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EXHIBIT 10.15
SIMULATION SCIENCES
SEPARATION AGREEMENT
This separation agreement (the "Agreement") is made and entered into by
and between ________________ ("Executive") and Simulation Sciences Inc. (the
"Company"), effective as of ________ __, 1996 (the "Effective Date").
WHEREAS, Executive is and has been employed by the Company and is
currently President and chief executive officer.
WHEREAS, the Board has determined that Executive is a critical
management asset to the Company and desires to assure itself of the continued
services of Executive for the term of employment provided for in this Agreement,
and Executive desires to be employed by the Company for such period, upon the
terms and conditions set forth herein; and
WHEREAS, the Board believes that it is imperative to provide the
Executive with certain severance benefits upon Executive's termination of
employment following a Change of Control which provides the Executive with
enhanced financial security and provides incentive and encouragement to the
Executive to remain with the Company notwithstanding the possibility of a Change
of Control;
NOW, THEREFORE, in consideration of the covenants and agreements set
forth herein, the parties hereto agree as follows:
1. Employment; Duties. During the Employment Term (as defined in
Section 2 of this Agreement), Executive shall serve as President and chief
executive officer. During the Employment Term, Executive shall render such
business and professional services in the performance of his duties, consistent
with Executive's position within the Company, as shall reasonably be assigned to
him by the Board. Executive shall not serve as a director, employee, consultant
or advisor to any other corporation or other business enterprise without the
prior written consent of the Company; provided, however, that Executive may
serve in any capacity with any civic, educational or charitable organization or
any trade association without the approval of the Board, so long as such
activities do not interfere with his duties and obligations under this
Agreement. It is understood and agreed that Executive will be considered an
"employee" of the Company for tax and contractual purposes for the duration of
the Employment Term.
2. Term of Employment. Executive's employment under this Agreement
shall commence on the Effective Date and shall continue for a period of two (2)
years thereafter, unless sooner terminated as provided herein. The period
commencing on the
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Effective date and ending two years later, or such shorter term as is provided
for herein, is referred to as the " Effective Term."
3. Compensation.
(a) Base Salary. The Company shall pay Executive throughout the --
Effective Term a base salary (the "Base Salary") at a rate of not less than
$200,000 per year, payable in equal installments no less frequently than
monthly. Once increased, such higher salary shall constitute Executive's Base
Salary for purposes of this Agreement.
(b) Bonuses. Executive shall receive bonuses (i) as determined by
the Compensation Committee of the Board of Directors, and (ii) according to the
terms of any Company executive bonus plans; (targeted bonus 50% of base pay).
4. Employee Benefits.
(a) General. Executive shall be included in all employee benefit
plans, programs or arrangements, including, without limitation, any plans,
programs or arrangements providing for retirement benefits, incentive
compensation, profit bonuses, disability benefits, health and life insurance,
vacation and paid holidays, which shall be established by the Company for, or
made available to , its senior executives and shall further be entitled to
fringe and other employee benefits and perquisites comparable to those he
received prior to entering onto this Agreement and to such other benefits and
perquisites as are specifically set forth herein.
(b) Reimbursement of Expenses. The Company shall reimburse
Executive for all out-of-pocket expenses reasonably incurred and paid by him in
the performance of his duties pursuant to this Agreement, in accordance with
Company policies.
5. 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 Executive in connection with his responsibilities as an employee
and intended to result in substantial personal enrichment of the Executive, (ii)
the conviction of a felony, (iii) a willful act by the Executive which
constitutes gross misconduct and which is injurious to the Company, and (iv)
following delivery to the Executive of a written demand for performance from the
Company which describes the basis for the Company's belief that the Executive
has not substantially performed his duties, continued violations by the
Executive of the Executive's obligations to the Company which are demonstrably
willful and deliberate on the Executive's part.
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(b) Change of Control. "Change of Control" means the occurrence
of any of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) is or becomes 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; 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 the stockholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
the Company's assets.
(c) Disability. "Disability" shall mean that the Executive has
been unable to perform his Company duties as the result of his 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 Executive or the Executive's legal representative and acceptable to the
Company (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
Executive's employment. In the event that the Executive resumes the performance
of substantially all of his duties hereunder before the termination of his
employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.
(d) Good Reason. "Good Reason" shall mean (i) without the
Executive's express written consent, the significant reduction of the
Executive's duties, authority or responsibilities, relative to the Executive's
duties, authority or responsibilities as in effect immediately prior to such
reduction, or the assignment to Executive of such reduced duties, authority or
responsibilities, (ii) a reduction by the Company in the Base Salary of the
Executive; (iii) a material reduction by the Company in the kind or level of
employee benefits, including bonuses, to which the Executive was entitled
immediately prior to such reduction with the result that the Executive's overall
benefits package is reduced; (iv) the relocation of the Executive to a facility
or a location more than thirty
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(30) miles from the Executive's then present location, without the Executive's
express written consent; (v) any purported termination of the Executive by the
Company 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 18 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 Executive.
6. Termination of Employment Prior to a Change of Control. The
following provisions shall govern termination of Executive's employment prior to
a Change of Control:
(a) Termination without Cause: Resignation for Good Reason.
(i) General. If, prior to two years following the Effective
Time and prior to a Change of Control Executive resigns from his employment
hereunder for Good Reason, then the Company shall:
(A) Cash Severance Payments. Pay to Executive
severance payments of one month's base salary for a period of six (6) months
following the date of termination (the "Severance Period"). If, at the end of
such six-month period, Executive has not obtained employment with a subsequent
employer after a good faith effort, then the Severance Period shall be extended
on a month by month basis until (i) six months after the expiration of the
initial six-month period, or (ii) Executive obtains employment with a subsequent
employer, whichever occurs first. Such severance payments shall be paid at
regular payroll intervals, and shall be calculated based on the highest level of
monthly salary received by Executive from the Company within the prior three
years.
(B) Accelerated Vesting. Cause the vesting of all
restricted stock, stock options and other equity-based compensation held, on the
date of termination, by Executive, to accelerate, as of the date of termination,
to the same extent as it would have had Executive remained employed by the
Company for twelve (12) months following the date of termination.
(C) Continued Group Health and Insurance Benefits.
Continue to make available to the Executive and Executive's spouse and
dependents covered under any group health plans or life insurance plans of the
Company on the date of such termination (the "Covered Dependents"), and pay for,
to the same extent as paid prior to termination of employment, all group health
plan, life and other similar insurance plans in which Executive or such Covered
Dependents participate on the date of the Executive's termination, through the
Severance Period (including any extension thereof, as applicable).
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(D) Outplacement Services. Pay on behalf of the
Executive, outplacement fees from a qualified outplacement agency, fees not to
exceed ten thousand dollars ($10,000) for the purpose of assisting Executive
securing re-employment in the profession the Executive has been employed by the
Company. Payments of fees will not extend beyond the severance period or the
Executive's re-employment whichever comes first.
(ii) Death During Severance Period. In the event of
Executive's death while he is receiving benefits pursuant to Section 6(a)(i)(C)
hereof, the Company shall continue providing and paying for group health plan,
life and similar insurance plan coverage for the Covered Dependents through the
Severance Period.
(b) Termination for Cause: Resignation Without Good Reason. If,
prior to the expiration of the Effective Term, Executive's employment is
terminated by the Company for Cause, or if the Executive resigns from his
employment hereunder other than for Good Reason, then Executive shall be
entitled only to payment of all amounts earned or owed to Executive and all
vesting of equity compensation through and including the date of such
termination or resignation.
7. Termination of Employment On or Following a Change of Control.
The following provisions shall govern termination of Executive's employment on
or following a Change of Control:
(a) Termination without Cause: Resignation for Good Reason.
(i) General. If, following a Change of Control and prior to
two years following the Effective Time (A) Executive's employment is terminated
by the Company without Cause, or (B) Executive resigns from his employment
hereunder for Good Reason, then the Company shall:
(A) Cash Severance Payments Pay to Executive severance
payments of one month's base salary for a period of six (6) months following the
date of termination (the "Severance Period"). If, at the end of such six-month
period, Executive has not obtained employment with a subsequent employer after a
good faith effort, then the Severance Period shall be extended on a month by
month basis until (i) six months after the expiration of the initial six-month
period, or (ii) Executive obtains employment with a subsequent employer,
whichever occurs first. Such severance payments shall be paid at regular payroll
intervals, and shall be calculated based on the highest level of monthly salary
received by Executive from the Company within the prior three years.
(B) Accelerated Vesting. Cause the vesting of all
restricted stock, stock options and other equity-based compensation held, on the
date of
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termination, by Executive, to fully accelerate, as of the date of termination,
so that they become 100% vested.
(C) Continued Group Health and Insurance Benefits.
Continue to make available to the Executive and the Covered Dependents, and pay
for, to the same extent as paid prior to termination of employment, all group
health plan, life and other similar insurance plans in which Executive or such
Covered Dependents participate on the date of the Executive's termination,
through the Change of Control Severance Period (including any extension thereof,
as applicable).
(D) Outplacement Services. Pay on behalf of the
Executive, outplacement fees from a qualified outplacement agency, fees not to
exceed ten thousand dollars ($10,000) for the purpose of assisting Executive
securing re-employment in the profession the Executive has been employed by the
Company. Payments of fees will not extend beyond the severance period or the
Executive's re-employment whichever comes first.
(ii) Death During Severance Period. In the event of
Executive's death while he is receiving benefits pursuant to Section 7(a)(i)(C)
hereof, the Company shall continue providing and paying for group health plan,
life and similar insurance plan coverage to the Covered Dependents through the
Change of Control Severance Period.
(b) Termination for Cause, Resignation Without Good Reason. If,
prior to the expiration of the Employment Term, Executive's employment is
terminated by the Company for Cause, or if Executive resigns from his employment
hereunder other than for Good Reason, then Executive shall be entitled only to
payment of all amounts earned or owed to Executive and all vesting of equity
compensation through and including the date of such termination or resignation.
8. Death or Permanent Disability. In the event Executive's
employment terminates due to Executive's death or Disability, whether or not
there has been a Change of Control, the Company shall:
(a) Cash-Lump-Sum Payment. Pay to Executive, his estate, or his
personal representative (as appropriate) a lump-sum cash payment equal to twelve
(12) months' Base Salary, to be paid within thirty (30) days after the date the
Company receives notice of Executive's death, or within thirty (30) days after
the date it has been conclusively determined that Executive has incurred a
Disability.
(b) Accelerated Vesting. Cause the vesting of all restricted
stock, stock options and other equity-based compensation held, on the date of
termination, by
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Executive, to accelerate, as of the date of termination, to the same extent as
it would have had Executive remained employed by the Company for twelve (12)
months following the date of termination.
(c) Continued Group Health and Insurance Benefits. Continue to
make available to the Executive (if alive) and the Covered Dependents (whether
or not Executive is alive) and pay for, to the same extent as paid prior to
termination of employment, all group health plans, life and other similar
insurance plans in which Executive or such Covered Dependents participate on the
date of the Executive's termination, for a period of twelve (12) months
following the date of Executive's termination of employment.
(d) Other Benefits. Pay to Executive, his estate, or his personal
representative (as appropriate) all other benefits normally paid to employees
who have died or incurred a disability.
9. Golden Parachute Excise Tax Gross-Up. In the event that the
severance and other benefits provided for in this Agreement or otherwise payable
to the Executive constitute "parachute payments" within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the "Code") and will be
subject to the excise tax imposed by Section 4999 of the Code, then the
Executive shall receive (i) a payment from the Company sufficient to pay such
excise tax, and (ii) an additional payment from the Company sufficient to pay
the excise tax and federal and state income taxes arising from the payments made
by the Company to Executive pursuant to this sentence. Unless the Company and
the Executive otherwise agree in writing, the determination of Executive's
excise tax liability and the amount required to be paid under this Section 9
shall be made in writing by the Accountants. In the event that the excise tax
incurred by Executive is determined by the Internal Revenue Service to be
greater or lesser than the amount so determined by the Accountants, the Company
and Executive agree to promptly make such additional payment, including interest
and any tax penalties, to the other party as the Accountants reasonably
determine is appropriate to ensure that the net economic effect to Executive
under this Section 9, on an after-tax basis, is as if the Code Section 4999
excise tax did not apply to Executive. For purposes of making the calculations
required by this Section 9, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on interpretations of
the Code for which there is a "substantial authority" tax reporting position.
The Company and the Executive shall furnish to the Accountants such information
and documents as the Accountants may reasonably request in order to make a
determination under this Section. the Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 9.
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The gross-up payment to which Executive is entitled hereunder shall be
paid by the Company to the Executive, in cash and in full, not later than thirty
(30) calendar days following the date of termination.
10. Date of Termination. The date of termination of employment by the
Company shall be the date specified in a written notice of termination to
Executive. The date of resignation shall be the date specified in the written
notice of resignation from Executive to the Company. Termination of Executive's
employment for Cause shall be communicated by delivery to Executive of a copy of
a resolution duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board (excluding Executive) at a meeting of the
Board called and held for such purpose (a "Notice of Termination"). For purposes
of this Agreement, no purported termination of Executive's employment for Cause
shall be effective without delivery of such Notice of Termination.
11. Assignment. Executive's rights and obligations under this
Agreement shall not be assignable by Executive. The Company's rights and
obligations under this Agreement shall not be assignable by the Company except
as incident to the transfer, by merger, liquidation, or otherwise, of all or
substantially all of the business of the Company.
12. Notices. Any notice required or permitted under this Agreement
shall be given in writing and shall be deemed to have been effectively made or
given if personally delivered, or if sent by facsimile, or mailed to the other
party at its address set forth below in this Section 12, or at such other
address as such party may designate by written notice to the other party hereto.
Any effective notice hereunder shall be deemed given on the date personally
delivered or on the date sent by facsimile or deposited in the United States
mail (sent by certified mail, return receipt requested), as the case may be, at
the following address:
i) If to the Company:
SIMULATION SCIENCES INC.
000 Xxxxxxxx Xxx., #000
Xxxx, Xxxxxxxxxx 00000
ii) If to Executive:
XXXXXXX X. XXXXXX
0 Xxxxxxxx Xxxxxx
Xxxxxx Xxxxxx, XX 00000
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13. Disputes. Any disputes under this Agreement between the parties
hereto shall be settled by arbitration in Irvine, California under the auspices
of, and in accordance with the rules of, the American Arbitration Association,
by an arbitrator who is mutually agreeable to the parties hereto, or, if the
Company and Executive cannot agree on the selection of the arbitrator, then
before three arbitrators, one of which shall be appointed by Executive, one of
which shall be appointed by the Company, and the third of which shall be chosen
by the American Arbitration Association (such arbitrator or arbitrators
hereinafter referred to as the "Arbitrator"). The decision in such arbitration
shall be final and conclusive on the parties and judgment upon such decision may
be entered in any court having jurisdiction thereof. The parties hereby agree
that the Arbitrator shall be empowered to enter an equitable decree mandating
specific enforcement of the terms of this Agreement. The Company and Executive
shall share equally all expenses of the Arbitrator incurred in any arbitration
hereunder, provided, however, that the Company or Executive, as the case may be,
shall bear all expenses of the Arbitrator and all of the legal fees and
out-of-pocket expenses of the other party if the Arbitrator determines that the
claim or position of such party was without reasonable foundation.
14. Severability. If an arbitrator determines that any term or
provision hereof is invalid or unenforceable, (a) the remaining terms and
provisions hereof shall be unimpaired and (b) such arbitrator shall have the
authority to replace such invalid or unenforceable term or provision with a term
or provision that is valid and enforceable and that comes closest to expressing
the intention of the invalid or unenforceable term or provision.
15. Entire Agreement. This Agreement and the Simulation Sciences Inc.
Confidentiality Agreement represents the entire agreement of the parties with
respect to the matters set forth herein, and to the extent inconsistent with
other prior contracts, arrangements or understandings between the parties,
supersedes all such previous contracts, arrangements or understandings between
the Company and Executive. The Agreement may be amended only by mutual written
agreement of the parties hereto.
16. Withholding. Company shall be entitled to withhold, or cause to
be withheld, from payment any amount of withholding taxes required by law with
respect to payments made to Executive in connection with his employment
hereunder.
17. Governing Law. This Agreement shall be construed, interpreted,
and governed in accordance with the laws of California without reference to
rules relating to conflict of law.
18. Successors. This Agreement shall be binding upon and inure to the
benefit of, and shall be enforceable by Executive and the Company, their
respective heirs, executors, administrators and assigns. In the event the
Company is merged, consolidated,
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liquidated by a parent corporation, or otherwise combined into one or more
corporations, the provisions of this Agreement shall be binding upon and inure
to the benefit of the parent corporation or the corporation resulting from such
merger or to which the asset shall be sold or transferred, which corporation
from and after the date of such merger, consolidation, sale or transfer shall be
deemed to be the Company for purposes of this Agreement. In the event of any
other assignment of this Agreement by the Company, by operation of law or
otherwise, the Company shall remain primarily liable for its obligations
hereunder. This Agreement shall not be assignable by Executive.
19. Headings. The headings of sections herein are included solely for
convenience of reference and shall not control the meaning of interpretation of
any of the provisions of this Agreement.
20. Counterparts. This Agreement may be executed by either of the
parties hereto in counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
COMPANY
EXECUTIVE
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