Exhibit 10.18
XXXXX CORPORATION
EXECUTIVE RETENTION AGREEMENT
This EXECUTIVE RETENTION AGREEMENT (the "AGREEMENT") is made and
entered into effective as of February 21, 2003 (the "EFFECTIVE DATE"), by and
between Xxxxx Xxxxxx (the "EXECUTIVE") and Xxxxx Corporation, a Delaware
corporation (together with its subsidiaries and successors, the "COMPANY").
WHEREAS, Executive is currently a valued employee of the Company;
WHEREAS, the Board of Directors of the Company (the "BOARD") believes
that it is in the best interests of the Company and its stockholders to provide
Executive with certain severance benefits in the event that Executive is
terminated under certain circumstances;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and the continued employment of Executive by the Company, the parties
agree as follows:
1. Severance Benefits.
(a) In the event that (x) Executive's employment is terminated
(A) by the Company without Cause (as defined below) at any time after
the Effective Date or (B) by Executive for any reason within 12 months
after a Change in Control (as defined below) or within 12 months after
the filing of a plan of liquidation which has been approved by the
Company's stockholders, or (y) Executive's employment is terminated for
any other reason and the Compensation Committee of the Board expressly
consents in writing to Executive receiving the benefits under this
Agreement, Executive will be entitled to receive the following
benefits:
(i) The Company shall pay to Executive a lump sum
payment equal to the base salary Executive would have received
had Executive continued to be employed by the Company for
eight additional months after the date of termination, less
applicable payroll deductions and withholdings.
(ii) Executive's outstanding unvested options to
purchase the Company's common stock shall become immediately
vested to the extent such options would have become vested
over the year following the date of Executive's termination,
and all vested options will remain exercisable until one year
from the date of Executive's termination or the date on which
such options would otherwise expire under the terms of the
applicable option plan and related option agreement.
(iii) Except as set forth in clause (c) below,
Executive shall receive any other benefits under the
applicable benefits plans of the Company in accordance with
their terms.
(b) The receipt of all benefits hereunder shall be subject to
Executive signing a general release of claims against the Company in a
form acceptable to the Company.
(c) All amounts payable by the Company under this Agreement
shall be reduced by any amounts required to be paid or notice required
to be given to Executive as a result of the termination of employment
under any applicable federal, state or local law, including but not
limited to the Workers Adjustment and Retaining Notification Act (the
"WARN ACT") and any similar state law, and will be in lieu of any other
severance benefits or payments pursuant to the Company's severance
plans or policies or any other agreement between the Company and
Executive.
(d) For purposes hereof, the following terms have the meanings
set forth below:
(i) "CAUSE" means (i) the continued failure by
Executive to devote substantially all of his business time and
energies to the performance of his duties to the Company
(other than as a result of total or partial incapacity due to
physical or mental illness) after a written demand for
substantial performance is delivered to Executive and
Executive shall have failed during the 30-day period following
such written demand to have corrected such failure; (ii) any
willful act or omission by Executive constituting dishonesty,
fraud or other malfeasance against the Company; (iii)
Executive's conviction of a felony, plea of nolo contendre or
guilty plea to a felony; or (iv) the breach by Executive of
the Confidentiality Agreement (as defined below).
(ii) "CHANGE IN CONTROL" means:
(A) the acquisition by any person, entity or
"group", within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities and Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), (excluding, for this
purpose, the Company or its subsidiaries, or any
employee benefit plan of the Company or its
subsidiaries which acquires beneficial ownership of
voting securities of the Company) of beneficial
ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of
either the then outstanding shares of common stock or
the combined voting power of the Company's then
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outstanding voting securities entitled to vote
generally in the election of directors;
(B) individuals who, as of the date hereof,
constitute the Board (the "INCUMBENT BOARD") cease
for any reason to constitute at least a majority of
the Board, provided that any person becoming a
director subsequent to the date hereof whose
election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a
majority of the directors then comprising the
Incumbent Board (other than an election or nomination
of an individual whose initial assumption of the
office is in connection with an actual or threatened
election contest relating to the election of the
directors of the Company, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) shall be, for the purposes of this
Agreement, considered as though such person were a
member of the Incumbent Board;
(C) consummation of a reorganization, merger
or consolidation, in each case, with respect to which
persons who were the stockholders of the Company
immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own
more than 50% of the combined voting power entitled
to vote generally in the election of directors of the
reorganized, merged or consolidated company's then
outstanding voting securities; or
(D) the sale of all or substantially all of
the assets of the Company.
(e) In the event Executive's employment is terminated other than as
provided under clause (a) above, then Executive shall not be entitled to receive
any severance benefits under this Agreement; provided that in such event
Executive shall be entitled to receive his accrued unpaid base salary through
the date of such termination and any applicable benefits under the plans and
policies of the Company in accordance with their terms, and the Company will
have no further obligations under this Agreement with respect to Executive.
2. Restrictive Covenants. Executive agrees and understands that during
and after his employment with the Company, he will continue to bound by the
provisions of the Confidentiality, Inventions and Arbitration Agreement (the
"CONFIDENTIALITY AGREEMENT") between Executive and the Company, including but
not limited to the agreement for one year after termination of your employment
not to encourage or solicit any employee or consultant of the Company to
terminate their relationship with the Company, and that such obligations shall
survive the termination of this Agreement.
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3. Limited Benefits. Notwithstanding anything contained in this
Agreement to the contrary, to the extent that the payments and benefits provided
under this Agreement and benefits provided to, or for the benefit of, Executive
under any other employer plan or agreement (such payments or benefits are
collectively referred to as the "BENEFITS") would be subject to the excise tax
(the "EXCISE TAX") imposed under Section 4999 of the Internal Revenue Code of
1986, as amended (the "CODE"), the Benefits shall either be (i) paid in full or
(ii) reduced to such lesser amount which would result in no portion of such
Benefits being subject to the Excise Tax, whichever of the foregoing amounts,
taking into account the applicable federal, state and local income taxes and the
Excise Tax, results in the receipt by Executive on an after-tax basis, of the
greatest amount of benefits. A determination as to whether the Benefits shall be
so reduced shall be made by the Company's independent public accountants and
shall be binding on Executive and the Company.
4. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement may be settled at the option of either party by
binding arbitration in the County of Santa Clara, California, in accordance with
the rules of the American Arbitration Association then in effect. Judgment may
be entered on the arbitrator's award in any court having jurisdiction. The costs
of such arbitration will be borne by the Company. In the arbitration, the
parties will be entitled to all remedies that would have been available if the
matter were litigated in a court of law.
5. Term. This Agreement shall expire on the later of (i) the date that
is one year following a Change of Control that has occurred prior to February
21, 2005 or (ii) February 21, 2005, except to the extent necessary to give
effect to the provisions hereof.
6. Miscellaneous.
(a) Attorneys Fees. If a legal action or other proceeding,
including arbitration pursuant to Section 4, is brought for enforcement
of this Agreement, each party shall be responsible for the payment of
its own attorneys' fees, except that the Company shall reimburse
Executive for all legal fees and expenses incurred by him in connection
therewith to the extent Executive prevails in such dispute to a
material extent.
(b) At-will Employment. The Company and Executive acknowledge
that the Executive's employment is and shall continue to be at-will, as
defined under applicable law.
(c) No Mitigation. Executive shall not be required to mitigate
the amount of any payment provided for under this Agreement by seeking
employment or otherwise, not will any such payments be reduced by any
earnings that Executive may receive from any other employer.
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(d) Successors and Assignments. This Agreement is binding on
and may be enforced by the Company and its successors and assigns and
is binding on and may be enforced by Executive and Executive's heirs
and legal representatives. Notwithstanding the foregoing, this
Agreement shall not be assignable by Executive and may be assigned by
the Company only to an affiliate or a successor to the Company of
substantially all of its business (whether by purchase, merger,
consolidation or otherwise).
(e) Notices. Notices under this Agreement must be in writing
and will be deemed to have been given when personally delivered or two
days after mailed by U.S. registered or certified mail, return receipt
requested and postage prepaid. Mailed notices to Executive will be
addressed to Executive at the home address which Executive has most
recently communicated to the Company in writing. Notices to the Company
will be addressed to its General Counsel (or if the Company does not
have a General Counsel, to its Chief Financial Officer) at the
Company's corporate headquarters.
(f) Waiver. No provision of this Agreement may be modified or
waived except in writing signed by the parties hereto. No waiver by
either party of any breach of this Agreement by the other party will be
considered a waiver of any other breach of this Agreement.
(g) Entire Agreement. This Agreement represents the entire
agreement between Executive and the Company concerning the subject
matter herein and supercedes all other prior or contemporaneous
agreements concerning such subject matter, whether written or oral.
(h) Governing Law. This Agreement will be governed by the laws
of the State of California without reference to conflict of laws
provisions.
(i) 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.
(j) Taxes. All payments and benefits received pursuant to this
Agreement shall be subject to withholding of applicable taxes.
(k) 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 hereto has duly executed this
Agreement as of the day and year first above written.
XXXXX CORPORATION
By: /s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
Title: C.O.O
EXECUTIVE:
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
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