EXHIBIT 10.1
XXXX MICROPRODUCTS INC.
MANAGEMENT RETENTION AGREEMENT
Xxxx Microproducts Inc. entered into a Management Retention Agreement in the
form attached hereto with the following officers of the Company:
Name of Officer Date of Agreement
--------------- ------------------
W. Xxxxxx Xxxx August 7, 2005
Xxxxx X. Xxxxxx August 14, 2005
Xxxxxx X. Xxxxxxx August 7, 2005
Xxxxxx X. Xxxxxxxx August 7, 2005
Xxxxxxx X. Xxxxxxx August 7, 2005
Xxxxxx Xxxx September 11, 2005
XXXX MICROPRODUCTS, INC.
MANAGEMENT RETENTION AGREEMENT
This Management Retention Agreement (the "Agreement") is made and entered into
by and between __________ (the "Employee") and Xxxx Microproducts, Inc. (the
"Company"), effective as of the latest date set forth by the signatures of the
parties hereto below (the "Effective Date").
RECITALS
A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of control. 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. The Board has determined that it
is in the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication and objectivity of the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company.
B. The Board believes that it is in the best interests of the Company and its
stockholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Employee with certain
severance benefits upon Employee's termination of employment following a Change
of Control which provides the Employee with enhanced financial security and
provides incentive and encouragement to the Employee to remain with the Company
notwithstanding the possibility of a Change of Control.
D. Certain capitalized terms used in the Agreement are defined in Section 4
below.
The parties hereto agree as follows:
1. Term of Agreement. The term of this Agreement shall initially be three years
following the Effective Date ("Initial Term"), and shall automatically be
extended for successive one year periods ("Extended Term") unless terminated,
amended or modified by the Company prior to the end of any Extended Term. Upon
the termination of employment, for any reason, this agreement is automatically
terminated.
2. 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,
including (without limitation) any termination prior to a Change of Control, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's written employee plans or pursuant to
other written agreements with the Company.
-1-
3. Severance Benefits.
(a) Termination Following A Change of Control. If the Employee's employment
terminates at any time within twelve (12) months following a Change of Control,
then, subject to Section 4, the Employee shall be entitled to receive the
following severance benefits:
(i) Involuntary Termination. If the Employee's employment is the
result of Involuntary Termination other than for Cause,then the Employee shall
receive the following severance benefits from the Company:
(1) Severance Payment. A cash payment in an amount equal to one
hundred percent (100%) of the Employee's Base Salary.
(2) Continued Employee Benefits. One hundred percent (100%)
Company-paid health, dental and life insurance coverage at the same level of
coverage as was provided to such employee immediately prior to the Change of
Control (the "Company-Paid Coverage") under the Company's plans. Such coverage
shall be provided under either (at the Company's discretion) (i) the Company's
plans, or (ii) no less favorable plans or arrangements secured by the Company.
If such coverage included the Employee's dependents immediately prior to the
Change of Control, such dependents shall also be covered at Company expense.
Company-Paid Coverage shall continue until the earlier of (i) one year from the
date of the Change of Control, or (ii) the date that the Employee and his
dependents become covered under another employer's group health, dental or life
insurance plans that provide Employee and his dependents with comparable
benefits and levels of coverage. For purposes of Title X of the Consolidated
Budget Reconciliation Act of 1985 ("COBRA"), the date of the "qualifying event"
for Employee and his dependents shall be the date upon which the Company-Paid
Coverage terminates.
(3) Accelerated Vesting. One hundred percent (100%) of the
unvested portion of any stock option, restricted stock and restricted stock
units held by the Employee shall automatically be accelerated in full so as to
become completely vested.
(b) Timing of Severance Payments. Any severance payment to which Employee
is entitled under Section 4(a)(i) shall be paid by the Company to the Employee
(or to the Employee's successors in interest, pursuant to Section 7(b)) in cash
and in full, not later than thirty (30) calendar days following the Termination
Date. In no event shall payment be made later than two and one-half (2 1/2)
months following the calendar year in which the Termination Date occurs.
(c) Voluntary Resignation; Termination For Cause. If the Employee's
employment terminates by reason of the Employee's voluntary resignation (and is
not an Involuntary Termination), or if the Employee is terminated for Cause,
then the Employee shall not be entitled to receive severance or other benefits
except for those (if any) as may then be established under the Company's then
existing written employee plans or pursuant to other written agreements with the
Company.
-2-
(d) Disability; Death. If the Company terminates the Employee's employment
as a result of the Employee's Disability, or such Employee's employment is
terminated due to the death of the Employee, then the Employee shall not be
entitled to receive severance or other benefits except for those (if any) as may
then be established under the Company's then existing written employee plans or
pursuant to other written agreements with the Company.
(e) Termination Apart from Change of Control. In the event the Employee's
employment is terminated for any reason, either prior to the occurrence of a
Change of Control or after the twelve (12)-month period following a Change of
Control, then the Employee shall be entitled to receive severance and any other
benefits only as may then be established under the Company's existing severance
and benefits plans and practices or pursuant to other agreements with the
Company.
4. Limitation on Payments. In the event that the severance and other benefits
provided for in this Agreement or otherwise payable to the Employee (i)
constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") and (ii) but for this
Section 4, would be subject to the excise tax imposed by Section 4999 of the
Code, then the Employee's severance benefits under Section 3(a)(i) shall be
reduced as to such lesser extent as would result in no portion of such severance
benefits being subject to excise tax under Section 4999 of the Code. Unless the
Company and the Employee otherwise agree in writing, any determination required
under this Section 4 shall be made in writing by the Company's independent
public accountants immediately prior to Change of Control (the "Accountants"),
whose determination shall be conclusive and binding upon the Employee and the
Company for all purposes. For purposes of making the calculations required by
this Section 4, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of Sections 280G and 4999 of
the Code. The Company and the Employee 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 4.
5. Definition of Terms. The following terms referred to in this Agreement shall
have the following meanings:
(a) Base Salary. "Base Salary" means an amount equal to twelve (12) times
Employee's monthly Company salary for the last full month preceding the Change
of Control.
(b) Cause. "Cause" shall mean (i) any act of personal dishonesty taken by
the Employee in connection with his responsibilities as an employee and intended
to result in substantial personal enrichment of the Employee, (ii) the
conviction of a felony, (iii) a willful act by the Employee which constitutes
gross misconduct and which is injurious to the Company, and (iv) following
delivery to the Employee of 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, continued violations by the Employee of the
Employee's obligations to the Company which are demonstrably willful and
deliberate on the Employee's part.
-3-
(c) 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) A change in the composition of the Board occurring within a
two-year period, as a result of which fewer than a majority of the directors are
Incumbent Directors. "Incumbent Directors" shall mean directors who either (A)
are directors of the Company as of the date hereof, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination
(but shall not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election
of directors to the Company).
(iii) 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.
(d) Disability. "Disability" shall mean that the Employee 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 Company or
its insurers and acceptable to the Employee or the Employee's legal
representative (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
Employee's employment. In the event that the Employee 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.
(e) Involuntary Termination. "Involuntary Termination" shall mean (i)
without the Employee's express written consent, the significant reduction of the
Employee's duties, authority or responsibilities, relative to the Employee's
duties, authority or responsibilities as in effect immediately prior to such
reduction, or the assignment to Employee of such reduced duties, authority or
responsibilities; (ii) without the Employee's express written consent, a
substantial reduction, without good business reasons, of the facilities and
perquisites (including office space and location) available to the Employee
immediately prior to such reduction; (iii) a reduction by the Company in the
base salary of the Employee as in effect immediately prior to such reduction;
(iv) a material
-4-
reduction by the Company in the kind or level of employee benefits, including
bonuses, to which the Employee was entitled immediately prior to such reduction
with the result that the Employee's overall benefits package is significantly
reduced; (v) the relocation of the Employee to a facility or a location more
than thirty-five (35) miles from the Employee's then present location, without
the Employee's express written consent; (vi) any purported termination of the
Employee 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; (vii)
the failure of the Company to obtain the assumption of this agreement by any
successors contemplated in Section 6(a) below; or (viii) any act or set of facts
or circumstances which would, under California case law or statute constitute a
constructive termination of the Employee.
(f) Termination Date. "Termination Date" shall mean (i) if this Agreement
is terminated by the Company for Disability, thirty (30) days after notice of
termination is given to the Employee (provided that the Employee shall not have
returned to the performance of the Employee's duties on a full-time basis during
such thirty (30)-day period), (ii) if the Employee's employment is terminated by
the Company for any other reason, the date on which a notice of termination is
given, provided that if within thirty (30) days after the Company gives the
Employee notice of termination, the Employee notifies the Company that a dispute
exists concerning the termination or the benefits due pursuant to this
Agreement, then the Termination Date shall be the date on which such dispute is
finally determined, either by mutual written agreement of the parties, or a by
final judgment, order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been perfected), or
(iii) if the Agreement is terminated by the Employee, the date on which the
Employee delivers the notice of termination to the Company.
6. Successors.
(a) Company's Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company's business and/or assets
shall assume the obligations under this Agreement and agree expressly to perform
the 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 Section 6(a) or which
becomes bound by the terms of this Agreement by operation of law.
(b) Employee's Successors. The terms of this Agreement and all rights of
the Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
-5-
7. Notice.
(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, 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 Section 7(a) of this Agreement. 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.
8. 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 shall 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) Whole Agreement. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof. This Agreement supersedes in their
entirety any prior or contemporaneous agreements, whether written, oral, express
or implied, relating to the subject matter hereof.
(d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California.
-6-
(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) Withholding. All payments made pursuant to this Agreement will be
subject to withholding of applicable income and employment taxes.
(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.
(h) Amendment. Notwithstanding anything in this Agreement to the contrary,
the Company specifically reserves the right to amend this Agreement during the
Initial Term or any Extended Term without Employee's consent to the extent
necessary or desirable to comply with the requirements of Code Section 409A, and
the regulations, notices and other guidance of general application issued
thereunder, and with any other applicable federal or state law.
This Agreement may also be amended during the Initial Term or any Extended
Term by mutual written agreement of the parties.
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 set
forth below.
COMPANY XXXX MICROPRODUCTS, INC.
By:
------------------------------------
W. Xxxxxx Xxxx,
President and Chief Executive
Officer
Date:
----------------------------------
EMPLOYEE
------------------------------------
Date:
----------------------------------
-7-
