Employment Agreement - CyberMedia Inc. and Jim Tolonen
Employment Agreement
This Employment Agreement (this "Agreement") is made as of April 22,
1998 by and between CyberMedia Inc., with offices at 2850 Ocean Park Boulevard,
Santa Monica, CA 90405 (the "Company"), and Jim Tolonen, with an address of 3911
Spray Lane, Malibu, CA 90265 ("Executive").
1. Employment and Term.
Effective from and after April 22, 1998 (the "Effective
Date"), the Company hereby employs Executive, and Executive hereby accepts
employment by the Company, on the terms and subject to the conditions set forth
in this Agreement, until such time as Executive or the Company shall terminate
such employment in accordance with the terms and conditions herein (such period
of time, the "Term of Employment"). The Company acknowledges and understands
that prior to May 1, 1998, Executive will be available on a limited, part-time
basis in deference to his obligations to and his transition from his prior
employer.
2. Duties; Location of Employment.
(a) During the Term of Employment, Executive shall serve on a
full-time basis as the Company's President and Chief Operating Officer. In such
capacity, Executive shall report to, and have such responsibilities and duties
with respect to the Company's business as may be required of him by the
Company's Chief Executive Officer ("CEO") or, in the absence of a CEO, the
Company's Board of Directors (the "Board"). Executive currently serves on the
Board. During the Employment Term, the Company shall use its best efforts to
nominate and elect Executive as a director, and Executive shall serve in such
capacity without additional consideration. Executive shall serve the Company
faithfully and to the best of his ability in such capacities, devoting his full
business time, attention, knowledge, energy and skills to such employment;
provided, however, the Company acknowledges that Executive may serve on the
board of directors of other companies with the prior approval of the Board.
Executive shall travel as reasonably required in connection with the performance
of his duties hereunder.
(b) Executive's services shall be rendered principally
at the current offices of the Company located at 2850 Ocean Park Boulevard,
Santa Monica, CA 90405.
3. Compensation and Benefits.
As full and complete compensation to Executive for the
performance of the services required hereunder, the Company shall pay, grant or
provide Executive, and Executive agrees to accept, the following salary and
other compensation and benefits:
(a) A base salary, payable in accordance with the Company's
standard payroll practices for senior executive employees, but not less
frequently than monthly, at an annual rate of $250,000 ("Base Salary").
(b) The right to participate in any medical, dental,
disability, insurance, retirement, savings, vacation, sick leave or other plans
or programs established for the benefit of the Company's key senior executive
employees.
(c) Prompt reimbursement for all reasonable business-related
expenses incurred by Executive in accordance with the policies and procedures of
the Company as in effect from time to time with respect to other key senior
executives.
(d) Paid vacation in accordance with the policies of the
Company as in effect from time to time with respect to other key senior
executives.
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(e) Non-qualified stock options (the "Options") to acquire
four hundred six thousand (406,000) shares of the common stock of the Company
(the "Common Stock"), on terms substantially similar to those applicable to
options granted under the Company's Amended 1993 Stock Option Plan (the "Option
Plan") and standard form of stock option agreement, as modified by this
Agreement. The Options shall be granted, and vesting thereof shall commence, as
of the Effective Date. The Options shall have an exercise price equal to the
fair market value of Common Stock as of the Effective Date as determined by the
Board as to one hundred thousand (100,000) of the Option shares, and $10 per
share as to three hundred six thousand (306,000) of the Option shares. Except as
otherwise provided herein, the Options shall vest on a monthly basis over a
forty-eight (48) month period, subject to Executive's continued service to the
Company.
(f) Within thirty (30) days of the Effective Date, the Company
shall pay Executive a bonus of $227,500. Provided Executive remains an employee
of the Company on the first anniversary of the Effective Date, the Company shall
pay Executive a bonus of $200,000 within fifteen (15) days of such anniversary.
Provided Executive remains an employee of the Company on the second anniversary
of the Effective Date, the Company shall pay to Executive a bonus of $200,000
within fifteen (15) days of such anniversary. Notwithstanding the foregoing, in
the event Executive becomes entitled to benefits under Section 4(d) or Section
4(g), the Company shall pay to Executive the bonuses described in this Section
3(f) to the extent not previously paid. Any bonuses payable hereunder shall be
subject to applicable tax withholding.
(g) The Executive shall be eligible to receive for each
annual period during the Term of Employment commencing January 1 and ending
December 31, beginning January 1, 1999 (the "Bonus Period"), an annual bonus
(the "Annual Bonus") of up to one hundred percent (100%) of Executive's Base
Salary (the "Target Bonus"), to be earned based upon attainment of performance
goals and objectives to be determined by the Board on or before January 1 of
each such year during the Term of Employment. For the period beginning with the
Effective Date and ending on June 30, 1998, Executive shall be eligible to
receive a bonus (the "Initial Bonus") of $42,000 based on performance goals and
objectives to be determined by the Board on or before June 1, 1998. For the
period beginning July 1, 1998 and ending December 31, 1998, Executive shall be
eligible to receive a quarterly bonus of $62,500 for each of the fiscal quarters
beginning July 1, 1998 and October 1, 1998, (the "Quarterly Bonus") to be earned
upon attainment of performance goals and objectives to be determined by the
Board on or before the beginning of each such quarter. The Initial Bonus and
Quarterly Bonus, if any, shall be paid within 60 days after the close of the
applicable fiscal quarter. The Annual Bonus, if any, shall be paid no less
frequently than once each year within 60 days after the Bonus Period.
(h) The right, exercisable for 30 days after the Effective
Date, to purchase on terms substantially similar to those applicable to stock
purchase rights under the Option Plan and standard form of restricted stock
purchase agreement up to one hundred thousand (100,000) shares of Common Stock,
at a price of $6.375 per share (the "Restricted Stock"). Executive may purchase
the Restricted Stock with a full recourse promissory note (the "Note"). The Note
shall accrue interest semi-annually at the "applicable federal rate" (within the
meaning of Section 1274(d) of the Code), and shall be subject to repayment in
accordance with Section 5 below. Restricted Stock shall vest on a monthly basis
over a thirty-six (36) month period commencing on the Effective Date, subject to
Executive's continued service to the Company or as otherwise provided herein,
with 2,777 shares of Restricted Stock to vest each month during such thirty-six
(36) month period except for the last month of such thirty-six (36) month period
in which 2,805 shares of Restricted Stock shall vest, subject to earlier
vesting, if any, if either of the following events or conditions occurs or is
satisfied during the Term of Employment: (x) the average closing stock price of
the common stock of the Company on the Nasdaq National Market exceeds fifteen
dollars ($15) for any twenty (20) consecutive trading days, or (y) the Company
recognizes a Net Profit for two fiscal consecutive quarters (the "Net Profit
Period"). For purposes of this Agreement, the Company shall have recognized a
"Net Profit" for the Net Profit Period if, with respect to each fiscal quarter
in the Net Profit Period, (x) the Company has net revenues in excess of $16
million for each such fiscal quarter as reported in the Company's consolidated
statement of operations ("Statement of Operations") in the Company's Form 10-Q
for the quarter then ended or the Company's annual report on Form 10-K for the
year then ended, as the
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case may be (the "SEC Reports"), and (y) the Company's earnings before
interest and taxes for each such fiscal quarter ("EBIT") are in excess of 5% of
the net revenues of the Company for such fiscal quarter as reported in the
Statement of Operations in the Company's SEC Reports; provided, that, EBIT for
any particular fiscal quarter shall be determined without giving effect to
Executive's right to the bonus described in Section 3(f).
(i) The Company shall pay premiums during the Term of
Employment required to be paid in order to maintain a life insurance policy on
the life of Executive with $2 million of benefits payable upon Executive's death
to a beneficiary or beneficiaries designated by Executive. Upon termination of
this Agreement, the Company shall be entitled to withdraw from the cash
surrender value of such policy, to the extent available, an amount equal to the
insurance premiums paid by the Company.
(j) The Company will pay or reimburse Executive, as the case
may be, for the following costs and expenses incurred in connection with
Executive's and his family's relocation to Santa Monica, California; (i)
Executive's reasonable and prudent moving expenses to a Santa Monica, California
residence; (ii) Executive's reasonable and prudent rental expenses for a Santa
Monica, California interim residence for a period of up to 270 days from the
Effective Date; (iii) the reasonable and prudent travel expenses incurred by the
Executive arising out of personal visits to Los Gatos, California until his
family relocates to the Santa Monica, California area; (iv) the reasonable
closing costs, such costs not to include any financing points, arising out of
Executive's sale of his Los Gatos, California residence and purchase of a Santa
Monica, California area residence; and (v) all other reasonable and prudent
one-time direct costs of relocation (but not including any loss on the sale of
the Los Gatos, California residence). Notwithstanding the foregoing, the
Company's obligation to pay or reimburse Executive for such expenses shall not
exceed $75,000.
4. Termination.
(a) Disability. In the event of the permanent disability (as
hereinafter defined) of Executive during the Term of Employment, the Company
shall have the right, upon written notice to Executive, to terminate Executive's
employment hereunder, effective upon the 30th calendar day following the giving
of such notice (or such later day as shall be specified in such notice). Upon
the effectiveness of such termination, (i) the Company shall have no further
obligations hereunder, except to pay and provide, subject to applicable
withholding, (A) all amounts of Base Salary accrued, but unpaid, at the
effective date of termination, (B) a lump sum amount equal to Executive's then
annual Base Salary, (C) a pro rata portion of Executive's Quarterly Bonus or
Target Bonus, as applicable, and (D) all reasonable unreimbursed
business-related expenses, and (ii) Executive shall have no further obligations
hereunder other than those provided for in Sections 6 and 7 hereof. All amounts
payable to Executive pursuant to this Section 4(a) shall be payable within 30
days following the effectiveness of the termination of Executive's employment.
For purposes of this paragraph, "permanent disability" shall be defined as any
physical or mental disability or incapacity which renders Executive incapable in
any material respect of performing the services required of him in accordance
with his obligations under Section 2 for a period of 120 days, consecutive or
otherwise, in any 360-day period.
(b) Death. In the event of the death of Executive during the
Term of Employment, this Agreement shall automatically terminate and the Company
shall have no further obligations hereunder, except to pay and provide to
Executive's beneficiary or other legal representative, subject to applicable
withholding, (A) all amounts of Base Salary accrued but unpaid, at the date of
death, (B) a pro rata portion of Executive's Quarterly Bonus or Target Bonus, as
applicable, and (C) all reasonable unreimbursed business-related expenses. All
amounts payable to Executive pursuant to this Section 4(b) shall be payable
within 30 days following the date of death.
(c) Cause. The Company shall have the right, upon written
notice to Executive, to terminate Executive's employment under this Agreement
for Cause (as hereinafter defined); provided, however, that the Company shall
not terminate Executive's employment for Cause unless the Company shall first
have given Executive written notice of the Company's intention to do so, which
written notice shall specify the particular breaches, acts or failures to act
constituting the basis for such termination and
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shall offer Executive an opportunity, within 20 days of the receipt of such
notice, to meet with the Board to defend such breaches, acts or failures to act
and/or to cure any such breaches or acts which are possible to cure. In the
event of a termination for Cause, this Agreement shall terminate and Executive
shall be removed from office effective as of the date specified by the Company
in the notice (subject to the 20-day period referred to above) and (i) the
Company shall have no further obligations hereunder, except to pay all amounts
of Base Salary, reimburse all reasonable unreimbursed business-related expenses
and pay and provide all other benefits accrued to the date of termination and
(ii) Executive shall have no further obligations hereunder except for those
provided for in Sections 6 and 7 hereof; provided, however, that nothing
contained in this Section 4(c) shall constitute a waiver or release by the
Company of any rights or claims it may have against Executive for actions or
omissions which give rise to a termination under this Section 4(c).
For purposes of this Agreement, the term "Cause" shall mean:
(i) any act of fraud, embezzlement or dishonesty on
the part of Executive with respect to the Company or any of its affiliates;or
(ii) any material breach by Executive of his
obligations under Sections 6 or 7 hereof; or
(iii) conviction of Executive of any felony; or
(iv) a material breach of, or the failure or refusal
by Executive to perform and discharge, Executive's duties, responsibilities
and obligations under this Agreement (it being understood that no action
or failure to act by Executive shall be considered to be Cause if such action or
failure to act shall have been taken by Executive in good faith).
(d) Without Cause. The Company shall have the right, upon
written notice to Executive, to terminate Executive's employment under this
Agreement without Cause, in which case this Agreement shall terminate on the
date specified in such notice. The Company thereafter shall have no further
obligations hereunder, except (subject to applicable withholding) to (i) pay all
amounts of Base Salary accrued, but unpaid, to the date of termination, (ii) pay
an additional amount equal to the sum of (A) Executive's annual Base Salary and
(B) Executive's Target Bonus for the fiscal year in which such termination
occurs, and (iii) reimburse all reasonable unreimbursed business-related
expenses. In addition, in the event Executive's employment is terminated by the
Company without Cause, all Options which would have vested had Executive
remained employed by the Company for a twelve month consecutive period after the
date of such termination and Restricted Stock that remains unvested as of such
date of termination shall automatically and immediately vest upon such
termination, in all cases subject to applicable tax withholding. For purposes of
this Section 4(d), Executive's employment will be considered to have been
terminated by the Company without Cause in the event Executive voluntarily
resigns his employment with the Company because of (i) a material adverse change
in his position with the Company which materially reduces his responsibility,
without Cause and without Executive's written consent; or (ii) a material
reduction in Executive's compensation without his written consent.
(e) Voluntary Termination. Executive may voluntarily terminate
his employment with the Company at any time upon at least 30 days prior written
notice, in which case this Agreement shall terminate on the 30th day from such
notice or such longer period as may be consented to by the Company. Upon
termination, the Company shall have no further obligations hereunder, except to
pay all amounts of Base Salary accrued, but unpaid, at the effective date of
voluntary termination, and all reasonable unreimbursed business-related
expenses, if any.
(f) Plan Benefits. Upon any termination of Executive's
employment hereunder, the Company shall pay Executive the amounts and shall
provide all benefits generally available upon termination under any employee
benefit plans, policies and practices of the Company, determined in accordance
with the applicable terms and provisions of such plans, policies and practices.
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(g) Change of Control. In the event (i) of a Change of Control
of the Company during the six-month period immediately after the Effective Date
(the "Initial Period") and (ii) within twelve months after such Change of
Control either Executive voluntarily resigns or the Company terminates
Executive's employment other than for Cause, then (A) the Company shall pay
Executive an amount equal to 300% of Executive's annual Base Salary less any
amounts of the Target Bonus, Initial Bonus and Quarterly Bonus earned or paid
with respect to the Company's fiscal year in which such termination occurs, and
(B) all Options which would have vested had Executive remained employed by the
Company from the Effective Date through and until twenty-four consecutive months
after the Effective Date and Restricted Stock that remain unvested as of such
date of termination shall automatically and immediately vest upon such
termination, in all cases subject to applicable tax withholding. In the event
(i) of a Change of Control of the Company at any time after the Initial Period
and (ii) within twelve months after such Change of Control Executive either
voluntarily resigns or the Company terminates Executive's employment other than
for Cause, then (A) the Company shall pay Executive an amount equal to 200% of
the Executive's annual Base Salary, and (B) all Options which would have vested
had Executive remained employed by the Company for an eighteen month period
after the date of such termination and Restricted Stock that remain unvested as
of such date of termination shall automatically and immediately vest upon such
termination, in all cases subject to applicable tax withholding. In the event of
a Change of Control of the Company at a value (the "Transaction Value") that
equals or exceeds $20 per share of Company common stock (as determined by the
Board, in its discretion), Executive's Options shall vest as follows (in
addition to any accelerated vesting provided above): if the Transaction Value is
less than $30 per share, then the Options shall vest as though Executive had
remained employed by the Company for an additional 12 months; if the Transaction
Value equals or exceeds $30 per share, then Executive's Options shall fully
vest.For purposes of this Agreement, a "Change of Control" shall be deemed to
have occurred upon the closing of (i) a merger, reorganization or consolidation
of the Company with or into any other corporation or other entity, or sale of
all or substantially all of the assets of the Company, unless the stockholders
of the Company immediately prior to such transaction hold at least 50% of the
total voting power represented by the voting securities of the entity surviving
such merger, reorganization or consolidation (or its parent), or the entity
purchasing such assets (or its parent), or (ii) upon a sale or transfer of more
than 50% of the Common Stock of the Company to a person or persons acting as a
group, which person or group is not controlled directly or indirectly by the
Company, in a single transaction or series of related transactions.
5. Repayment of Note.
Executive's Note (as described in Section 3(h)), shall be due
and payable in full, together with any accrued but unpaid interest, on the third
anniversary of the Effective Date, subject to earlier prepayment voluntarily by
Executive or as follows:
(a) The principal amount of the Note, together with any
accrued but unpaid interest, shall be due and payable in full within ninety (90)
days of the date Executive's employment with Company (or its successor)
terminates for any reason, but only if such termination occurs more than ninety
(90) days before the third anniversary of the Effective Date.
(b) Within thirty (30) days of receiving any bonus as
provided in Section 3(f), Executive shall pay to the Company an amount equal to
the bonus amount, net of applicable tax withholding.
6. Confidentiality; Ownership.
(a) During the Term of Employment and thereafter, Executive
shall keep secret and retain in strictest confidence and not use or disclose,
furnish or make accessible to anyone outside the Company and any of its
affiliates, directly or indirectly, or use for the benefit of himself or others
except in connection with the business of the Company and the business of any of
its subsidiaries or affiliates, any Protected Information. The term "Protected
Information" shall mean trade secrets, confidential or proprietary information
and all other knowledge, technology, know-how, information, documents or
materials owned, developed or possessed by the Company or any of its
subsidiaries
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or affiliates, whether in tangible or intangible form, pertaining to the
business of the Company or any of its subsidiaries or affiliates, including, but
not limited to, research and development operations, systems, databases,
computer programs and software, designs, models, operating procedures, knowledge
of the organization, products and services (including prices, costs, sales or
content), processes, techniques, contracts, financial information or measures,
business methods, future business plans, details of consultant contracts, new
personnel acquisition plans, business acquisition plans, customers and suppliers
(including identities of customers and prospective customers and suppliers,
identities of individual contacts at business entities which are customers or
prospective customers or suppliers, preferences, businesses or habits), and
business relationships; provided, however, that Protected Information shall not
include information that shall become generally known to the public or the trade
without violation of this Section 6.
(b) Executive acknowledges that all developments, inventions
(whether patentable or otherwise), discoveries, improvements, patents, trade
secrets, copyrights, designs, reports, works of authorship, computer software,
flow charts and diagrams, procedures, data, documentation and writings and
applications thereof relating to the business of the Company or planned business
of the Company or any of its subsidiaries or affiliates that, alone or jointly
with others, Executive may conceive, create, make, develop, reduce to practice
or acquire during the Term of Employment, or has conceived, created, made,
developed, reduced to practice or acquired prior to the Term of Employment
(collectively, the "Developments") are, shall remain, and shall be the sole and
exclusive property of the Company, and Executive hereby assigns to the Company
all of his right, title and interest in and to all such Developments. Executive
shall promptly and fully disclose all future material Developments to the Board
and, at any time upon request and at the expense of the Company, shall execute,
acknowledge and deliver to the Company all instruments that the Company shall
prepare, give evidence and take all other actions that are necessary or
desirable in the opinion of the Company to enable the Company to file and
prosecute applications for and to acquire, maintain and enforce all letters
patent, trademark registrations or copyrights covering the Developments in all
countries in which the same are deemed necessary by the Company. All memoranda,
notes, lists, drawings, records, files, computer tapes, programs, software,
source and programming narratives and other documentation (and all copies
thereof, except for Executive's appointment book, daily planner or similar
organizational or scheduling notes) made or compiled by Executive or made
available to Executive concerning the Developments or otherwise concerning the
business of the Company or planned business of the Company or any of its
subsidiaries or affiliates shall be the property of the Company or such
subsidiary or affiliate and shall be delivered to the Company or such subsidiary
or affiliate promptly upon the termination of the Term of Employment.
(c) The provisions of this Section 6 shall, without any
limitation as to time, survive the expiration or termination of Executive's
employment hereunder, irrespective of the reason for any termination.
7. Covenant-Not to Solicit. Executive agrees that for a period of one
(1) year following any termination of the employment of Executive with the
Company, Executive will not, directly or indirectly, without the prior written
consent of the Company: solicit, entice, persuade or induce any employee,
consultant, agent or independent contractor of the Company or of any of its
subsidiaries or affiliates to terminate his or her employment by the Company or
such subsidiary or affiliate to become employed by any person, firm or
corporation other than the Company or such subsidiary or affiliate, or approach
any such employee, consultant, agent or independent contractor for any of the
foregoing purposes, or hire any such employee, consultant, agent or independent
contractor or authorize or assist in the taking of any such actions by any third
party.
8. Rights Regarding Salary and Benefits. The right of Executive to
participate in plans and programs, and to receive salary, benefits or
reimbursement from the Company pursuant to the terms of this Agreement shall not
be affected by or subject to (i) any set-off, counterclaim, recoupment, defense
or other right which the Company may have against Executive (other than in
respect of debts for money owed by Executive to the Company), or (ii) any
insolvency, bankruptcy, reorganization or similar proceedings by or against the
Company.
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9. Survivorship. The respective rights and obligations of the parties
hereunder, including, without limitation, the rights and obligations pursuant to
Sections 6 and 7, shall survive any termination of this Agreement to the extent
necessary for the intended preservation of such rights and obligations.
10. Specific Performance. Executive acknowledges that the services to
be rendered by Executive are of a special, unique and extraordinary character
and, in connection with such services, Executive will have access to
confidential information vital to the Company's Business and the businesses of
its subsidiaries and affiliates. By reason of this, Executive consents and
agrees that if Executive violates any of the provisions of Sections 6 or 7
hereof, the Company and its subsidiaries and affiliates would sustain
irreparable injury and that money damages will not provide adequate remedy to
the Company and that the Company shall be entitled to have Sections 6 or 7
specifically enforced by any court having equity jurisdiction. Nothing contained
herein shall be construed as prohibiting the Company or any of its subsidiaries
or affiliates from pursuing any other remedies available to it for such breach
or threatened breach, including the recovery of damages from Executive.
11. Deductions and Withholding; Expenses. Executive agrees that the
Company and/or its subsidiaries or affiliates shall withhold from any and all
compensation paid to and required to be paid to Executive pursuant to this
Agreement, all federal, state, local and/or other taxes which the Company
determines are required to be withheld in accordance with applicable statutes
and/or regulations from time to time in effect and all amounts required to be
deducted in respect of Executive's coverage under applicable employee benefit
plans. For purposes of this Agreement and calculations hereunder, all such
deductions and withholdings shall be deemed to have been paid to and received by
Executive.
12. Waiver. The waiver by the Company of a breach of any provision of
this Agreement by Executive shall not operate or be construed as a waiver of any
subsequent breach by him. The waiver by Executive of a breach of any provision
of this Agreement by the Company shall not operate or be construed as a waiver
of any subsequent-breach by the Company.
13. Governing Law. This Agreement shall be subject to, and governed by,
the laws of the State of California applicable to agreements made and to be
performed entirely therein.
14. Assignability; Successors.
(a) The obligations of Executive may not be delegated and,
except as expressly provided in Section 4(b) relating to the designation of
beneficiaries, Executive may not, without the Company's prior written consent
thereto, assign, transfer, convey, pledge, encumber, hypothecate or otherwise
dispose of this Agreement or any interest herein. Any such attempted delegation
or disposition shall be null and void and without effect. Notwithstanding the
foregoing, Executive may transfer his Options and Restricted Stock to his
immediate family members or to a family trust or family partnership, subject to
the terms and conditions of the Option Plan, as modified by this Agreement.
(b) The Company and Executive agree that this Agreement and
each of the Company's rights and obligations hereunder may be assigned or
transferred by the Company to and shall be assumed by and binding upon any
Successor to the Company.
(c) The term "Successor" shall mean any corporation or other
business entity which succeeds to the assets or conducts the business of the
Company, whether directly or indirectly, by purchase, merger, consolidation or
otherwise.
In the event that another corporation or other business entity becomes
a Successor of the Company, then the Successor shall, by an agreement in form
and substance reasonably satisfactory to Executive, expressly assume and agree
to perform this Agreement in the same manner and to the same extent as the
Company would be required to perform if there had been no successor.
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15. Change of Control Payments.
(a) Notwithstanding anything to the contrary contained herein
(including, without limitation, in Section 4(g) hereof), in the event that any
payment or benefit received or to be received by Executive in connection with a
termination of Executive's employment with the Company (collectively, the
"Severance Payments") would (i) constitute a "parachute payment" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code") or any similar or successor provision to 280G and (ii) but for this
Section 15(a), be subject to the excise tax imposed by Section 4999 of the Code
or any similar or successor provision to Section 4999 (the "Excise Tax"), then
such Severance Payments (which Severance Payments shall collectively be referred
to herein as the "Severance Parachute Payments")shall be reduced to the largest
amount which would result in no portion of the Severance Parachute Payments
being subject to the Excise Tax. In the event any reduction of benefits is
required pursuant to this Agreement, Executive shall be allowed to choose which
benefits hereunder are reduced (e.g., reduction first from the Severance
Payment, then from the vesting acceleration). If the Internal Revenue Service
(the "IRS") determines that a Severance Parachute Payment is subject to the
Excise Tax, then the Company may seek to enforce the provisions of Section 15(b)
hereof. Such enforcement of Section 15(b) hereof shall be the only remedy, under
any and all applicable state and federal laws or otherwise, for Executive's
failure to reduce the Severance Parachute Payments so that no portion thereof is
subject to the Excise Tax.
(b) If, notwithstanding the reduction described in Section
15(a) hereof, the IRS determines that Executive is liable for the Excise Tax as
a result of the receipt of a Severance Parachute Payment, then Executive shall,
subject to the provisions of this Agreement, be obligated to pay to the Company
(the "Repayment Obligation") an amount of money equal to the "Repayment Amount."
The Repayment Amount with respect to a Severance Parachute Payment shall be the
smallest such amount, if any, as shall be required to be paid to the Company so
that Executive's net proceeds with respect to any Severance Parachute Payment
(after taking into account the payment of the Excise Tax imposed on such
Severance Parachute Payment) shall be maximized. Notwithstanding the foregoing,
the Repayment Amount with respect to a Severance Parachute Payment shall be zero
if a Repayment Amount of more than zero would not eliminate the Excise Tax
imposed on such Severance Parachute Payment. If the Excise Tax is not eliminated
through the performance of the Repayment Obligation, Executive shall pay the
Excise Tax. The Repayment Obligation shall be performed within 30 days of either
(i) Executive's entering into a binding agreement with the IRS as to the amount
of Executive's Excise Tax liability or (ii) a final determination by the IRS or
a court decision requiring Executive to pay the Excise Tax with respect to such
a Severance Parachute Payment from which no appeal is available or is timely
taken.
16. Severability; Blue-Pencilling. If any provision (or any part
thereof) of this Agreement, including Sections 6 and 7, as applied to either
party or to any circumstances, shall be determined by any court of competent
jurisdiction to be invalid or unenforceable, the same shall in no way affect any
other provision or remaining part thereof of this Agreement, which shall be
given full effect without regard to the invalid or unenforceable provision or
part thereof, or the validity or enforceability of this Agreement.
If any of the provisions of Sections 6 or 7, or any part thereof, are
determined to be unreasonable because of the duration of such provision or the
geographic scope thereof, the court shall have the power to reduce the duration
or restrict or redefine the geographic scope of such provision and to enforce
such provision as so reduced, restricted or redefined.
17. Notices. All notices to the Company or Executive permitted or
required hereunder shall be in writing, shall refer to this Agreement and shall
be delivered personally, by telecopier or by courier service providing for
next-day delivery or sent by registered or certified mail, return receipt
requested, to the following addresses:
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<PAGE>
(a) if to the Company to:
CyberMedia, Inc.
2850 Ocean Park Boulevard
Santa Monica, CA 90405
Attention: General Counsel
Telephone: (310) 664-5000
Facsimile: (310) 581-4720
(b) if to Executive to:
3911 Spray Lane
Malibu, CA 90265
Any party may change the address to which notices shall be
sent by sending written notice of such change of address to the other party. Any
such notice shall be deemed given, if delivered personally, upon receipt; if
sent by certified or registered mail, 3 days after deposit (postage prepaid)
with the U.S. mail service; if sent by courier service providing for next day
delivery, the next business day following deposit with such courier service; and
if telecopied, when telecopied.
18. Paragraph Headings. The paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
19. Entire Agreement. This Agreement together with any other agreement
expressly referred to herein embodies the entire agreement of the parties and
supersedes all prior agreements and understandings of the parties with respect
to Executive's employment between the Company and Executive. This Agreement may
not be changed or terminated orally but only by an agreement in writing signed
by the parties hereto.
20. 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
taken together shall constitute one and the same instrument.
In Witness Whereof, the parties hereto have duly executed this
Agreement as of April 22,1998.
CyberMedia, Inc.
By: /s/ Suhas Patil
---------------------
Name: Suhas Patil
Title: Compensation Committee, Board of Directors
/s/ James R. Tolonen
---------------------
James R. Tolonen
45