SEVERANCE AGREEMENT
THIS AGREEMENT made as of the ______ day of __________, 19__, by and
between Mylex Corporation, a Delaware corporation, and ____________________ (the
"Executive").
WHEREAS, the Board of Directors (the "Board") of the Company (as
hereinafter defined) recognizes that the possibility of a termination without
Cause (as hereinafter defined), and the possibility of a Change in Control (as
hereinafter defined), can create significant distractions for its key management
personnel because of the uncertainties inherent in such situations;
WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and its stockholders to retain the services of the
Executive, in general, and particularly in the event of a threat or the
occurrence of a Change in Control and to ensure his or her continued dedication
and efforts in such event without undue concern for his or her personal
financial and employment security; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Company, in general, and particularly in the event of a threat or the occurrence
of a Change in Control, the Company desires to enter into this Agreement with
the Executive to provide the Executive with certain benefits in the event his or
her employment is terminated without Cause or as a result of, or in connection
with, a Change in Control and to provide the Executive with certain other
benefits whether or not the Executive's employment is terminated.
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
1. TERM OF AGREEMENT. This Agreement shall commence as of _______ __,
19__, and shall continue in effect until _________ ___, 19__; PROVIDED, HOWEVER,
that commencing on __________, ___, 19__ and on each _____ ___ thereafter, the
term of this Agreement shall automatically be extended for one (1) year, unless
either the Company or the Executive shall have given written notice to the
other, at least ninety (90) days prior thereto, that the term of this Agreement
shall not be so extended; and PROVIDED, FURTHER, HOWEVER, that notwithstanding
any such notice by the Company not to extend, the term of this Agreement shall
not expire prior to the expiration of twenty-four (24) months after the
occurrence of a Change in Control which occurs during the term of this
Agreement.
2. DEFINITIONS.
2.1 ACCRUED COMPENSATION. For purposes of this Agreement, "Accrued
Compensation" shall mean an amount which shall include all amounts earned or
accrued through the "Termination Date" (as hereinafter defined) but not paid as
of the Termination Date, including (i) base salary, (ii) reimbursement for
reasonable and necessary business expenses incurred by the Executive on behalf
of the Company, pursuant to the Company's expense reimbursement policy in effect
at such time, during the period ending on the Termination Date, (iii) vacation
pay, and (iv) bonuses and incentive compensation (other than the "Pro Rata
Bonus" (as hereinafter defined)).
2.2 BASE AMOUNT. For purposes of this Agreement, "Base Amount" shall mean
the greater of the Executive's annual base salary (a) at the rate in effect on
the Termination Date or (b) at the highest rate in effect at any time during the
ninety (90) day period prior to the Termination Date or a Change in Control, and
shall include all amounts of his or her base salary that are deferred under the
qualified and non-qualified employee benefit plans of the Company or any other
agreement or arrangement.
2.3 BONUS AMOUNT. For purposes of this Agreement, "Bonus Amount" shall
mean the greater of (x) the most recent annual bonus paid or payable to the
Executive, or, if greater, the annual bonus paid or payable for the full fiscal
year ended prior to the fiscal year during which a Termination Date or a Change
in Control occurred or (y) the average of the annual bonuses paid or payable
during the three full fiscal years ended prior to the Termination Date or, if
greater, the three full fiscal years ended prior to the Termination Date or
Change in Control (or, in each case, such lesser period for which annual bonuses
were paid or payable to the Executive).
2.4 CAUSE. For purposes of this Agreement, a termination of employment is
for "Cause" if the Executive has been convicted of a felony or the termination
is evidenced by a resolution adopted in good faith by two-thirds of the Board
that the Executive (a) intentionally and continually failed substantially to
perform his or her reasonably assigned duties with the Company (other than a
failure resulting from the Executive's incapacity due to physical or mental
illness or from the assignment of duties that would constitute "Good Reason" as
hereinafter defined), which failure continued for a period of at least thirty
(30) days after a written notice of demand for substantial performance has been
delivered to the Executive, specifying the manner in which the Executive has
failed substantially to perform, or (b) intentionally and continually failed
substantially to follow or perform the lawful directives of the President or any
other superior of the Executive (other than a failure resulting from the
Executive's incapacity due to physical or mental illness or from the
establishment of directives that would constitute "Good Reason" as hereinafter
defined), which failure continued for a period of at least thirty (30) days
after written notice of demand for compliance or substantial performance has
been delivered to the Executive, specifying the manner in which the Executive
has failed substantially to perform or comply; PROVIDED, HOWEVER, that no
termination of the Executive's employment
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shall be for Cause as set forth in clauses (a) or (b) above until (x) there
shall have been delivered to the Executive a copy of a written notice setting
forth that the Executive was guilty of the conduct set forth in clauses (a) or
(b) and specifying the particulars thereof in reasonable detail, and (y) the
Executive shall have been provided an opportunity to be heard in person by the
Board. No act, nor failure to act, on the Executive's part, shall be considered
"intentional," unless the Executive has acted, or failed to act, with a lack of
good faith or with a lack of reasonable belief that the Executive's action or
failure to act was in the best interest of the Company.
2.5 CHANGE IN CONTROL. For purposes of this Agreement, a "Change in
Control" shall mean any of the following events:
(a) An acquisition (other than directly from the Company) of any voting
securities of the Company (the "Voting Securities") by any "Person" (as the term
person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "1934 Act")) immediately after which such Person
has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under
the 1934 Act) of thirty percent (30%) or more of the combined voting power of
the Company's then outstanding Voting Securities; PROVIDED, HOWEVER, that in
determining whether a Change in Control has occurred, Voting Securities which
are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a
trust forming a part thereof) maintained by (x) the Company or (y) any
corporation or other Person of which a majority of its voting power or its
equity securities or equity interest is owned directly or indirectly by the
Company (a "Subsidiary"), or (2) the Company or any Subsidiary.
(b) The individuals who, as of the date this Agreement is approved by the
Board, are members of the Board (the "Incumbent Board"), cease for any reason to
constitute at least two-thirds of the Board; PROVIDED, HOWEVER, that if the
election, or nomination for election by the Company's stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent Board,
such new director shall, for purposes of this Agreement, be considered and
defined as a member of the Incumbent Board; PROVIDED, FURTHER, HOWEVER, that no
individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11 promulgated under the
1934 Act) or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board (a "Proxy Contest"), including by
reason of any agreement intended to avoid or settle any Election Contest or
Proxy Contest; or
(c) Approval by stockholders of the Company of:
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(1) A merger, consolidation or reorganization involving the Company,
unless
(i) the stockholders of the Company, immediately before such
merger, consolidation or reorganization, own, directly or
indirectly immediately following such merger, consolidation
or reorganization, at least eighty-five percent (85%) of the
combined voting power of the outstanding voting securities
of the corporation resulting from such merger or
consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as their
ownership of the Voting Securities immediately before such
merger, consolidation or reorganization,
(ii) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least two-thirds of the members of the board
of directors of the Surviving Corporation, and
(iii) no Person (other than the Company, any Subsidiary, any
employee benefit plan (or any trust forming a part thereof)
maintained by the Company, the Surviving Corporation or any
Subsidiary) has Beneficial Ownership of twenty percent (20%)
or more of the combined voting power of the Surviving
Corporation's then outstanding voting securities,
a transaction described in clauses (i) through (iii) shall herein
be referred to as a "Non-Control Transaction"; or
(2) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person
(other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because a Person (the "Subject Person") gained Beneficial
Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company
which, by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Person,
provided that if a Change in Control would occur (but for the operation of
this sentence) as a result of the acquisition of Voting Securities by the
Company, and after such share acquisition by the Company, the Subject Person
becomes the Beneficial
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Owner of any additional Voting Securities which increases the percentage of
the then outstanding Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur.
(d) Notwithstanding anything contained in this Agreement to the contrary,
if the Executive's employment is terminated prior to a Change in Control and the
Executive reasonably demonstrates that such termination (i) was at the request
of a third party who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control and who effectuates a Change in Control
(a "Third Party") or (ii) otherwise occurred in connection with, or in
anticipation of, a Change in Control which actually occurs, then for all
purposes of this Agreement, the date of a Change in Control with respect to the
Executive shall mean the date immediately prior to the date of such termination
of the Executive's employment.
2.6 COMPANY. For purposes of this Agreement, "Company" shall mean Mylex
Corporation and shall include its "Successors and Assigns" (as hereinafter
defined).
2.7 DISABILITY. For purposes of this Agreement, "Disability" shall mean a
physical or mental infirmity which impairs the Executive's ability to
substantially perform his or her duties with the Company for a period of one
hundred eighty (180) consecutive days, and the Executive has not returned to his
or her full time employment prior to the Termination Date as stated in the
"Notice of Termination" (as hereinafter defined).
2.8 GOOD REASON. (a) For purposes of this Agreement, "Good Reason" shall
mean the occurrence after a Change in Control of any of the events or conditions
described in subsections (1) through (8) hereof:
(1) a change in the Executive's status, title, position or
responsibilities (including reporting responsibilities) which, in
the Executive's reasonable judgment, represents an adverse change
from his or her status, title, position or responsibilities as in
effect at any time within ninety (90) days preceding the date of
a Change in Control or at any time thereafter; the assignment to
the Executive of any duties or responsibilities which, in the
Executive's reasonable judgment, are inconsistent with his or her
status, title, position or responsibilities as in effect at any
time within ninety (90) days preceding the date of a Change in
Control or at any time thereafter; or any removal of the
Executive from or failure to reappoint or reelect him or her to
any of such offices or positions, except in connection with the
termination of his or her employment for Disability, Cause, as a
result of his or her death or by the Executive other than for
Good Reason;
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(2) a reduction in the Executives base salary or any failure to pay
the Executive any compensation or benefits to which he or she is
entitled within five (5) days of the date due;
(3) the Company's requiring the Executive to be based at any place
outside a 30-mile radius from Fremont, California, except for
reasonably required travel on the Company's business which is not
materially greater than such travel generally required for such
Executive prior to the Change in Control;
(4) the failure by the Company to (A) continue in effect (without
reduction in benefit level, and/or reward opportunities) any
material compensation or employee benefit plan in which the
Executive was participating at any time within ninety (90) days
preceding the date of a Change in Control or at any time
thereafter, including, but not limited to, the plans listed on
Appendix A, unless such plan is replaced with a plan that
provides substantially equivalent compensation or benefits to the
Executive or (B) provide the Executive with compensation and
benefits, in the aggregate, at least equal (in terms of benefit
levels and/or reward opportunities) to those provided for under
each other employee benefit plan, program and practice in which
the Executive was participating at any time within ninety (90)
days preceding the date of a Change in Control or at any time
thereafter;
(5) the insolvency or the filing (by any party, including the
Company) of a petition for bankruptcy of the Company, which
petition is not dismissed within sixty (60) days;
(6) any material breach by the Company of any provision of this
Agreement;
(7) any purported termination of the Executive's employment for Cause
by the Company which does not comply with the terms of Section
2.4; or
(8) the failure of the Company to obtain an agreement, satisfactory
to the Executive, from any Successors and Assigns to assume and
agree to perform this Agreement, as contemplated in Section 6(c)
hereof.
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(b) Any event or condition described in this Section 2.8(a)(1) through (8)
which occurs prior to a Change in Control but which the Executive reasonably
demonstrates (1) was at the request of a Third Party, or (2) otherwise arose in
connection with, or in anticipation of, a Change in Control which actually
occurs, shall constitute Good Reason for purposes of this Agreement
notwithstanding that it occurred prior to the Change in Control.
(c) The Executive's right to terminate his or her employment pursuant to
this Section 2.8 shall not be affected by his or her incapacity due to physical
or mental illness.
2.9 NOTICE OF TERMINATION. For purposes of this Agreement, "Notice of
Termination" shall mean a written notice from the Company of termination of the
Executive's employment which indicates the specific termination provision in
this Agreement relied upon, if any, and which sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
2.10 PRO RATA BONUS. For purposes of this Agreement, "Pro Rata Bonus"
shall mean an amount equal to the greater of (i) the Bonus Amount or (ii) an
amount equal to the bonus objective or target established by the Board for the
Executive for the fiscal year in which the termination occurs multiplied by a
fraction the numerator of which is the number of days in the fiscal year through
the Termination Date and the denominator of which is 365.
2.11 SUCCESSORS AND ASSIGNS. For purposes of this Agreement, "Successors
and Assigns" shall mean a corporation or other entity acquiring all or
substantially all the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.
2.12 TERMINATION DATE. For purposes of this Agreement, "Termination Date"
shall mean in the case of the Executive's death, his or her date of death, in
the case of Good Reason, the last day of his or her employment, and in all other
cases, the date specified in the Notice of Termination; PROVIDED, HOWEVER, that
if the Executive's employment is terminated by the Company for Cause or due to
Disability, the date specified in the Notice of Termination shall be at least 30
days from the date the Notice of Termination is given to the Executive, provided
that in the case of Disability the Executive shall not have returned to the
full-time performance of his or her duties during such period of at least 30
days.
3. TERMINATION OF EMPLOYMENT.
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3.1 CHANGE OF CONTROL. If, during the term of this Agreement, the
Executive's employment with the Company shall be terminated within twenty-four
(24) months following a Change in Control or prior to a Change in Control but
for "Good Reason" as defined in Section 2.8(b), the Executive shall be entitled
to the following compensation and benefits:
(a) If the Executive's employment with the Company shall be terminated (1)
by the Company for Cause or Disability, (2) by reason of the Executive's death,
or (3) by the Executive other than for Good Reason, the Company shall pay to the
Executive the Accrued Compensation and, unless such termination is by the
Company for Cause, a Pro Rata Bonus.
(b) If the Executive's employment with the Company shall be terminated for
any reason other than as specified in Section 3.1(a), the Executive shall be
entitled to each and all of the following:
(i) The Company shall pay the Executive all Accrued Compensation and
a Pro-Rata Bonus.
(ii) The Company shall pay the Executive as severance pay and in lieu
of any further compensation for periods subsequent to the
Termination Date, in a single payment, an amount in cash equal to
one (1) plus one-quarter (1/4) for each year of service beyond
four years of service to the Company as an officer, up to a
maximum multiple of two (2), times the sum of (A) the Base Amount
and (B) the Bonus Amount.
(iii) For twenty-four (24) months after the Termination Date (the
"Section 3.1 Continuation Period"), the Company shall at its
expense continue on behalf of the Executive and his or her
dependents and beneficiaries the life insurance, disability,
medical, dental and hospitalization benefits provided (x) to the
Executive at any time during the ninety (90) day period prior to
the Change in Control or at any time thereafter or (y) to other
similarly situated executives who continue in the employ of the
Company during the Section 3.1 Continuation Period. The coverage
and benefits (including deductibles and costs) provided in this
Section 3.1(b)(iii) during the Section 3.1 Continuation Period
shall be no less favorable to the Executive, and his or her
dependents and beneficiaries, than the most favorable of such
coverages and benefits during any of the periods referred to in
clauses (x) and (y) above. The Company's obligation hereunder
with respect to the foregoing benefits shall be
8
limited to the extent that the Executive obtains any such
benefits pursuant to a subsequent employer's benefit plans, in
which case the Company may reduce the coverage of any benefits it
is required to provide the Executive hereunder as long as the
aggregate coverages and benefits of the combined benefit plans is
no less favorable to the Executive than the coverages and
benefits required to be provided hereunder. This subsection
(iii) shall not be interpreted so as to limit any benefits to
which the Executive, his or her dependents or beneficiaries may
be entitled under any of the Company's employee benefit plans,
programs or practices following the Executive's termination of
employment, including, without limitation, retiree medical and
life insurance benefits.
(iv) The restrictions on any outstanding incentive awards (including
restricted stock and granted performance shares or units) granted
to the Executive under any Mylex Stock Option Plan or under any
other incentive plan or arrangement shall lapse and such
incentive award shall become 100% vested, all stock options and
stock appreciation rights granted to the Executive shall become
immediately exercisable and shall become 100% vested, and all
performance units granted to the Executive shall become 100%
vested.
(c) The amounts provided for in Sections 3.1(a) and 3.1(b)(i) and (ii)
shall be paid in a single lump sum cash payment within five (5) days after the
Executive's Termination Date (or earlier, if required by applicable law).
3.2 TERMINATION WITHOUT CAUSE. If, during the term of this Agreement, the
Executive's employment with the Company is terminated, other than (i) within
24 months following a Change of Control or (ii) prior to a Change of Control but
for "Good Reason" as defined in Section 2.8(b), the Executive shall be entitled
to the following compensation and benefits:
(a) If the Executive's employment with the Company shall be terminated (1)
by the Company for Cause or Disability, (2) by reason of the Executive's death,
or (3) by the Executive other than for Good Reason, the Company shall pay to the
Executive the Accrued Compensation and, unless such termination is by the
Company for Cause, a Pro Rata Bonus.
(b) If the Executive's employment with the Company shall be terminated for
any reason other than as specified in Sections 3.1 or 3.2 (a), the Executive
shall be entitled to each and all of the following:
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(i) The Company shall pay the Executive all Accrued Compensation and
a Pro Rata Bonus.
(ii) The Company shall pay the Executive as severance pay and in lieu
of any further compensation for periods subsequent to the
Termination Date, normal monthly payments of the Executive's Base
Amount in effect immediately prior to the Termination Date for
that number of months, not to exceed six (6) months, determined
by the following formula: two (2) months plus one (1) month if
the Executive served as an officer of the Company for at least
six (6) months prior to the Termination Date plus an additional
one (1) month for each full year prior to the Termination Date
that the Executive served as an officer of the Company.
(iii) For that number of months established by the formula set forth in
Section 3.2 (b)(ii) above, but not greater than six (6) months
(the "Section 3.2 Continuation Period"), the Company shall at its
expense continue on behalf of the Executive and his or her
beneficiaries the life insurance, disability, medical, dental and
hospitalization benefits provided (x) to the Executive at any
time during the ninety (90) day period prior to the Termination
Date or at any time thereafter or (y) to other similarly situated
Executives who continue in the employ of the Company during the
Section 3.2 Continuation Period. The coverage and benefits
(including deductibles and costs) provided in this
Section 3.2(b)(iii) during the Section 3.2 Continuation Period
shall be no less favorable to the Executive, and his or her
dependents and beneficiaries, than the most favorable of such
coverages and benefits during any of the periods referred to in
clauses (x) and (y) above. The Company's obligation hereunder
with respect to the foregoing benefits shall be limited to the
extent that the Executive obtains any such benefits pursuant to a
subsequent employer's benefit plans, in which case the Company
may reduce the coverage of any benefits it is required to provide
the Executive hereunder as long as the aggregate coverages and
benefits of the combined benefit plans is no less favorable to
the Executive than the coverages and benefits required to be
provided hereunder. This subsection (iii) shall not be
interpreted so as to limit any benefits to which the Executive,
his or her dependents or beneficiaries may be entitled under any
of the Company's employee benefit plans, programs or practices
following the Executive's termination of employment, including,
without limitation, retiree medical and life insurance benefits.
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3.3 The Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise
and no such payment shall be offset or reduced by the amount of any compensation
or benefits provided to the Executive in any subsequent employment except as
provided in Sections 3.1(b)(iii) and 3.2(b)(iii).
3.4 The severance pay and benefits provided for in this Section 3 shall be
in lieu of any other severance or termination pay to which the Executive may be
entitled under any Company severance or termination plan, program, practice or
arrangement. The Executive's entitlement to any other compensation or benefits
shall be determined in accordance with the Company's employee benefit plans
(including, the plans listed on Appendix A) and other applicable programs,
policies and practices then in effect.
3.5 Notwithstanding any other provision of this Agreement to the contrary,
the termination of the Executive's employment with the Company in connection
with the sale, divestiture or other disposition of a Subsidiary or "Division"
(as hereinafter defined) (or part thereof) shall not be deemed to be a
termination of employment of the Executive for purposes of this Agreement
provided the Executive accepts employment offered by the purchaser or acquiror
of such Subsidiary or Division (or part thereof) and provided, in the event such
sale, divestiture or other disposition of a Subsidiary or Division occurs
subsequent to or in connection with a Change in Control, the Company obtains an
agreement from such purchaser or acquiror as contemplated in Section 6(c). The
Executive shall not be entitled to benefits from the Company under this
Agreement as a result of such sale, divestiture, or other disposition, or as a
result of any subsequent termination of employment. "Division" shall mean a
business unit or other substantial business operation within the Company that is
operated as a separate profit center, but that is not maintained by the Company
as a separate legal entity.
4. NOTICE OF TERMINATION. Any purported termination of the Executive's
employment by the Company and/or the Employer shall be communicated by Notice of
Termination to the Executive. For purposes of this Agreement, no-such purported
termination shall be effective without such Notice of Termination.
5. EXCISE TAX PAYMENTS
(a) Notwithstanding anything contained in this Agreement to the contrary,
to the extent that the payments and benefits provided under this Agreement and
benefits provided to, or for the benefit of, the Executive under any other
Company plan or agreement (such payments or benefits are collectively referred
to as the "Payments") would be subject to the excise tax (the "Excise Tax")
imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), the Payments shall be
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reduced (but not below zero) if and to the extent necessary so that no Payment
to be made or benefit to be provided to the Executive shall be subject to the
Excise Tax (such reduced amount is hereinafter referred to as the "Limited
Payment Amount"). Unless the Executive shall have given prior written notice
specifying a different order to the Company to effectuate the Limited Payment
Amount, the Company shall reduce or eliminate the Payments, by first reducing or
eliminating those payments or benefits which are not payable in cash and then by
reducing or eliminating cash payments, in each case in reverse order beginning
with payments or benefits which are to be paid the farthest in time from the
"Determination" (as hereinafter defined). Any notice given by the Executive
pursuant to the preceding sentence shall take precedence over the provisions of
any other plan, arrangement or agreement governing the Executive's rights and
entitlements to any benefits or compensation.
(b) An initial determination as to whether the Payments shall be reduced
to the Limited Payment Amount pursuant to the Plan and the amount of such
Limited Payment Amount shall be made by an accounting firm at the Company's
expense selected by the Company which is designated as one of the six largest
accounting firms in the United States (the "Accounting Firm"). The Accounting
Firm shall provide its determination (the "Determination"), together with
detailed supporting calculations and documentation, to the Company and the
Executive within five (5) days of the Termination Date, if applicable, or such
other time as requested by the Company or by the Executive (provided the
Executive reasonably believes that any of the Payments may be subject to the
Excise Tax), and if the Accounting Firm determines that no Excise Tax is payable
by the Executive with respect to a Payment or Payments, it shall furnish the
Executive with an opinion, at the Company's expense, reasonably acceptable to
the Executive that no Excise Tax will be imposed with respect to any such
Payment or Payments. Within ten (10) days of the delivery of the Determination
to the Executive, the Executive shall have the right to dispute the
Determination (the "Dispute"). If there is no Dispute, the Determination shall
be binding, final and conclusive upon the Company and the Executive subject to
the application of Section 5(c) below.
(c) As a result of the uncertainty in the application of Sections 4999 and
28OG of the Code, it is possible that the Payments to be made to, or provided
for the benefit of, the Executive either have been made or will not be made by
the Company which, in either case, will be inconsistent with the limitations
provided in Section 5(a) (hereinafter referred to as an "Excess Payment" or
"Underpayment", respectively). If it is established pursuant to a final
determination of a court, or an Internal Revenue Service (the "IRS") proceeding
which has been finally and conclusively resolved, that an Excess Payment has
been made, such Excess Payment shall be deemed for all purposes to be a loan to
the Executive made on the date the Executive received the Excess Payment and the
Executive shall repay the Excess Payment to the Company, on demand (but not less
than thirty (30) days after written notice is received by the Executive),
together with
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interest on the Excess Payment at the "Applicable Federal Rate" (as defined in
Section 1274(d) of the Code) from the date of the Executive's receipt of such
Excess Payment until the date of such repayment. In the event that it is
determined by (i) the Accounting Firm, the Company (which shall include the
position taken by the Company, or together with its consolidated group, on its
federal income tax return) or the IRS, (ii) pursuant to a determination by a
court, or (iii) upon the resolution to the Executive's satisfaction of the
Dispute, that an Underpayment has occurred, the Company shall pay an amount
equal to the Underpayment to the Executive within thirty (30) days of such
determination or resolution, together with interest on such amount at the
Applicable Federal Rate from the date such amount would have been paid to the
Executive until the date of payment.
(d) Notwithstanding anything contained in this Agreement to the contrary,
in the event that, according to the Determination, an Excise Tax will be imposed
on any Payment or Payments, the Company shall pay to the applicable government
taxing authorities, as Excise Tax withholding, the amount of the Excise Tax that
the Company has actually withheld from the Payment or Payments.
6. SUCCESSORS: BINDING AGREEMENT.
(a) This Agreement shall be binding upon and shall inure to the benefit of
the Company, and its Successors and Assigns, and the Company shall require any
Successors and Assigns to expressly 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.
(b) Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Executive, his or her beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal representative.
(c) In the event that a Division (or part thereof) is sold, divested, or
otherwise disposed of by the Company subsequent to or in connection with a
Change in Control and the Executive is offered employment by the purchaser or
acquiror thereof, the Company shall require such purchaser or acquiror to
assume, and agree to perform, the Company's obligations under this Agreement, in
the same manner, and to the same extent, that the Company would be required to
perform if no such acquisition or purchase had taken place.
7. FEES AND EXPENSES. The Company shall pay all reasonable legal fees
and related expenses (including the costs of arbitrators, experts, evidence and
counsel) incurred by,the Executive as they become due as a result of (a) the
Executive's
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termination of employment (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination of employment), (b) the
Executive seeking to obtain or enforce any right or benefit provided by this
Agreement (including, but not limited to, any such fees and expenses incurred in
connection with the Dispute, and (c) the Executive's hearing before the Board as
contemplated in Section 2.4 of this Agreement; PROVIDED, HOWEVER, that the
circumstances set forth in clauses (a), (b) and (c) (other than as a result of
the Executive's termination of employment under circumstances described in
Section 2.5(d)) occurred on or after a Change in Control.
8. ARBITRATION. Any dispute, controversy or claim arising out of or
relating to this Agreement, or the breach, termination or invalidity hereof,
(collectively, a "Claim") shall be settled by arbitration pursuant to the rules
of the American Arbitration Association. Any such arbitration shall be
conducted by one arbitrator, with experience in the matters covered by this
Agreement, mutually acceptable to the parties. If the parties are unable to
agree on the arbitrator within thirty (30) days of one party giving the other
party written notice of intent to arbitrate a Claim, the American Arbitration
Association shall appoint an arbitrator with such qualifications to conduct such
arbitration. The decision of the arbitrator in any such arbitration shall be
conclusive and binding on the parties. Any such arbitration shall be conducted
in San Jose, California.
9. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other, provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the President and the Secretary of the
Company. All notices and communications shall be deemed to have been received
on the date of delivery thereof or on the third business day after the mailing
thereof, except that notice of change of address shall be effective only upon
receipt.
10. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company (except for any
severance or termination policies, plans, programs or practices) and for which
the Executive may qualify, nor shall anything herein limit or reduce such rights
as the Executive may have under any other agreements with the Company (except
for any severance or termination agreement). Amounts which are vested benefits
or which the Executive is otherwise entitled to receive under any plan or
program of the Company shall be payable in accordance with such plan or program,
except as explicitly modified by this Agreement.
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11. SETTLEMENT OF CLAIMS. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
12. NO EMPLOYMENT RIGHT. This Agreement does not constitute, and shall
not be construed to provide, any assurance of continuing employment.
Executive's employment with the Company and of its Successors or Assigns is "at
will," and, subject to the terms and conditions of this Agreement, may be
terminated by Executive or the Company at any time.
13. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing, specifying such modification, waiver or discharge, and signed by the
Executive and the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
14. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware without giving
effect to the conflict of laws principles thereof. Any action brought by any
party to this Agreement to enforce any decision of an arbitrator made as
contemplated in Section 8 above shall be brought and maintained in a court of
competent jurisdiction in State of Delaware or the State of California.
15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable, and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and the Executive has executed this Agreement as of
the day and year first above written.
Mylex Corporation
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By:_______________________________________
Name:_____________________________________
Title:____________________________________
Executive:________________________________
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Severance Agreement - Mylex Corp.
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