PHOENIX TECHNOLOGIES
LTD.
SEVERANCE AND CHANGE OF CONTROL
AGREEMENT
This Severance and
Change of Control Agreement (the “ Agreement ”)
is made and entered into by and between Timothy Chu (“
Executive ”) and Phoenix Technologies Ltd. (the
“ Company ”), effective as of April 27,
2007 (the “ Effective Date ”).
1. It is
possible that the Company could terminate Executive’s
employment with the Company. The Board of Directors of the Company
(the “ Board ”) recognizes that such
consideration can be a distraction to Executive and can cause
Executive to consider alternative employment opportunities. The
Compensation Committee of the Board (pursuant to its delegated
authority) has determined that it is in the best interests of the
Company and its stockholders to assure that the Company will have
the continued dedication and objectivity of Executive,
notwithstanding the possibility, threat or occurrence of such a
termination.
2. The
Compensation Committee of the Board believes that it is in the best
interests of the Company and its stockholders to provide Executive
with an incentive to continue his employment and to motivate
Executive to maximize the value of the Company for the benefit of
its stockholders.
3. The
Compensation Committee of the Board believes that it is imperative
to provide Executive with certain severance benefits upon certain
terminations of Executive’s employment with the Company.
These benefits will provide Executive with enhanced financial
security and incentive and encouragement to remain with the
Company.
4. Certain
capitalized terms used in the Agreement are defined in
Section 6 below.
NOW, THEREFORE, in
consideration of the mutual covenants contained herein, the parties
hereto agree as follows:
1. Term
of Agreement . This Agreement will have an initial term of
three (3) years commencing on the Effective Date.
Notwithstanding the previous sentence, in the event of a Change of
Control within three years of the Effective Date, the term of this
Agreement will extend through the one-year anniversary of such
Change of Control.
2.
At-Will Employment . The Company and Executive acknowledge
that Executive’s employment is and will continue to be
at-will, as defined under applicable law. If Executive’s
employment terminates for any reason, Executive will not be
entitled to any payments, benefits, damages, awards or compensation
other than as provided by this Agreement.
(a)
Termination other than for Cause . If the Company (or any
parent or subsidiary of the Company employing Executive) terminates
Executive’s employment with the Company (or any parent or
subsidiary of the Company) for a reason other than Cause,
Executive’s Disability or Executive’s death, then,
subject to Section 4, Executive will receive the following
severance benefits from the Company:
(i)
Accrued Compensation . Executive will be entitled to receive
all accrued vacation, expense reimbursements and any other benefits
due to Executive through the date of termination of employment in
accordance with the Company’s then existing employee benefit
plans, policies and arrangements.
(ii)
Severance Payments . Executive will be paid continuing
payments of severance pay for six (6) months from the date of
such termination at a monthly rate equal to Executive’s
monthly base salary rate, as then in effect. Such payments shall be
paid periodically in accordance with the Company’s normal
payroll policies.
(iii)
Continued Benefits . Executive will receive Company-paid
coverage during the first six (6) months following such
termination for Executive and Executive’s eligible dependents
under the Company’s Benefit Plans.
(iv)
Option Exercisability . The vested portion of any stock
options held by Executive as of the termination date will remain
exercisable until the earlier of (i) the term of the
applicable option or (ii) the date six (6) months from
the termination date.
(v)
Payments or Benefits Required by Law . Executive will
receive such other compensation or benefits from the Company as may
be required by law.
(b)
Certain Terminations in Connection with a Change of Control
. If Executive terminates his employment with the Company (or any
parent or subsidiary of the Company) for Good Reason or the Company
(or any parent or subsidiary of the Company employing Executive)
terminates Executive’s employment with the Company (or any
parent or subsidiary of the Company) for a reason other than Cause,
Executive’s Disability or Executive’s death within two
(2) months prior to or twelve (12) months following a
Change of Control, then (i) Executive shall receive the
severance and other benefits set forth in Section 3(a)(i)-(v),
and (ii) 50% of the unvested shares subject to all of
Executive’s outstanding rights to purchase or receive shares
of the Company’s common stock (including, without limitation,
through awards of stock options, stock appreciation rights,
restricted stock units or similar awards) whether acquired by
Executive before or after the date of this Agreement and 50% of any
of Executive’s shares of Company common stock subject to a
Company right of repurchase or forfeiture upon Executive’s
termination of employment for any reason (whether acquired by
Executive before or after the date of this Agreement), will
immediately vest and, if applicable, become exercisable upon such
termination. In all other respects, such awards will continue to be
subject to the terms and conditions of the plans, if any, under
which they were granted and any applicable agreements between the
Company and Executive.
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(c)
Other Terminations . If Executive voluntarily terminates
Executive’s employment with the Company or any parent or
subsidiary of the Company (other than for Good Reason within two
(2) months prior to or twelve (12) months following a
Change of Control) or if the Company (or any parent or subsidiary
of the Company employing Executive) terminates Executive’s
employment with the Company (or any parent or subsidiary of the
Company) due to Executive’s death, Disability or for Cause,
then Executive will (i) receive his earned but unpaid base
salary through the date of termination of employment,
(ii) receive all accrued vacation, expense reimbursements and
any other benefits due to Executive through the date of termination
of employment in accordance with established Company plans,
policies and arrangements, and (iii) not be entitled to any
other compensation or benefits (including, by way of example but
not limitation, accelerated vesting of any equity awards) from the
Company except to the extent provided under agreement(s) relating
to any equity awards or as may be required by law (for example,
“COBRA” coverage under Section 4980B of the
Internal Revenue Code of 1986, as amended (the “ Code
”)).
(d)
Exclusive Remedy . In the event of a termination of
Executive’s employment with the Company (or any parent or
subsidiary of the Company), and whether separate or in connection
with a Change of Control, the provisions of this Section 3 are
intended to be and are exclusive and in lieu of any other rights or
remedies to which Executive may otherwise be entitled, whether at
law, tort or contract, in equity, or under this Agreement.
Executive will be entitled to no benefits, compensation or other
payments or rights upon termination of employment other than those
benefits expressly set forth in this Section 3.
4.
Conditions to Receipt of Severance .
(a)
Separation Agreement and Release of Claims . The receipt of
any severance pursuant to Section 3 will be subject to
Executive signing and not revoking a separation agreement and
release of claims in a form acceptable to the Company. No severance
pursuant to Section 3 will be paid or provided until the
separation agreement and release of claims becomes
effective.
(b)
Noncompetition; Nonsolicitation . The receipt of any
severance benefits pursuant to Section 3 will be subject to
Executive not violating the provisions of Section 7. In the
event Executive breaches the provisions of Section 7, all
continuing payments and benefits to which Executive would have been
entitled pursuant to Section 3 will immediately
cease.
(c)
Section 409A . Any cash severance to be paid pursuant
to Section 3 will not be paid during the six-month period
following Executive’s termination of employment, unless the
Company reasonably determines that paying such amounts immediately
following Executive’s termination of employment would not
result in the imposition of additional tax under Section 409A
of the Code (“Section 409A”), in which case such
amounts shall be paid in accordance with normal payroll practices.
If no cash severance is paid to Executive upon termination of his
employment as a result of the previous sentence, on the first day
following such six-month period, the Company will pay Executive a
lump-sum amount equal to the cumulative amounts that would have
otherwise been paid to Executive pursuant to Section 3.
Thereafter, Executive will receive his cash severance payments
pursuant to Section 3 in accordance with the Company’s
normal payroll practices.
5.
Limitation on Payments .
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(a) In
the event that the severance and other benefits provided for in
this Agreement or otherwise payable to Executive
(i) constitute “parachute payments” within the
meaning of Section 280G of the Code and (ii) but for this
Section 5, would be subject to the excise tax imposed by
Section 4999 of the Code, then Executive’s severance
benefits under this Agreement shall be payable either
(b) as
to such lesser amount which would result in no portion of such
severance benefits being subject to excise tax under
Section 4999 of the Code, whichever of the foregoing amounts,
taking into account the applicable federal, state and local
incom
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