Phoenix Technologies Ltd. Contracts
Sample Business Contracts
Severance Agreement - Phoenix Technologies Ltd. and Jack Kay
SEVERANCE AGREEMENT
This Severance Agreement (the "Agreement") is made and entered into
effective as of January 21, 1999, by and between Jack Kay (the "Executive") and
Phoenix Technologies Ltd., a Delaware corporation (the "Company").
R E C I T A L S
A. 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 the
Executive with certain severance benefits should Executive's employment with the
Company terminate under certain circumstances.
B. To accomplish the foregoing objectives, the Board has directed the
Company, upon execution of this Agreement by the Executive, to agree to the
terms provided herein.
C. Certain capitalized terms used in the Agreement are defined in
Section 7 below.
A G R E E M E N T
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of Executive by the Company, the
parties agree as follows:
1. DUTIES AND SCOPE OF EMPLOYMENT. The Company currently employs
Executive as President and Chief Executive Officer, as such position has been
defined in terms of responsibilities and compensation as of the effective date
of this Agreement. The Executive shall comply with and be bound by the Company's
operating policies, procedures and practices from time to time in effect during
his employment. During the term of the Executive's employment with the Company,
the Executive shall continue to devote his full time, skill and attention to his
duties and responsibilities, and shall perform them faithfully, diligently and
competently, and the Executive shall use his best efforts to further the
business of the Company and its affiliated entities.
2. BASE COMPENSATION. The Company pays the Executive as compensation for
his services a base salary at the annualized rate of $310,000.00. Such salary
shall be paid periodically in accordance with normal Company payroll practices.
The annual compensation specified in this Section 2, together with any increases
in such compensation as the Board may direct from time to time, is referred to
in this Agreement as "Base Compensation."
3. EXECUTIVE BENEFITS. The Executive shall be eligible to participate in
the employee benefit plans and executive compensation programs maintained by the
Company applicable to other key executives of the Company, including (without
limitation) retirement plans, savings or profit-sharing plans, stock option,
incentive or other bonus plans, life, disability, health, accident and other
insurance programs, paid vacations, and similar plans or programs, subject in
each case to the generally applicable terms and conditions of the applicable
plan or program in question and to the sole determination of the Board or any
committee administering such plan or program.
4. TERMS OF EMPLOYMENT/TERM OF AGREEMENT.
(a) TERMS OF EMPLOYMENT. The Company and the Executive acknowledge
that the Executive's employment will continue to be governed by the existing
understandings, except to the extent this agreement changes the same.
(b) TERM OF AGREEMENT. The terms of this Agreement shall terminate
on the date that all obligations of the parties hereunder have been
satisfied. A termination of the terms of this Agreement pursuant to this
Section shall be effective for all purposes.
<PAGE>
5. SEVERANCE BENEFITS UPON TERMINATION OR RESIGNATION. If the Executive
voluntarily resigns from the Company, or if the Company terminates the
Executive's employment for any reason other than for Cause, the Executive shall
be entitled to receive the following severance benefits:
a. SEVERANCE PAYMENTS. Subject to Executive entering into a Release of
Claims (in a form substantially similar to the release of claims attached
as Exhibit A), Executive shall be entitled to a severance payment
consisting of 12 months' additional payment of $25,833.33 per month for
each of the next 12 months following the date of termination (the
severance payment to be made in accordance with the Company's standard
payroll practices, extended by an additional six months (at the same
annual rate of $310,000) if Re-employment has not commenced. For the
purposes of this Agreement, "Reemployment" shall mean providing services
to an entity other than the Company for remuneration based on more than
twenty hours per week by the end of the Severance Benefits Period
(whether such remuneration consists of cash, debt, deferred compensation,
equity compensation or other valuable property or rights).
b. MEDICAL BENEFITS. The Company, at the Company's sole expense, shall
provide Executive (and, if applicable, his eligible dependents) with the
same level of health coverage and benefits as in effect for Executive
(and, if applicable, his eligible dependents) on the day immediately
preceding the day of the Executive's termination of employment (the
"Company-Paid Coverage"); provided, however, that (i) Executive and each
eligible dependent constitutes a qualified beneficiary, as defined in
Section 4980B(g)(1) of the Internal Revenue Code of 1986, as amended
(collectively, "Qualified Beneficiaries"); (ii) each Qualified
Beneficiary elects continuation coverage under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"), within the time
period prescribed pursuant to COBRA; and (iii) if the health coverage is
no longer offered by the Company to its current employees, then the
Company shall be under no obligation to continue the existing coverage
for Executive (and, if applicable, his eligible dependents). Such
Company-Paid Coverage shall continue in effect for each Qualified
Beneficiary until the earlier of (i) the Qualified Beneficiary is no
longer eligible to receive continuation coverage under COBRA, or (ii)
eighteen (18) months following termination of employment pursuant to
Section 5(a).
c. FAMILY TRAVEL EXPENSES. The company shall grant a "Travel Allowance" (TA)
to the Executive (and members of his family) by paying invoices for
travel expenses to unrelated third parties for said persons' travel costs
and/or reimbursing the Executive for such costs which he personally pays.
For purposes of this agreement, the TA shall be the sum of $25,000 for
each year the executive has resided in California, plus $60,000.
d. FY 1999 EXECUTIVE BONUS. Should the Compensation Committee of the Board
of Directors award the executive management with a bonus for FY 1999
performance, then the Executive shall be entitled to an amount equal to
that percent granted by the compensation committee multiplied by his
bonus target for FY 1999 ($165,000). The Compensation Committee, at its
discretion has the right to pro-rate the amount paid by that fraction of
the fiscal year in which the Executive was employed by the Company.
e. MOVING EXPENSES. The Company shall pay for moving the Executives
household effects (including automobile) from California to
Massachusetts, or to Arizona, except that should these household goods be
split between two or more destinations, the executive shall be solely
responsible for any amount over the cost for shipping all goods to just
one address.
f. USE OF OFFICE EQUIPMENT. During the eighteen (18) month period following
termination of employment, the Executive shall be entitled to the use of
his personal computer, e-mail address, and telephone extension. However,
should the Executive begin full time employment at another company, such
benefits shall cease and the equipment returned to the Company.
<PAGE>
g. STATUS OF STOCK OPTIONS. The Company hereby represents and warrants to
the executive that the following stock options have been vested to him
prior to this date (or will without question vest prior to June 9, 1999
whether or not the Executive is then an employee).
---------------- --------------- ------------- ----------- ------------ ------------
Number Option Date Plan Type Price Shares
---------------- --------------- ------------- ----------- ------------ ------------
001606 12/12/90 87NQ NQ $2.3800 13,419
---------------- --------------- ------------- ----------- ------------ ------------
B01678 12/12/90 871S NQ $2.3800 20,831
---------------- --------------- ------------- ----------- ------------ ------------
000344 2/4/92 871S ISO $7.8750 2,886
---------------- --------------- ------------- ----------- ------------ ------------
001018 2/4/92 871S ISO $7.8750 50,000
---------------- --------------- ------------- ----------- ------------ ------------
001099 2/4/92 86 ISO $7.8750 1,l38
---------------- --------------- ------------- ----------- ------------ ------------
A01690 2/4/92 87NQ NQ $7.8750 7,147
---------------- --------------- ------------- ----------- ------------ ------------
B01690 2/4/92 87NQ NQ $7.8750 2,529
---------------- --------------- ------------- ----------- ------------ ------------
001593 11/3/93 92 NQ $3.8750 42,000
---------------- --------------- ------------- ----------- ------------ ------------
001570 8/10/94 92 NQ $5.0000 100,000
---------------- --------------- ------------- ----------- ------------ ------------
001573 8/10/94 92 NQ $5.0000 80,000
---------------- --------------- ------------- ----------- ------------ ------------
001609 8/10/94 94 NQ $5.0000 200,000
---------------- --------------- ------------- ----------- ------------ ------------
001447 8/10/94 92 ISO $5.0000 20,000
---------------- --------------- ------------- ----------- ------------ ------------
002822 5/13/97 94 ISO $12.3750 15,245
---------------- --------------- ------------- ----------- ------------ ------------
002823 5/13/97 94 NQ $12.3750 6,630
---------------- --------------- ------------- ----------- ------------ ------------
In addition thereto, the Company hereby represents and warranties to
the Executive that so long as he is a member of the Board of Directors of the
Company, he will continue to enjoy the following stock options, all of which
will vest in the event of a change of control.
---------------- --------------- ------------- ----------- ------------ ------------
Number Option Date Plan Type Price Shares
---------------- --------------- ------------- ----------- ------------ ------------
002822 5/13/97 94 ISO $12.3750 18,180
---------------- --------------- ------------- ----------- ------------ ------------
002823 5/13/97 94 NQ $12.3750 9,945
---------------- --------------- ------------- ----------- ------------ ------------
TBD 10/l/98 50,000
---------------- --------------- ------------- ----------- ------------ ------------
h. DISABILITY; DEATH. If the Company terminates the Executive's employment
as a result of the Executive's Disability or if the Executive's
employment terminates due to the death of the Executive, then the
Executive shall not be entitled to receive severance or other benefits
pursuant to this Agreement, except he shall be entitled to receive the
benefit of the stock options vested at that time. However, Executive
shall remain eligible for those severance and other benefits (if any) as
may then be available under the Company's then existing severance and
benefits plans and policies at the time of Executive's termination or
death.
<PAGE>
6. COVENANTS NOT TO COMPETE AND NOT TO SOLICIT.
(a) Upon the termination of the Executive's employment with the
Company by the Company for any reason other than for cause and for a period
of eighteen (18) months thereafter, Executive agrees that he shall not, on
his own behalf, or as owner, manager, advisor, principal, agent, partner,
consultant director, officer, stockholder or employee of any business entity,
or otherwise in any territory in which the Company is actively engaged in
business (i) open or operate any business which is in competition with any
business of the Company, (ii) act as an employee, agent, advisor or
consultant of any competitor of the Company, (iii) solicit or accept business
from any of the Company's competitors, (iv) take any action to or do anything
reasonably intended to divert business from the Company or influence or
attempt to influence any existing customers of the Company to cease doing
business with the Company or to alter its business relationship with the
Company, or (v) take any action or do anything reasonably intended to
influence any suppliers of the Company to cease doing business with the
Company or to alter its business relationship with the Company. Executive
further covenants and agrees that he will not for himself or on behalf of any
other person, partnership, firm, association or corporation in any territory
served by the Company, directly or indirectly solicit or accept business from
any of the Company's existing customers for the purchase or sale of product
or services of a like kind to those sold or provided the Company. The
foregoing covenant shall not be deemed to prohibit Executive from acquiring
an investment not more than one percent (1%) of the capital stock of a
competing business, whose stock is traded on a national securities exchange
or through the automated quotation system of a registered securities
association.
(b) Upon the termination of the Executive's employment with the
Company by the Company for any reason other than for cause and for a period
of eighteen (18) months thereafter, Executive agrees that he shall not either
directly or indirectly solicit, induce, attempt to hire, recruit, encourage,
take away, hire any employee of the Company or cause any employee of the
Company to leave his or her employment either for Executive or for any other
entity or person.
(c) Executive represents that he (i) is familiar with the foregoing
covenants not to compete and not to solicit, and (ii) is fully aware of his
obligations hereunder, including, without limitation, the reasonableness of
the length of time, scope and geographic coverage of these covenants.
7. DEFINITION OF TERMS. The following terms referred to in this Agreement
shall have the following meanings for the purposes of this Agreement only:
(a) CAUSE. "Cause" shall mean (i) any act of personal dishonesty
taken by the Executive in connection with his responsibilities as an
Executive and intended to result in substantial personal enrichment of the
Executive, (ii) conviction of a felony that is injurious to the Company,
(iii) a willful act by the Executive which constitutes gross misconduct and
which is injurious to the Company, and (iv) continued violations by the
Executive of the Executive's obligations under Section I of this Agreement
that are demonstrably will and deliberate on the Executive's part after there
has been delivered to the Executive 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.
(b) DISABILITY. "Disability" shall mean that the Executive has been
unable to perform his duties under this Agreement as the result of his
incapacity due to physical or mental illness, and such inability, at least
ninety (90) days after its commencement is determined to be total and
permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive'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 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.
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<PAGE>
8. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. Any successor to the Company (whether
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's
business and 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 assets which executes and delivers the assumption agreement
described in this Section or which becomes bound by the terms of this
Agreement by operation of law.
(b) EXECUTIVE'S SUCCESSORS. The terms of this Agreement and all
rights of the Executive hereunder shall inure to the benefit of, and be
enforceable by, the Executive's personal or legal representatives, executors,
administrators, successors, heirs, devisees and legatees.
9. 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 Executive, 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
shall be communicated by a notice of termination to the Executive given in
accordance with Section 9(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 15 days after the giving of
such notice).
10. ARBITRATION.
(a) The Company and Executive agree that any dispute or controversy
arising out of, relating to, or in connection with this Agreement, the
interpretation, validity, construction, performance, breach, or termination
hereof, or any of the matters herein released shall be settled by binding
arbitration to be held in Santa Clara County, California in accordance with
the National Rules for the Resolution of Employment Disputes then in effect
of the American Arbitration Association (the "Rules"). The arbitrator may
grant injunctions or other relief in such dispute or controversy. The
decision of the arbitrator shall be final, conclusive and binding on the
parties to the arbitration. Judgment may be entered on the arbitrator's
decision in any court having jurisdiction.
(b) The arbitrator(s) shall apply California law to the merits of
any dispute or claim, without reference to conflicts of law rules. Executive
hereby consents to the personal jurisdiction of the state and federal courts
located in California for any action or proceeding arising from or relating
to this Agreement or relating to any arbitration in which the Parties are
participants.
(c) EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH
DISCUSSES ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT,
EXECUTIVE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN
CONNECTION WITH THIS AGREEMENT, THE INTERPRETATION, VALIDITY, CONSTRUCTION,
PERFORMANCE, BREACH OR TERMINATION THEREOF, OR ANY OF THE MATTERS HEREIN TO
BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF
EXECUTIVES RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL
DISPUTES RELATING TO ALL ASPECTS OF THIS SEVERANCE AGREEMENT AND RELEASE OF
ALL CLAIMS.
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<PAGE>
11. MISCELLANEOUS PROVISIONS.
(a) 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 Executive and by an authorized officer of the
Company (other than the Executive). 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.
(b) WHOLE AGREEMENT. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes in its entirety any and all prior undertakings and agreements of
the Company and Executive with respect to the subject matter hereof.
(c) CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the internal substantive
laws but not the choice of law rules of the State of California.
(d) 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.
(e) NO ASSIGNMENT OF BENEFITS. The rights of any person to payments
or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or
other creditor's process, and any action in violation of this Section 11 (e)
shall be void.
(f) EMPLOYMENT TAXES. 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.
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
first above written.
COMPANY: PHOENIX TECHNOLOGIES LTD.
/s/ Ronald D. Fisher
-------------------------
By
Chairman
-------------------------
Title
EXECUTIVE: [INSERT NAME OF EXECUTIVE]
/s/ Jack Kay
-------------------------
Signature
Jack Kay
-------------------------
Printed Name
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