Change of Control Agreement - Be Inc.
BE INCORPORATED
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement ("Agreement") is entered into as of
__________, 1999 (the "Effective Date"), by and between ________________________
("Executive") and Be Incorporated (the "Company"), a Delaware corporation.
WHEREAS, the Company and Employee have entered into an "at-will" employment
relationship whereby Executive provides personal services to the Company, and
Company provides Executive with certain compensation and benefits in return for
such services; and
WHEREAS, without changing the nature of the at-will employment
relationship, the Company wishes to offer added incentive for Executive's
continued employment with the Company by offering some measure of protection to
Executive if Executive's employment is terminated after the Company affects a
change of control of the Company and to align further Executive's interest with
those of the stockholders of the Company when considering transactions that may
result in a change of control of the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed by and between the parties hereto as
follows:
1. DEFINITIONS.
1.1 Cause. For purposes of this Agreement, "Cause" shall mean
Executive's (i) conviction of any felony involving moral turpitude; (ii)
engaging in illegal business practices or other practices contrary to the
written policies of the Company; (iii) misappropriation of assets of the
Company; (iv) continual or repeated insobriety or drug use; (v) continual or
repeated absence for reasons other than disability or sickness; (vi) fraud; or
(vii) embezzlement of Company funds.
1.2 Change of Control. For purposes of this Agreement, "Change of
Control" shall mean the occurrence of any of the following:
(a) a sale of assets representing fifty percent (50%) or more of
the net book value and of the fair market value of the Company's consolidated
assets (in a single transaction or in a series of related transactions);
(b) a merger or consolidation involving the Company or any
subsidiary of the Company after the completion of which: (i) in the case of a
merger (other than a triangular merger) or a consolidation involving the
Company, the shareholders of the Company immediately prior to the completion of
such merger or consolidation beneficially own (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or comparable successor rules), directly or indirectly, outstanding
voting securities representing less than fifty percent (50%) of the combined
voting power of the surviving entity in such merger or consolidation, and (ii)
in the case of a triangular merger involving the Company or a subsidiary of the
Company, the shareholders of the Company
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immediately prior to the completion of such merger beneficially own (within the
meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable
successor rules), directly or indirectly, outstanding voting securities
representing less than fifty percent (50%) of the combined voting power of the
surviving entity in such merger and less than fifty percent (50%) of the
combined voting power of the parent of the surviving entity in such merger;
(c) an acquisition by any person, entity or "group" (within the
meaning of Section 13(d) or 14(d) of the Exchange Act or any comparable
successor provisions), other than any employee benefit plan, or related trust,
sponsored or maintained by the Company or an affiliate of the Company and other
than in a merger or consolidation of the type referred to in clause "(b)" of
this sentence, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act, or comparable successor rules) of
outstanding voting securities of the Company representing more than thirty
percent (30%) of the combined voting power of the Company (in a single
transaction or series of related transactions);
(d) in the event that the individuals who, as of the Effective
Date, are members of the Company's Board of Directors (the "Incumbent Board"),
cease for any reason to constitute at least fifty percent (50%) of the Company's
Board of Directors. (If the election, or nomination for election by the
Company's shareholders, of any new member of the Board of Directors is approved
by a vote of at least fifty percent (50%) of the Incumbent Board, such new
member of the Board of Directors shall be considered as a member of the
Incumbent Board.); or
(e) any other transaction or series of transactions that would have
substantially the same effect as the change of control events described in (a)
through (d) above.
1.3 Change of Control Period. For purposes of this Agreement, "Change
of Control Period" shall mean the period of time starting six (6) months prior
to the date the Change of Control is effected and ending eighteen (18) months
following such Change of Control.
1.4 Good Reason. For purposes of this Agreement, "Good Reason" shall
mean any one of the following events (so long as Executive tenders his
resignation to the Company within sixty (60) days after the occurrence of the
event which forms the basis for any termination for Good Reason): (i) any
reduction of the Executive's then existing annual base salary or annual bonus
target; (ii) any material reduction in the package of benefits and incentives,
taken as a whole, provided to the Executive (except that employee contributions
may be raised to the extent of any cost increases imposed by third parties as
applied to the Company as a whole) or any action by the Company which would
materially and adversely affect the Executive's participation or reduce the
Executive's benefits under any such plans, except to the extent that such
benefits and incentives are reduced as to be made equivalent to the benefits and
incentives of all other executive officers of the Company and/or its successor
or assign; (iii) any diminution of the Executive's duties, responsibilities,
authority, reporting structure, titles or offices, excluding for this purpose an
isolated, insubstantial or inadvertent action not taken in bad faith which is
remedied by the Company immediately after notice thereof is given by the
Executive; (iv) request that the Executive relocate to a work site that would
increase the Executive's one-way commute distance by more than thirty-five (35)
miles from his then principal residence, unless the Executive accepts such
relocation opportunity; (v) any material breach by the Company of its
obligations under this Agreement; or (vi) any failure by the
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Company to obtain the assumption of this Agreement by any successor or assign of
the Company.
2. Terms and Termination Of Employment.
2.1 At-Will Employment. Executive's relationship with the Company
continues to be an at-will employment relationship. The Company or Executive
shall have the right to terminate Executive's employment with the Company at any
time with or without Cause and with or without notice. Nothing in this Agreement
shall confer upon the Executive any right to continue in the employ of the
Company prior to, or after a Change of Control of the Company or shall in any
way limit the rights of the Company, except as expressly stated herein, to
discharge the Executive at any time prior to, or after the date of a Change of
Control of the Company for any reason whatsoever, with or without cause.
2.2 Change of Control Termination. In the event Executive's employment
with the Company is terminated without Cause, or Executive resigns for Good
Reason during the Change of Control Period, or if Executive is terminated
without Cause, or events leading to Executive's resignation for Good Reason are
effected in anticipation of a Change of Control, including but not limited to an
attempt to avoid the Company or its successor's obligations under this
Agreement, then the following shall occur:
(a) Company shall provide to Executive, within thirty (30) days
after the effective date of such termination without Cause or resignation for
Good Reason, a lump sum severance payment, subject to standard withholdings and
deductions, in an amount equal to twelve (12) months of Executive's base salary
immediately prior to the termination without Cause or the date of occurrence of
Good Reason. In addition, the Company will provide, at its expense, Executive
with continued group health insurance benefits (medical, dental and vision) for
Executive and Executive's eligible dependents under COBRA for a period of up to
twelve (12) months following the effective date of Executives termination
without Cause or resignation for Good Reason.
(b) Any unvested options in Company stock issued to Executive
pursuant to the Company's 1992 and 1999 Stock Option Plans shall have their
vesting accelerated in full so as to become one hundred percent (100%) vested
and immediately exercisable in full as of the date of such termination.
(c) Prior to Executive gaining the right to receive, and in
exchange for, the severance compensation, benefits and option acceleration
provided in Sections 2.2 (a) and (b) above, to which Executive would not
otherwise be entitled, Executive shall first enter into and execute a release
substantially in the form attached hereto as Exhibit A (the "Release") upon
Executive's termination of employment. Unless the Release is executed by
Executive and delivered to the Company within twenty-one (21) days (forty-five
(45) days in the event of a group termination) after the termination of
Executive's employment with the Company, Executive shall not receive any
severance benefits provided under this Agreement, acceleration, if any, of
Executive's Options as provided in this Agreement shall not apply and
Executive's options in such event may be exercised following the date of
Executive's termination only to the
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extent provided under their original terms in accordance with the applicable
stock option plan and option agreements.
2.3 Gross-up Payment.
(a) In the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive in accordance
with Section 2.2 above (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"),
then the Executive shall be entitled to receive an additional payment (a "Gross-
up Payment") in an amount such that, after payment by the Executive of the
excise tax imposed by Section 4999 of the Code on the Gross-up Payment, the
Executive retains an amount of the Gross-up Payment equal to the excise tax
imposed upon the Payment. Executive and Company agree use commercially
reasonable efforts to reach mutual agreement, upon advise from each party's tax
advisors, regarding the applicable excise tax and the amount of the Gross-up
Payment.
(b) The Executive shall notify the Company in writing of any
inquiry, claim or proceeding brought by the Internal Revenue Service, or other
state or federal taxing authority, the subject of which, would result in a
requirement by the Company to pay the Gross-up Payment. Such notification shall
be given no later than thirty (30) days after the receipt by the Executive of
such a claim by the Internal Revenue Service.
3. General Provisions.
3.1 Notices. Any notices provided hereunder must be in writing and
shall be deemed effective upon personal delivery (including, personal delivery
by facsimile transmission) or the third day after mailing by first class mail,
to the Company at its primary office location and to Executive at his address as
listed on the Company payroll (which address may be changed by written notice).
3.2 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity or unenforceability will not affect any other
provision or any other jurisdiction, and such invalid or unenforceable provision
shall be reformed, construed and enforced in such jurisdiction so as to render
it valid and enforceable consistent with the intent of the parties insofar as
possible.
3.3 Waiver. If either party should waive any breach of any provisions
of this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
3.4 Entire Agreement; Survival. This Agreement, together with
Executive's offer letter agreement dated __________________, the Proprietary
Information and Inventions Agreement dated _______________, and the Indemnity
Agreement dated ____________ forms the complete and exclusive statement of
Executive's employment with the Company, and shall survive any Change of
Control. This Agreement is entered into without reliance on any promise,
representation, statement or agreement other than those expressly contained or
incorporated
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herein, and it cannot be modified or amended except in a writing signed by
Executive and another duly authorized officer of the Company. The terms and
conditions of Executive's Indemnity Agreement, and the protection afforded such
Executive pursuant to the Company's Director and Officers Insurance Policy, that
by their nature survive Executive's termination of employment with the Company
shall also survive any termination hereunder.
3.5 Counterparts. This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.
3.6 Headings. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
3.7 Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive, the Company and their
respective successors, assigns, heirs, executors and administrators, except that
Executive may not assign any of his duties hereunder and he may not assign any
of his rights hereunder without the written consent of the Company, which shall
not be withheld unreasonably.
3.8 Attorneys' Fees. If either party hereto brings any action to
enforce his or its rights hereunder, the prevailing party in any such action
shall be entitled to recover his or its reasonable attorneys' fees and costs
incurred in connection with such action.
3.9 Arbitration. To provide a mechanism for rapid and economical
dispute resolution, Executive and the Company agree that any and all disputes,
claims, or causes of action, in law or equity, arising from or relating to this
Agreement or its enforcement, performance, breach, or interpretation, will be
resolved, to the fullest extent permitted by law, by final, binding, and
confidential arbitration held in Santa Clara or San Mateo County, California and
conducted by Judicial Arbitration & Mediation Services/Endispute ("JAMS"), under
its then-existing Rules and Procedures. Nothing in this Section 3.9 or in this
Agreement is intended to prevent either Executive or the Company from obtaining
injunctive relief in court to prevent irreparable harm pending the conclusion of
any such arbitration.
3.10 Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the law of the State of
California as applied to contracts made and to be performed entirely within
California.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the Effective Date above written.
BE INCORPORATED: EXECUTIVE:
By:__________________________________ By:________________________________
Jean-Louis Gassee
Chief Executive Officer
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Exhibit A
RELEASE AGREEMENT
I understand that my position with _________, Inc. (the "Company") terminated
effective _______________ (the "Separation Date"). The Company has agreed that
if I choose to sign this Release, the Company will, within thirty (30) days
after the Effective Date of this Release, pay me certain severance benefits
(minus the standard withholdings and deductions) pursuant to the terms of the
Change of Control Agreement (the "Agreement") entered into as of ______________,
1999, between myself and the Company, and any agreements incorporated therein by
reference. I understand that I am not entitled to such severance benefits
unless I sign this Release. I further understand that, regardless of whether I
sign this Release, the Company will pay me all of my accrued salary and paid
time off through the Separation Date, to which I am entitled by law.
In consideration for the severance benefits I am receiving under the Agreement,
I hereby release the Company and its officers, directors, agents, attorneys,
employees, shareholders, parents, subsidiaries, and affiliates from any and all
claims, liabilities, demands, causes of action, attorneys' fees, damages, or
obligations of every kind and nature, whether they are now known or unknown,
arising at any time prior to the date I sign this Release. This general release
includes, but is not limited to: all federal and state statutory and common law
claims, claims related to my employment or the termination of my employment or
related to breach of contract, tort, wrongful termination, discrimination,
harassment, defamation, fraud, wages or benefits, or claims for any form of
equity or compensation. Notwithstanding the release in the preceding sentence,
I am not releasing any right of indemnification, or Company Director and Officer
insurance protection, I may have for any liabilities and costs of defense
(including without limitation reasonable attorneys' fees) arising from my
actions within the course and scope of my employment with the Company.
In releasing claims unknown to me at present, I am waiving all rights and
benefits under Section 1542 of the California Civil Code, and any law or legal
principle of similar effect in any jurisdiction: "A general release does not
extend to claims which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor."
If I am forty (40) years of age or older as of the Separation Date, I
acknowledge that I am knowingly and voluntarily waiving and releasing any rights
I may have under the federal Age Discrimination in Employment Act of 1967, as
amended ("ADEA"). I also acknowledge that the consideration given for the
waiver in the above paragraph is in addition to anything of value to which I was
already entitled. I have been advised by this writing, as required by the ADEA
that: (a) my waiver and release do not apply to any claims that may arise after
my signing of this Release; (b) I should consult with an attorney prior to
executing this Release; (c) I have twenty-one (21) days (forty-five (45) days in
the event of a group termination) within which to consider this Release
(although I may choose to voluntarily execute this Release earlier); (d) I have
seven (7) days following the execution of this release to revoke the Release;
and (e) this Release will not be effective until the eighth day after this
Release has been signed both by me and by the Company ("Effective Date").
Agreed:
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Date [Employee]
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