Exhibit 10.24
AMENDED AND RESTATED SEVERANCE AGREEMENT
THIS AMENDED AND RESTATED SEVERANCE AGREEMENT (the "Agreement"),
originally dated September 28, 1998, and amended and restated in its entirety
effective as of January 25, 1999, is entered into by and between Xxxxxxx-Xxxxxxx
Company, a California corporation (the "Company"), and Xxxxx Xxxxxxxx
("Employee").
The Company's Board of Directors has determined that it is appropriate
to reinforce and encourage the continued attention and dedication of Employee to
his assigned duties without distraction in potentially disturbing circumstances
arising from the possibility of a Change in Control (as defined in Section 2(a))
of the Company.
This Agreement sets forth the severance compensation which the Company
agrees to pay to Employee if Employee's employment with the Company terminates
under one of the circumstances described herein.
1. Term.
(a) This Agreement shall terminate, except for any unpaid
obligation of the Company, upon the earliest of (i) three
years from the date hereof if a Change in Control has not occurred within such
three-year period; (ii) the termination of Employee's employment by the Company
based on death, Disability (as defined in Section 2(c)) or Cause (as defined in
Section 2(d)) or by Employee other than for Good Reason (as defined in Section
2(e); or (iii) three years from the date of a Change in Control.
(b) Nothing in this Agreement shall confer upon Employee any
right to continue in the employ of the Company prior to or following a Change in
Control or shall in any way limit the rights of the Company, which are hereby
expressly reserved, to discharge Employee at any time prior to or following the
date of a Change in Control for any reason whatsoever, with or without Cause.
2. Certain Definitions.
(a) Change in Control. A "Change in Control" shall be deemed
to have occurred if (i) there shall be consummated (x) any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation, (y) any other consolidation or merger to which the Company is a
party, regardless of whether shares of the Company's Common Stock would
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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 the same proportionate ownership of common stock (or the
equivalent fully voting securities) of the surviving corporation or other entity
immediately after the merger, or (z) 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, or (ii) the Company consummates
(in one or a series of transactions) the disposition of substantially all of its
operating businesses, or (iii) any "person" (as defined in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended, shall become the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of 30% or more of the Company's outstanding Common Stock, or (iv)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the entire Board of Directors of the Company shall cease
for any reason to 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.
(b) Triggering Event. A "Triggering Event" shall be deemed to
have occurred if either (i) a Change in Control occurs while Employee is still
an employee of the Company or any of its subsidiaries or (ii) a Change in
Control occurs after the date on which Employee's employment with the Company or
any of its subsidiaries was terminated (x) by the Company other than for death,
Disability or Cause or (y) by Employee for Good Reason, and such termination is
effected by the Company (or the actions or decisions giving rise to Employee's
termination for Good Reason are taken
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or made by the Company) in anticipation of a Change in Control (any such
termination, action or decision effected, taken or made within 90 days prior to
the date of any such Change in Control shall be conclusively deemed to be in
anticipation of a Change in Control).
(c) Disability. If, as a result of Employee's incapacity due
to physical or mental illness, Employee shall have been absent from duties with
the Company on a full-time basis for six consecutive months and within 30 days
after written Notice of Termination (as required by Section 9(b)) is thereafter
given by the Company, Employee shall not have returned to the full-time
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performance of Employee's duties, the Company may terminate this Agreement for
"Disability."
(d) Cause. For purposes of this Agreement only, the Company shall
have "Cause" to terminate Employee's employment hereunder only on the basis of
fraud, misappropriation, embezzlement or willful engagement by Employee in
misconduct which is demonstrably and materially injurious to the Company and its
subsidiaries taken as a whole. An act, or omission of Employee shall not be
considered "willful" unless done, or omitted to be done, by Employee without
good faith and a reasonable belief that the act or omission was in the best
interests of the Company and its subsidiaries. Employee may not be terminated
for Cause unless and until there shall have been delivered to Employee a copy of
a resolution duly adopted by affirmative vote of not less than three-quarters 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 Employee and
an opportunity for Employee, together with Employee's counsel, to be heard
before the Board), finding Employee was guilty of the conduct set forth in the
first sentence of this Section, and specifying the particulars thereof in
detail. Notwithstanding the foregoing, Employee shall have the right to contest
such termination for Cause (for purposes of this Agreement) by arbitration in
accordance with the provisions of Section 8.
(e) Good Reason. For purposes of this Agreement, "Good Reason"
shall mean any of the following (without Employee's express written consent):
(i) the assignment to Employee by the Company of duties
inconsistent with, or a substantial alteration in the nature or status of,
Employee's responsibilities immediately prior to a
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Change in Control other than any such alteration primarily attributable to the
fact that the Company's securities are no longer publicly traded;
(ii) a reduction by the Company in Employee's base salary in
effect on the date of a Change in Control or as the same may be increased from
time to time during the term of this Agreement;
(iii) failure by the Company to continue in effect without
substantial change any compensation, incentive, welfare or benefit plan or
arrangement, as well as any plan or arrangement whereby Employee may acquire
securities of the Company, in which Employee is participating at the time of a
Change in Control (or any other plans providing Employee with substantially
similar benefits, hereinafter referred to as "Benefit Plans"), or the taking of
any action by the Company which would adversely affect Employee's participation
in or materially reduce Employee's benefits under any such Benefit Plan or
deprive Employee of any material fringe benefit enjoyed by Employee at the time
of a Change in Control; unless an equitable substitute arrangement (embodied in
an ongoing substitute or alternative Benefit Plan) has been made for the benefit
of Employee with respect to the Benefit Plan in question. For purposes of the
foregoing, Benefit Plans shall include, but not be limited to, the Company's
Employee Stock Ownership Plan, Employees' Profit Sharing and Investment Plan,
Deferred Compensation (401K) Plan, 1991 Stock Option and Incentive Plan, Top
Management Incentive Bonus Plan, and/or any other plan or arrangement to receive
and exercise stock options or stock appreciation rights, incentive, bonus or
other award plans, group life insurance plans, medical, dental, accident and
disability plans;
(iv) a relocation of the Company's principal executive
offices to a location outside the San Francisco-Oakland-San Xxxx Bay Area, or
Employee's relocation to any place
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other than the principal executive offices of the Company, except for required
travel by Employee on Company business to an extent substantially consistent
with Employee's business travel obligations at the time of a Change in Control;
(v) any material breach by the Company of any provision of
this Agreement;
(vi) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company as required in Section
6;
(vii) any purported termination of Employee's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 9(b) below. For purposes of this Agreement, no such
purported termination shall be effective.
(f) Date of Termination. "Date of Termination" shall mean (i) for
Disability, 30 days after Notice of Termination is given to Employee (provided
Employee has not returned to the performance of Employee's duties on a full-time
basis during such 30-day period), or (ii) if Employee's employment is terminated
for any other reason, the date on which notice is given by the Company or
Employee, as the case may be.
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3. Severance Compensation upon Termination of Employment in Connection
with a Change in Control. No compensation shall be payable under this Agreement
unless and until a Triggering Event has occurred. Upon the occurrence of a
Triggering Event, the provisions of this Agreement shall be binding on and shall
inure to the benefit of the surviving or resulting corporation, or (in the case
of a Change in Control of the kind referred to in Section 2(a)(i)(y)) the
corporation to which the applicable assets of the Company have been transferred;
provided, however, that (a) Employee may treat the occurrence of a Triggering
Event as a material breach of this Agreement and may terminate this Agreement
upon written notice given (in accordance with Section 9(b)) within 120 days of
the occurrence of a Change in Control, unless Employee's employment has
theretofore been terminated for death, Disability or Cause, and (b) Employee may
terminate this Agreement for Good Reason at any time prior to the second
anniversary of a Change in Control and during the remainder of the term of this
Agreement as specified in Section 1(a). Upon such termination by Employee under
this Section 3, or upon the termination of Employee's employment by the Company
without Cause at any time prior to the second anniversary of a Change in
Control, the Company shall:
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(i) pay to Employee as severance pay in a lump sum, in
cash, on the fifth day following the Date of Termination, an amount equal to the
aggregate of (x) 299.999% of Employee's "Base Compensation" (as defined below),
plus (y) an amount equal to (A) the amount previously determined by the Board as
Employee's target bonus for the calendar year in which Notice of Termination is
given by Employee or the Company, as the case may be, multiplied by (B) a
fraction, the numerator of which shall be the number of days that have elapsed
during such calendar year, through and including the date on which such Notice
of Termination is given, and the denominator of which shall be 365; provided,
however, that if the lump sum severance payment under this Section 3, either
alone or together with other payments (or the value of other benefits) which
Employee has the right to receive from the Company in connection with a Change
in Control, would not be deductible (in whole or in part) by the Company as a
result of such lump sum payment constituting a "parachute payment" (as defined
in Section 280G of the Internal Revenue Code of 1986, as amended (collectively
the "Code")), such lump sum severance payment (or, at Employee's election, such
other payments and/or benefits, or a combination of such other payments and/or
benefits and such lump sum severance payment) shall be
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reduced to the largest amount as will result in no portion of the lump sum
severance payment under this Section 3 not being fully deductible by the Company
as a result of Section 280G of the Code. The determination of the amount of any
such required reduction pursuant to the foregoing provision, and the valuation
of any non-cash benefits for purposes of such determination, shall be made
exclusively by the firm that was acting as the Company's auditors prior to the
Change in Control (whose fees and expenses shall be borne by the Company), and
such determination shall be conclusive and binding. The term "Base Compensation"
shall mean an average of the annual cash compensation paid to Employee by the
Company and any of its subsidiaries in the form of salary or bonuses (including
any amount that is subject of an elective deferral by Employee) during the five
taxable years immediately preceding the Change in Control which was includable
in gross income (or would have been so included but for any such elective
deferral) by Employee for federal income tax reporting purposes; and
(ii) arrange to provide Employee, for a thirty-six month
period (or such shorter period as Employee may elect), with disability,
accident, group life, medical and dental insurance, all of which shall be
prepaid, substantially similar to those
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insurance benefits which Employee is receiving immediately prior to a
termination by Employee under this Section 3. Benefits otherwise receivable by
Employee pursuant to this Section 3 shall be reduced to the extent comparable
benefits are actually received by Employee during such thirty-six month period
(or such shorter period elected by Employee), and any such benefits actually
received by Employee shall be reported by Employee to the Company.
4. No Obligation to Mitigate Damages. Employee 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 shall the amount of any payment
provided for under this Agreement be reduced by any compensation earned by
Employee as a result of employment by another employer or by retirement benefits
after the Date of Termination, or otherwise, except to the extent provided in
Section 3 above.
5. No Effect on Other Contractual Rights. The provisions of this
Agreement, and any payment provided for hereunder, shall not reduce any amounts
otherwise payable, or in any way diminish Employee's existing rights, or rights
which would accrue solely as a result of the passage of time, under any Benefit
Plan, employment agreement or other contract, plan or arrangement,
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except that the provisions of this Agreement and any payment provided for
hereunder, shall be in lieu of payments otherwise due to Employee under any of
the Company's severance pay policies on account of Employee's termination of
employment upon (or in anticipation of, as set forth in Section 2(b)) the
occurrence of a Change in Control.
6. Successor to the Company. The Company shall require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement satisfactory to Employee, 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. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor or
assign to its business and/or assets which executes and delivers the agreement
provided for in this Section 6 or which otherwise becomes bound by all the terms
and provisions of this Agreement by operation of law.
7. Heirs of Employee. This Agreement shall inure to the benefit of and
be enforceable by Employee's personal and legal
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representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Employee should die while any amounts
are still payable to Employee hereunder, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee, or other designee or, if there be no such designee,
to Employee's estate.
8. Arbitration. Any dispute, controversy or claim arising under or in
connection with this Agreement, or the breach hereof, shall be settled
exclusively by arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association then in effect. Judgment upon the award
rendered by Arbitrator(s) may be entered in any court having jurisdiction
thereof. Any arbitration held pursuant to this Section 8 shall take place in San
Francisco, California.
9. Notice.
(a) General. 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:
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If to the Company:
Xxxxxxx-Xxxxxxx Company
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: President of the Company
If to Employee:
Xxxxx Xxxxxxxx
0000 Xxxxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
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.
(b) Notice of Termination. Any purported termination of
employment shall be communicated by a written Notice of Termination to Employee
in accordance with paragraph (a) of this Section 9, and shall state the specific
termination provisions in this Agreement relied upon, and set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Employee's employment.
10. Nonwaiver, Complete Agreement, Governing Law. No provisions of
this Agreement may be modified, waived or discharged unless in writing signed by
both parties. No waiver by either party hereto at any time of any breach by the
other party of, or compliance with, any condition or provision of this agreement
shall be deemed a waiver of similar or dissimilar
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provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. This Agreement shall be governed by
and construed in accordance with the laws of the State of California.
11. Legal Fees and Expenses. The Company shall pay all reasonable
legal fees and expenses which Employee may incur as a result of the Company's
contesting the validity, enforceability or Employee's good faith interpretation
of, or good faith determinations under, this Agreement; provided, however, that
the Company shall not pay any legal fees and expenses incurred by Employee in
contesting the termination of Employee's employment for Cause if, as a result of
such contest, it is determined that Employee was in fact terminated for Cause.
12. Confidentiality. Employee shall retain in confidence any and
all confidential information known to Employee concerning the Company and its
business so long as such information is not otherwise publicly disclosed.
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13. 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.
14. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXXXXX-XXXXXXX COMPANY, a California
corporation
By /s/ W. Xxxxx Xxxxxxx
--------------------
Title: President & CEO
---------------
/s/ Xxxxx X. Xxxxxxxx
---------------------
Xxxxx Xxxxxxxx
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