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EXHIBIT 10.23
SEVERANCE COMPENSATION AGREEMENT
DATED AS OF APRIL 22, 1999
BETWEEN
COLLECTORS UNIVERSE, INC.,
AND
▇▇▇▇ ▇▇▇▇▇▇
The Board of Directors of Collectors Universe, Inc., a Delaware
Corporation (the "Company") has determined that it is appropriate to reinforce
and encourage the continued attention and dedication of members of the Company's
management, including ▇▇▇▇ ▇▇▇▇▇▇, the Company's Chief Financial Officer (the
"Executive"), to their assigned duties without distraction in potentially
disturbing circumstances arising from the possibility of a change in control of
the Company.
This Agreement sets forth the severance compensation which the Company
agrees it will pay to the Executive if the Executive's employment with the
Company terminates under one of the circumstances described herein following a
Change in Control of the Company (as defined in Section 2).
1. Term. The term of this Agreement shall commence on the date hereof
and, subject to earlier termination pursuant to Section 3(b), 3(c) or 3(d)
hereof, shall end three (3) years following the date on which notice of
non-renewal or termination of this Agreement is given by either the Company or
Executive to the other. Thus, this Agreement shall be renewable automatically on
a daily basis so that the outstanding term is always three (3) years following
any effective notice of non-renewal or of termination given by the Company or
Executive, other than in the event of a termination pursuant to Section 3(b),
3(c) or 3(d) hereof.
2. Change in Control. For purposes of this Agreement, a "Change in
Control" of the Company shall be deemed to have occurred if:
2.1 there shall be consummated:
(a) 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 substantially the same
proportionate ownership of at least 65% of common stock of the
surviving corporation immediately after the merger, or
(b) 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 other than to a
corporation in which the persons who were the holders of the Company's
Common Stock immediately prior to such transaction have substantially
the same proportionate ownership of at least 65% of the common stock of
such corporation, or
2.2 the stockholders of the Company approve any plan or
proposal for the liquidation or dissolution of the Company, or
2.3 any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), shall become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of 20% or more of the Company's outstanding shares of
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Common Stock, other than any such person who has record or beneficial ownership
of at least 10% of the Company's outstanding shares of Common Stock on the date
hereof and any persons who acquire shares of stock in the Company by purchasing
shares in a firmly underwritten public offering by the Company; or
2.4 during any period of two consecutive years during the term
of this Agreement, individuals who at the beginning of the two year period
constituted the entire Board of Directors do not for any reason 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.
3.1 Executive shall become entitled to receive the
compensation provided for in Section 4 hereof if, and only if, a Change in
Control of the Company shall have occurred while the Executive is still an
employee of the Company, and there subsequently occurs a termination of the
Executive's employment:
(a) By Executive for Good Reason (as defined in
Section 3.5 below); or
(b) By the Company for any reason other than (i)
Executive's death; (ii) Executive's Disability (as defined in Section
3.2 below), (iii) Executive's reaching Retirement Age (as defined in
Section 3.3 below), or (iv) Cause (as defined in Section 3.4 below).
3.2 Death or Disability. If, as a result of the Executive's
incapacity due to physical or mental illness, the Executive is absent from his
duties with the Company on a full-time basis for five months, the Company may
elect to terminate his employment and this Agreement for "Disability" by written
notice to Executive; provided, however, that any such termination shall be
effective only at the end of thirty (30) days following the delivery of such
notice and only if Executive fails to return to the full-time performance of
duties by the end of such 30-day notice period. Executive's employment and this
Agreement also shall terminate immediately in the event of the death of the
Executive occurring at any time during the term hereof. Executive shall not be
entitled to any compensation under this Agreement by reason of the termination
of his employment and/or the termination of this Agreement due to his Disability
or death, even if such termination occurs subsequent to a Change of Control.
3.3 Retirement or Voluntary Resignation. This Agreement shall
terminate automatically on Retirement (as hereinafter defined) of Executive or
due to the resignation or termination by Executive of his employment for any
reason other than Good Reason (as hereinafter defined). The Company shall have
no obligation to pay and Executive shall have no right to receive any
compensation under this Agreement on or due to such Retirement or the
Executive's resignation or termination of employment other than for Good Reason,
even such termination occurs subsequent to a Change of Control. The term
"Retirement" as used in this Agreement shall mean termination by the Company or
the Executive of the Executive's employment or of this Agreement based on the
Executive's having reached age 65 or such other age as shall have been fixed in
any arrangement established with the Executive's consent with respect to the
Executive.
3.4 Cause. The Company may terminate Executive's Employment
and/or this Agreement for Cause (as hereinafter defined) and the Company shall
have no obligation to pay and the Executive shall have no right to receive any
compensation hereunder by reason of any such termination, even if it occurs
following a Change of Control. The term "Cause" for purposes of this Agreement
shall have the same meaning given to it in Executive's Employment Agreement of
even date herewith (the
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"Employment Agreement") with the Company. Notwithstanding the foregoing, the
Executive shall not be deemed, for purposes of this Agreement, to have been
terminated for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than two-thirds of the entire membership of the Company's Board of
Directors at a meeting of the Board called and held for that purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board), finding
that in the good faith opinion of the Board the Executive engaged in conduct
that constitutes grounds for a termination of his employment for Cause (as
defined in the Employment Agreement and specifying the particulars thereof in
reasonable detail.
3.5 Good Reason. If, prior to the termination of this
Agreement, there occurs: (i) first a Change of Control and (ii) then, any of the
events or circumstances described below in this Section 3.5, and (iii) the
termination by Executive of his employment in the manner and within the
applicable time period set forth hereinafter, Executive shall become entitled to
receive the severance compensation set forth in Section 4 of this Agreement. Any
such termination shall constitute a termination for "Good Reason." For purposes
of this Agreement "Good Reason" shall mean any of the following (without the
Executive's express written consent) that occurs either as a result of, or after
the occurrence of, any Change in Control:
(a) The Company has materially changed the
Executive's position, duties, responsibilities, status, or offices as
in effect immediately prior to a Change in Control of the Company,
which, for purposes hereof, shall include, without limitation, any
change in his reporting responsibilities (such as, but not limited to,
a requirement that the Executive report to a person or persons other
than, or in addition to, the Board of Directors of the Company or any
other persons to whom the Executive was required to report prior to
such Change in Control) or has removed the Executive from or failed to
reelect the Executive to any of such positions, except in connection
with the termination of his employment for Disability, Retirement or
Cause or as a result of the Executive's death or Retirement;
(b) A reduction by the Company in the Executive's
base salary as in effect on the date hereof or as the same may be
increased from time to time during the term of this Agreement, or the
Company's failure to increase (within 12 months of the Executive's last
increase in base salary) the Executive's base salary after a Change in
Control of the Company in an amount which at least equals, on a
percentage basis, the average percentage increase in base salary for
all officers of the Company effected in the preceding 12 months;
(c) Any failure by the Company to continue in effect
any benefit plan or arrangement (including, without limitation, the
Company's life insurance, accident, disability and health insurance
plans, 401(k) and bonus plans, stock options, and all other similar
plans which are from time to time made generally available to senior
executives of the Company and in which the Executive is participating
at the time of a Change in Control of the Company, unless replaced by
any other plan providing the Executive with substantially similar
benefits (hereinafter referred to as "Benefit Plans"), or the taking of
any action by the Company which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under
any such Benefit Plan or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of a Change in Control of
the Company;
(d) Any failure by the Company to continue in effect
any incentive compensation plan or arrangement (including, without
limitation, the Company's plans enumerated in paragraph (c) above and
similar incentive compensation benefits) in which the Executive is
participating at the time of a Change in Control of the Company, unless
replaced by
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any other plans or arrangements providing him with substantially
similar benefits (hereinafter referred to as "Incentive Plans"), or the
taking of any action by the Company which would adversely affect the
Executive's participation in any such Incentive Plan or reduce the
Executive's potential benefits under any such Incentive Plan, expressed
as a percentage of his base salary, by more than 10 percentage points
in any fiscal year as compared to the immediately preceding fiscal
year;
(e) Any failure by the Company to continue in effect
any plan or arrangement to receive securities of the Company
(including, without limitation, the Company's stock option and purchase
plans and any other plan or arrangement to receive and exercise stock
options, stock appreciation rights, restricted stock or grants thereof)
in which the Executive is participating at the time of a Change in
Control of the Company, unless there are substituted therefor plans or
arrangements providing him with substantially similar benefits
(hereinafter referred to as "Securities Plans"), or the taking of any
action by the Company which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under
any such Securities Plan;
(f) A relocation of the Company's principal executive
offices to a location outside of Orange County, California, or the
Executive's relocation to any place other than the location at which
the Executive performed the Executive's duties prior to a Change in
Control of the Company, except for required travel by the Executive on
the Company's business to an extent substantially consistent with the
Executive's business travel obligations during the 12 months
immediately preceding a Change of Control of the Company;
(g) Any failure by the Company to provide the
Executive with the number of paid vacation days to which the Executive
is entitled at the time of a Change of Control of the Company;
(h) Any material breach by the Company of any
provision of this Agreement which it fails to cure within 15 days of
written notice thereof from the Executive;
(i) Any failure by the Company to obtain the
assumption of this Agreement by any purchaser of all or substantially
all of the assets of the Company; or
(j) Any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 3.6, and for purposes of this
Agreement, no such purported termination shall be effective.
3.6 Notice of Termination. Any termination by the Company
pursuant to Section 3.2, 3.3 or 3.4 shall be communicated by a Notice of
Termination. For purposes of this Agreement, a "Notice of Termination" shall
mean a written notice which shall indicate those specific termination provisions
in this Agreement relied upon and which set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provisions so indicated. For purposes of this Agreement, no
such purported termination by the Company shall be effective without such Notice
of Termination.
3.7 Date of Termination. "Date of Termination" shall mean (i)
if this Agreement or Executive's employment is terminated by the Company for
Disability, 30 days after Notice of Termination is given to the Executive
(provided that the Executive shall not have returned to the performance of the
Executive's duties on a full-time basis during such 30-day period) or (ii) if
the Executive's employment is terminated by the Company for any other reason,
the date on which a Notice
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of Termination is given; provided that if within 30 days after any Notice of
Termination is given to the Executive by the Company the Executive notifies the
Company that a dispute exists concerning the termination, the Date of
Termination shall be the date the dispute is finally determined, whether by
mutual agreement by the parties or upon final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
4. Severance Compensation upon Termination of Employment. Subject to
Section 4.5 below, if, following a Change in Control, the Company shall
terminate the Executive's employment for any reason other than other than those
set forth in Section 3.2, 3.3 or 3.4 above, or if the Executive shall terminate
his employment for Good Reason, then:
4.1 The Company shall pay to the Executive as severance pay a
lump sum, in cash, in full on the fifth day following the Date of Termination in
an amount equal to two and one-half (2.5) multiplied by the sum of (i) the
Executive's highest annual base salary in effect during the 12-month period
immediately preceding the Date of Termination, and (ii) a lump sum payment of
the Executive's incentive compensation bonus that would otherwise be payable to
Executive under the Company's Bonus Plan then in effect for the year in which
the Date of Termination occurred assuming one hundred percent (100%)
satisfaction of all performance goals established under such Bonus Plan for the
Executive. All payments hereunder shall be made net of withholdings required by
applicable federal, state or local laws.
4.2 The Company shall pay in cash to the Executive an amount
equal to the difference between the exercise price and the fair market price
(based upon the average NASDAQ trading price of the Company's stock for the
twenty (20) business days preceding the Change in Control) of those shares of
capital stock of the Company subject to all stock options held by the Executive
as of the Date of Termination, and the Company shall withhold all appropriate
taxes and other amounts related to such payment as required by applicable
federal, state or local laws.
4.3 All restrictions on any restricted stock held by the
Executive as of the Date of Termination shall be removed.
4.4 The Company shall continue for a period of two (2) years
from the Date of Termination to provide the following benefits to the Executive
if and to the extent he was receiving such benefits on the day immediately
preceding the Date of Termination:
(a) Participation in the Company's medical, dental
and vision plans; and
(b) Long-term disability insurance.
Provided however, that any benefits payable under this subsection 4.4 shall
terminate at such time as the Executive becomes eligible for similar benefits
from any subsequent employer.
4.5 Limitation. To the extent that any or all of the payments
and benefits provided for in this Agreement constitute "parachute payments"
within the meaning of Section 280G of the Internal Revenue Code (the "Code")
and, but for this Section 4.5, would be subject to the excise tax imposed by
Section 4999 of the Code, the aggregate amount of such payments and benefits
shall be reduced such that the present value thereof (as determined under the
Code and applicable regulations) is equal to 2.99 times the Executive's "base
amount" (as defined in the Code). The determination of any reduction of any
payment or benefits under this Section 4 pursuant to the foregoing provision
shall be made by a nationally recognized public accounting firm chosen by the
Company in good faith, and such determination shall be conclusive and binding on
the Company and the Executive.
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5. No Obligation to Mitigate Damages; No Effect on Other Contractual
Rights.
(a) The Executive 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, except as set forth in Section 4.4, shall the
amount of any payment provided for under this Agreement be reduced by any
compensation earned by the Executive as the result of employment by another
employer after the Date of Termination, or otherwise.
(b) The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, employment agreement or other contract, plan or arrangement.
6. Successor to the Company.
(a) The Company will require any successor or assignee to all
or substantially all of the business and/or assets of the Company, by agreement
in form and substance reasonably satisfactory to the Executive, 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. Any failure of
the Company to obtain such agreement prior to the effectiveness of any such
succession or assignment shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment for Good Reason.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor or assignee to its business and/or assets as aforesaid
which executes and delivers the agreement provided for in this Section 6 or
which otherwise becomes bound by all of the terms and provisions of this
Agreement by operation of law. If at any time during the term of this Agreement
the Executive is employed by any corporation a majority of the voting securities
of which is then owned by the Company, "Company" as used in Sections 3, 4, 11
and 12 hereof shall in addition include such employer. In such event, the
Company agrees that it shall pay or shall cause such employer to pay any amounts
that become due and payable to the Executive pursuant to Section 4 hereof.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such designee, to the Executive's estate.
7. Release of Claims. The obligations of the Company under this
Agreement shall constitute the only obligations of the Company arising from a
termination of Executive's employment under the circumstances set forth in
Section 3.1 hereof following a Change in Control of the Company. Upon the
Company's tender of payment hereunder pursuant to Section 4, the Company shall
have no obligation to Executive by reason of his employment or the termination
thereof other than those set forth herein, and the Executive agrees that receipt
of such payment shall constitute a full and final settlement and release of all
claims or rights against the Company whether under this Agreement or any other
employment contract or agreement, or under any Benefit Plans, Incentive Plans,
or Securities Plans that the Company has with the Executive or in which he
participates, and Executive shall execute all appropriate agreements reflecting
such settlement and release.
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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: If to Executive
Chief Executive Officer ▇▇▇▇ ▇▇▇▇▇▇
Collectors Universe, Inc. ____________________________________
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ________________________, CA 9_____
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
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. Amendments and Waivers. No provisions of this Agreement may be
amended, modified, waived or discharged unless such amendment, modification,
waiver or discharge is set forth in a writing signed by the Executive and the
Company. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
10. 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.
11. 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.
12. Governing Law; Legal Proceedings, Fees and Expenses; Waiver of Jury
Trial. This Agreement shall be governed by and construed in accordance with the
laws of the State of California. In the event any controversy, claim or dispute
arises between the parties hereto relating to this Agreement, the California
Superior Court for the County of Orange shall have exclusive jurisdiction over
such controversy claim or dispute, and each party further agrees (i) to accept
and not challenge the subject matter or the personal jurisdiction or the venue
of such court, (ii) that it shall not assert the defense of forum nonconviens,
and (iii) that it shall accept service of process in any such proceeding by
registered or certified mail. TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH PARTY
EXPRESSLY AND IRREVOCABLY WAIVES ANY RIGHT IT OR HE MAY HAVE TO A TRIAL BY JURY
WITH RESPECT TO ANY SUCH CONTROVERSY, CLAIM OR DISPUTE AND EXPRESSLY AND
IRREVOCABLY AGREES THAT THE JUDGE SHALL BE THE SOLE TRIER OF FACT IN ANY SUCH
PROCEEDING. EACH PARTY IS AWARE THAT THE RIGHT TO A TRIAL BY JURY IS A
CONSTITUTIONAL RIGHT AND REPRESENTS THAT SUCH PARTY IS HEREBY WAIVING
VOLUNTARILY AND WITH AN UNDERSTANDING OF THE CONSEQUENCES THEREOF. The Company
shall pay all legal fees and expenses which the Executive may incur as a result
of the Company's contesting the validity, enforceability or the Executive's
interpretation of, or determinations under, this Agreement unless the Company
prevails in such contest.
13. Confidentiality. The Executive shall retain in confidence any and
all confidential information known to the Executive concerning the Company and
its business so long as such information is not otherwise publicly disclosed.
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14. Entire Agreement. This Agreement contains all of the terms agreed
upon between the Executive and the Company with respect to the subject matter
hereof and replaces and supersedes all prior severance agreements between the
Executive and the Company; provided, however, that the parties acknowledge that
Executive is employed by the Company under the Employment Agreement referenced
hereinabove (the "Existing Employment Agreement"), which sets forth, among other
things, the terms of his employment and the respective rights and remedies of
the parties with respect to and in the event of the termination of his
employment with the Company. Notwithstanding the foregoing, if the Executive's
employment is terminated pursuant to the Existing Employment Agreement prior to
any Change in Control of the Company or after a Change of Control for any of the
reasons set forth in Section 3.2, 3.3 or 3.4, or due to a resignation or
termination of employment by Executive other than for Good Reason, the
provisions of the Existing Employment Agreement shall govern his rights and
remedies arising from such termination and shall supersede this Agreement.
Conversely, if there occurs a Change in Control while Executive is employed by
the Company, and while this Agreement is in effect, and Executive's employment
is terminated other than pursuant to Section 3.2, 3.3 or 3.4, or by the
Executive for Good Reason, as defined in Section 3.5, then Executive's rights
and the Company's obligations by reason of such termination shall be governed by
this Agreement and not by the Existing Employment Agreement. The Executive and
the Company agree that no term, provision or condition of this Agreement shall
be held to be altered, amended, changed or waived in any respect except by
subsequent written agreement of the Executive and the Company.
15. Headings and Interpretation. This Agreement is the result of
arms'-length negotiations between the parties hereto and no provision of this
Agreement, because of any ambiguity found to be contained herein, shall be
construed against a party by reason of the fact that such party or its legal
counsel was the draftsman of that provision. Unless otherwise indicated
elsewhere in this Agreement, (a) the term "or" shall not be exclusive, (b) the
term "including" shall mean "including, but not limited to," and (c) the terms
"herein," "hereof," "hereto," "hereunder" and other terms similar to such terms
shall refer to this Agreement as a whole and not merely to the specific section,
subsection, paragraph or clause where such terms may appear. The Section and
paragraph headings in this Agreement are included for convenience of reference
and shall not be considered in interpreting, construing or giving effect to any
of the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
"COMPANY" "EXECUTIVE"
COLLECTORS UNIVERSE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive Officer ▇▇▇▇ ▇▇▇▇▇▇
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