Exhibit 10.23
▇▇▇▇.▇▇▇, INC.
CHANGE OF CONTROL SEVERANCE AGREEMENT
This Change of Control Severance Agreement (the "Agreement") is made and
entered into effective as of December __, 2000 (the "Effective Date"), by and
between ▇▇▇▇.▇▇▇, Inc., a Delaware corporation (the "Company") and the person
whose signature appears on the signature page attached hereto (the "Employee").
Certain capitalized terms used in this Agreement are defined in Section 1 below.
R E C I T A L S
A. The Company from time to time may be presented with the possibility
of engaging in a Change of Control transaction. The Board of Directors of the
Company (the "Board") recognizes that such consideration can be a distraction to
the Employee and can cause the Employee to consider alternative employment
opportunities.
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
employment and to maximize the value of the Company upon a Change of Control for
the benefit of its shareholders.
C. In order to provide the Employee with enhanced financial security and
sufficient encouragement to remain with the Company notwithstanding the
possibility of a Change of Control, the Board believes that it is imperative to
provide the Employee with certain severance benefits upon the Employee's
termination of employment (in certain circumstances) following a Change of
Control.
AGREEMENT
In consideration of the mutual covenants herein contained and the
continued employment of Employee by the Company, the parties agree as follows:
1. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
(a) Cause. "Cause" shall mean (i) any act of personal dishonesty
taken by the Employee in connection with his responsibilities as an employee
which is intended to result in substantial personal enrichment of the Employee,
(ii) Employee's conviction of a felony which the Board reasonably believes has
had or will have a material detrimental effect on the Company's reputation or
business, (iii) a willful act by the Employee which constitutes misconduct and
is injurious to the Company, and (iv) continued willful violations by the
Employee of the Employee's obligations to the Company after there has been
delivered to the Employee a written demand for performance from the Company
which describes the basis for the Company's belief that the Employee has not
substantially performed his duties.
(b) Change of Control. "Change of Control" shall mean the occurrence
of any of the following events:
(i) the approval by shareholders of the Company of 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) more than 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;
(ii) the approval by the shareholders of the Company of a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(iii) 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 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 50% or more of the total
voting power represented by the Company's then outstanding voting securities.
(c) Compensation Continuation Period. "Compensation Continuation
Period" shall mean the period of time commencing with termination of the
Employee's employment as a result of Involuntary Termination at anytime within
twelve (12) months after a Change of Control and ending with the expiration of
six (6) months following the date of the Employee's termination.
(d) Involuntary Termination. "Involuntary Termination" shall mean
termination of Employee's employment with the Company immediately following any
of the following: (i) a reduction by the Company of the Employee's base salary
as in effect immediately prior to such reduction; (ii) a material reduction by
the Company in the kind or level of employee benefits to which the Employee is
entitled immediately prior to such reduction with the result that the Employee's
overall benefits package is significantly reduced; (iii) without the Employee's
express written consent, the relocation of the Employee to a facility or a
location more than fifty (50) miles from his current location; or (iv) any
purported termination of the Employee by the Company which is not effected for
Cause.
(e) Termination Date. "Termination Date" shall mean the effective
date of any notice of termination delivered by one party to the other hereunder.
2. Term of Agreement. This Agreement shall terminate upon the date
that all obligations of the parties hereto under this Agreement have been
satisfied.
3. 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. If the Employee's employment terminates for any reason, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or
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as may otherwise be established under the Company's then existing employee
benefit plans or policies at the time of termination.
4. Severance Benefits.
(a) Termination Following A Change of Control.
(i) Involuntary Termination. If the Employee's employment with
the Company terminates as a result of an Involuntary Termination at any time
within twelve (12) months after a Change of Control, the Employee shall be
entitled to receive continuing payments of severance pay at a rate equal to the
sum of: six (6) months of the Employee's base salary (as in effect immediately
prior to the Change of Control). Such severance payments shall be paid monthly
in accordance with the Company's normal payroll practices during the
Compensation Continuation Period. In addition, if Employee is eligible for and
timely elects group health continuation coverage pursuant to the Consolidated
Omnibus Reconciliation Act of 1985, as amended ("COBRA"), the Company will
reimburse Employee for his COBRA premiums until the earlier of (i) six (6)
months from the Employee's Termination Date; or (ii) the date Employee is no
longer eligible to receive continuation coverage pursuant to COBRA. Employee
shall thereafter be responsible for the payment of COBRA coverage at 102% of the
actual premium cost for the remaining COBRA period.
(ii) Other Termination. If the Employee's employment with the
Company terminates other than as a result of an Involuntary Termination at any
time within twelve (12) months after a Change of Control, then the Employee
shall not be entitled to receive severance or other benefits hereunder, but may
be eligible for those benefits (if any) as may then be established under the
Company's then existing severance and benefits plans and policies at the
Termination Date.
(b) Termination Apart from a Change of Control. If the Employee's
employment with the Company terminates for any or no reason other than within
the twelve (12) months following a Change of Control, then the Employee shall
not be entitled to receive severance or other benefits hereunder, but may be
eligible for those benefits (if any) as may then be established under the
Company's then existing severance and benefits plans and policies at the time of
such termination.
(c) Accrued Wages and Vacation; Expenses. Without regard to the
reason for, or the timing of, Employee's termination of employment: (i) the
Company shall pay the Employee any unpaid base salary due for periods prior to
the Termination Date; (ii) the Company shall pay the Employee all of the
Employee's accrued and unused vacation through the Termination Date; and (iii)
following submission of proper expense reports by the Employee, the Company
shall reimburse the Employee for all expenses reasonably and necessarily
incurred by the Employee in connection with the business of the Company prior to
the Termination Date. These payments shall be made promptly upon termination and
within the period of time mandated by law.
(d) Incentive Compensation. If, during the first twelve (12) months
of Employee's employment with the Company, the Employee's employment terminates
as a result of an Involuntary Termination after a Change of Control, the
Employee shall be entitled to receive a portion of the
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"short-term incentive opportunity" (as such term is described in the offer
letter dated December 29, 2000, executed by Employee and Company) derived by
annualizing the amount earned by Employee as of the date of termination through
her achievement of both individual and Company performance metrics.
5. Option Acceleration. If the Employee's employment with the Company
terminates as a result of an Involuntary Termination at any time within twelve
(12) months after a Change of Control, the vesting and exercisability of one
hundred percent (100%) of any unvested options (including any Incentive Stock
Options or Nonstatutory Stock Options) granted to the Employee by the Company
shall become vested and exercisable as of the date of the Employee's Involuntary
Termination.
6. Excess Parachute Payments. If as a result of a Change of Control, the
Company is deemed to have made an "excess parachute payment" (as defined in
Section 280G of the Internal Revenue Code) to Employee, the Company shall,
subject to approval by the Compensation Committee of the Board of Directors,
take reasonable steps (including without limitation reducing or enhancing
Employee's 280G-related benefits to pay all or some of the taxes arising from
such Change of Control) to mitigate Employee's tax exposure arising from such
Change of Control.
7. Successors.
(a) Company's 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 Company's obligations under this Agreement and
agree to perform the Company's 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 subsection (a) or which becomes bound by the terms of this
Agreement by operation of law.
(b) Employee's Successors. Without the written consent of the
Company, Employee shall not assign or transfer this Agreement or any right or
obligation under this Agreement to any other person or entity. Notwithstanding
the foregoing, the terms of this Agreement and all rights of Employee hereunder
shall inure to the benefit of, and be enforceable by, Employee's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
8. Notices.
(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 when mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid. In the case of the Employee,
mailed notices shall be addressed to him at the home address which he most
recently communicated to the Company in writing. In the case of the Company,
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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 Employee as a result of a voluntary resignation or an Involuntary
Termination shall be communicated by a notice of termination to the other party
hereto given in accordance with this Section. 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 Employee to include in the notice any fact or circumstance which
contributes to a showing of Involuntary Termination shall not waive any right of
the Employee hereunder or preclude the Employee from asserting such fact or
circumstance in enforcing his rights hereunder.
9. Arbitration.
(a) Any dispute or controversy arising out of, relating to, or in
connection with this Agreement, or the interpretation, validity, construction,
performance, breach, or termination thereof, shall be settled by binding
arbitration to be held in Pasadena, California, in accordance with the National
Rules for the Resolution of Employment Disputes then in effect of the American
Arbitration Association (the "Rules"). The arbitrator may grant injunctions or
other relief in such dispute or controversy. The decision of the arbitrator
shall be final, conclusive and binding on the parties to the arbitration.
Judgment may be entered on the arbitrator's decision in any court having
jurisdiction.
(b) The arbitrator(s) shall apply California law to the merits of any
dispute or claim, without reference to conflicts of law rules. The arbitration
proceedings shall be governed by federal arbitration law and by the Rules,
without reference to state arbitration law. Employee hereby consents to the
personal jurisdiction of the state and federal courts located in California for
any action or proceeding arising from or relating to this Agreement or relating
to any arbitration in which the parties are participants.
(c) Employee understands that nothing in this Section modifies
Employee's at-will employment status. Either Employee or the Company can
terminate the employment relationship at any time, with or without cause.
(d) EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES
ARBITRATION. EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF,
RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION,
VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING
ARBITRATION, CONSTITUTES A WAIVER OF EMPLOYEE'S RIGHT TO A JURY TRIAL AND
RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING
CLAIMS:
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(i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH
OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND
FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF
EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR
INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND
DEFAMATION.
(ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR
MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS
ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT
ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR
STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE
SECTION 201, et seq;
(iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND
REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.
10. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Employee 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 Employee may receive from any
other source.
(b) Waiver. No provision of this Agreement may 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) Integration. This Agreement and the stock option agreements
representing the Options represent the entire agreement and understanding
between the parties as to the subject matter herein and supersede all prior or
contemporaneous agreements, whether written or oral.
(d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the internal substantive
laws, but not the conflicts of law rules, of the State of California.
(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) Employment Taxes. All payments made pursuant to this Agreement
shall be subject to withholding of applicable income and employment taxes.
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(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.
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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.
COMPANY: ▇▇▇▇.▇▇▇, INC.
By:
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Title:
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EMPLOYEE: By:
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Print Name:
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