of the Termination Payment and any other "payments in the nature of
compensation" (as defined in Section 280G of the Code and the regulations
adopted thereunder) to or for the benefit of the Executive under this
Agreement, or under any other agreement, plan or arrangement, be deemed to
be an "excess parachute payment" as defined in Section 280G of the Code. It
is agreed that the present value of the Total Payments shall not exceed an
amount equal to two and ninety-nine hundredths (2.99) times the Executive's
Base Period Income, which is the maximum amount which the Executive may
receive without becoming subject to the tax imposed by Section 4999 of the
Code or which the Company may pay without loss of deduction under Section
280G(a) of the Code. Present value for purposes of this Agreement shall be
calculated in accordance with the regulations issued under Section 280G of
the Code. Within sixty (60) days following delivery of the Notice of
Termination or notice by the Company to the Executive of its belief that
there is a payment or benefit due the Executive which will result in an
excess parachute payment as defined in Section 280G of the Code, the
Executive and the Company shall, at the Company's expense, obtain such
opinions as more fully described hereafter, which need not be unqualified,
of legal counsel and certified public accountants or a firm of recognized
executive compensation consultants. The Executive shall select said legal
counsel, certified public accountants and executive compensation
consultants; provided, however, that if the Company does not accept one (1)
or more of the parties selected by the Executive, the Company shall provide
the Executive with the names of such legal counsel, certified public
accountants and/or executive compensation consultants as the Company may
select; provided, further, however, that if the Executive does not accept
the party or parties selected by the Company, the legal counsel, certified
public accountants and/or executive compensation consultants selected by
the Executive and the Company, respectively, shall select the legal
counsel, certified public accountants and/or executive compensation
consultants, whichever is applicable, who shall provide the opinions
required by this Section 2(d). The opinions required hereunder shall set
forth (a) the amount of the Base Period Income of the Executive, (b) the
present value of Total Payments and (c) the amount and present value of any
excess parachute payments. In the event that such opinions determine that
there would be an excess parachute payment, the Termination Payment or any
other payment determined by such counsel to be includable in Total Payments
shall be reduced or eliminated as specified by the Executive in writing
delivered to the Company within thirty (30) days of his or her receipt of
such opinions or, if the Executive fails to so notify the Company, then as
the Company shall reasonably determine, so that under the bases of
calculation set forth in such opinions there will be no excess parachute
payment. The provisions of this Section 2(d), including the calculations,
notices and opinions provided for herein shall be based upon the conclusive
presumption that the compensation and other benefits, including but not
limited to the Accrued Benefits, earned on or after the date of Change of
Control by the Executive pursuant to the Company's compensation programs if
such payments would have been made in the future in any event, even though
the timing of such payment is triggered by the Change of Control, are
reasonable compensation for services rendered prior to the Change of
Control; provided, however, that in the event legal counsel so requests in
connection with the opinion required by this Section 2(d), a firm of
recognized executive compensation consultants, selected by the Executive
and the Company pursuant to the procedures set forth above, shall provide
an opinion, upon which such legal counsel may rely, as to the
reasonableness of any item of compensation as reasonable compensation for
services rendered prior to the Change of Control by the Executive. In the
event that the provisions of Sections 280G and 4999 of the Code are
repealed without succession, this Section 2(d) shall be of no further force
or effect;
d. The Termination Payment shall be payable in a lump sum not later
than ten (10) days following the Executive's Termination Date. Such lump
sum payment shall not be reduced by any present value or similar factor.
Further, the Executive shall not be required to mitigate the amount of such
payment by securing other employment or otherwise and such payment shall
not be reduced by reason of the Executive securing other employment or for
any other reason.
3. TERMINATION NOTICE AND PROCEDURE.
Any termination by the Company or the Executive of the Executive's
employment during the Employment Period shall be communicated by written Notice
of Termination to the Executive, if such Notice of Termination is delivered by
the Company, and to the Company, if such Notice of Termination is delivered by
the Executive, all in accordance with the following procedures:
a. The Notice of Termination shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances alleged to provide a basis for
termination;
b. Any Notice of Termination by the Company shall be approved by a
resolution duly adopted by a majority of the directors of the Company then
in office;
c. If the Executive shall in good faith furnish a Notice of
Termination for Good Reason and the Company notifies the Executive that a
dispute exists concerning the termination, within the fifteen (15) day
period following the Company's receipt of such notice, the Executive shall
continue the Executive's employment during such dispute. If it is
thereafter determined that (i) Good Reason did exist, the Executive's
Termination Date shall be the earlier of (A) the date on which the dispute
is finally determined, by mutual written agreement of the parties, (B) the
date of the Executive's death or (C) one day prior to the second (2nd)
anniversary of a Change of Control, and the Executive's Termination
Payment, if applicable, shall reflect events occurring after the Executive
delivered the Executive's Notice of Termination; or (ii) Good Reason did
not exist, the employment of the Executive shall continue after such
determination as if the Executive had not delivered the Notice of
Termination asserting Good Reason;
d. If the Executive gives notice to terminate his employment for Good
Reason and a dispute arises as to the validity of such dispute, and the
Executive does not continue his employment during such dispute, and it is
finally determined that the reason for termination set forth in such Notice
of Termination did not exist, if such notice was delivered by the
Executive, the Executive shall be deemed to have voluntarily terminated the
Executive's employment other than for Good Reason.
4. REMEDIES AND JURISDICTION.
a. The Executive hereby acknowledges and agrees that a breach of the
agreements contained in this Agreement will cause irreparable harm and
damage to the Company, that the remedy at law for the breach or threatened
breach of the agreements set forth in this Agreement will be inadequate,
and that, in addition to all other remedies available to the Company for
such breach or threatened breach (including, without limitation, the right
to recover damages), the Company shall be entitled to injunctive relief for
any breach or threatened breach of the agreements contained in this
Agreement;
b. All claims, disputes and other matters in question between the
parties arising under this Agreement, shall, unless otherwise provided
herein, be decided by arbitration in Salt Lake City, Utah, in accordance
with the Model Employment Arbitration Procedures of the American
Arbitration Association (including such procedures governing selection of
the specific arbitrator or arbitrators), unless the parties mutually agree
otherwise. The Company shall pay the costs of any such arbitration. The
award by the arbitrator or arbitrators shall be final, and judgment may be
entered upon it in accordance with applicable law in any state or Federal
court having jurisdiction thereof.
5. ATTORNEYS' FEES.
In the event that either party hereunder institutes any legal
proceedings in connection with its rights or obligations under this Agreement,
the prevailing party in such proceeding shall be entitled to recover from the
other party, all costs incurred in connection with such proceeding, including
reasonable attorneys' fees, together with interest thereon from the date of
demand at the rate of twelve percent (12%) per annum.
6. SUCCESSORS.
This Agreement and all rights of the Executive shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, estates, executors, administrators, heirs and beneficiaries. In
the event of the Executive's death, all amounts payable to the Executive under
this Agreement shall be paid to the Executive's surviving spouse, or the
Executive's estate if the Executive dies without a surviving spouse. This
Agreement shall inure to the benefit of, be binding upon and be enforceable by,
any successor, surviving or resulting corporation or other entity to which all
or substantially all of the business and assets of the Company shall be
transferred whether by merger, consolidation, transfer or sale.
7. ENFORCEMENT.
The provisions of this Agreement shall be regarded as divisible, and if
any of said provisions or any part hereof are declared invalid or unenforceable
by a court of competent jurisdiction, the validity and enforceability of the
remainder of such provisions or parts hereof and the applicability thereof shall
not be affected thereby.
8. AMENDMENT OR TERMINATION.
This Agreement may not be amended or terminated during its term, except
by written instrument executed by the Company and the Executive.
9. ENTIRE AGREEMENT.
This Agreement sets forth the entire agreement between the Executive
and the Company with respect to the subject matter hereof, and supersedes all
prior oral or written agreements, negotiations, commitments and understandings
with respect thereto.
10. VENUE; GOVERNING LAW.
This Agreement and the Executive's and Company's respective rights and
obligations hereunder shall be governed by and construed in accordance with the
laws of the State of Utah without giving effect to the provisions, principles,
or policies thereof relating to choice or conflict laws.
11. NOTICE.
Notices given pursuant to this Agreement shall be in writing and shall
be deemed given when received, and if mailed, shall be mailed by United States
registered or certified mail, return receipt requested, addressee only, postage
prepaid, if to the Company, to:
Company: ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ Computer Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Executive: ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the Company shall have given to the Executive or, if
to the Executive, to such address as the Executive shall have given to the
Company.
12. NO WAIVER.
No waiver by either party at any time of any breach by the other party
of, or compliance with, any condition or provision of this Agreement to be
performed by the other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same time or any prior or subsequent time.
13. HEADINGS.
The headings herein contained are for reference only and shall not
affect the meaning or interpretation of any provision of this Agreement.
14. 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 Company has caused this Agreement to be
executed by its duly authorized officer, and the Executive has executed this
Agreement, on the date and year first above written.
"COMPANY"
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ COMPUTER
CORPORATION, a Utah corporation
By:___________________________________
Its:___________________________________
"EXECUTIVE"
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