Exhibit 10.9
Re: Retention Agreement
Dear :
The purpose of this letter is to confirm our agreement regarding certain
arrangements in the event of a Change of Control (as defined below) of PRI
Automation, Inc. (the "Company," which term shall include any Successor of PRI
Automation, Inc.), as follows:
1. DEFINITIONS. The following terms used in this agreement shall have the
following meanings:
CHANGE OF CONTROL. "Change of Control" shall mean the occurrence of
any of the following events:
a. Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) becomes the "beneficial owner"
(as defined in Rule 13d-3 under said Act), directly or indirectly, of securities
of the Company, representing fifty percent (50%) or more of the total voting
power represented by the then outstanding voting securities of the Company,
whether by tender offer, or otherwise; or
b. A change in the composition of the Board of Directors of the
Company, as a result of which fewer than a majority of the directors are
Incumbent Directors, or the merger or consolidation of the Company with or into
or becoming a direct or indirect subsidiary of any entity that does not have a
board of directors (or similar governing body) of which a majority are Incumbent
Directors. "Incumbent Directors" shall mean directors who either (A) are
directors of the Company on the date hereof, (B) directors who were elected by
the stockholders of the Company after nomination by a majority of those who are
directors of the Company on the date hereof and directors previously elected
pursuant to clause (B) or (C) of this paragraph or (C) directors who were
elected by the Board of Directors of the Company where such directors received
the vote of a majority of those who are directors of the Company on the date
hereof and directors previously elected pursuant to clause (B) or (C) of this
paragraph. In the event of a Change of Control, references in the definition of
Incumbent Director to "directors of the Company on the date hereof" shall, after
such Change of Control, mean the directors of the Company immediately after such
Change of Control; or
c. The liquidation of the Company, the sale or disposition by the
Company of all or substantially all of its assets or the merger or consolidation
of the Company with any other entity. Notwithstanding the foregoing, a merger or
consolidation of the Company shall not constitute a Change of Control if it
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities
of the surviving entity) fifty-one percent (51%) or more of the total voting
power represented by the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation on a Fully
Diluted Basis, unless the outstanding voting securities of the other party or
parties to such merger or consolidation represent more than forty-nine percent
(49%) of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation on an actual basis. For purposes of calculating voting power on a
"Fully Diluted Basis," options, warrants, and other securities exercisable or
exchangeable for or convertible into voting securities of the Company and any
other party to the merger or consolidation that are outstanding immediately
before and after such merger or consolidation (whether or not vested) shall be
deemed exercised in full, and the shares obtainable upon such exercise, exchange
or conversion shall be deemed issued and outstanding at both such times.
INVOLUNTARY TERMINATION. "Involuntary Termination" shall mean your
resignation following the occurrence of any one or more of the following events:
(i) a material reduction by the Company in your base compensation and/or "target
bonus" as in effect immediately prior to a Change of Control; (ii) a material
reduction by the Company in the kind or level of employee benefits to which you
are entitled immediately prior to a Change of Control with the result that your
overall benefits package is materially reduced; or (iii) your relocation to a
facility or a location more than 50 miles from your present office location,
without your express written consent.
CAUSE. "Cause" shall mean (i) any act of personal dishonesty taken by
you in connection with your responsibilities as an employee and intended to
result in your substantial personal enrichment, (ii) your conviction of a
felony, (iii) a willful act by you which constitutes gross misconduct and which
is injurious to the Company (or its successor), or (iv) continued, intentional
violations by you of your obligations as an employee of the Company after there
has been delivered to you a written demand for performance from the Company
which describes the basis for the belief by the Company that you have not
substantially performed your duties.
DISABILITY. "Disability" shall mean that you have been unable to
perform your duties as an employee of the Company as the result of incapacity
due to physical or mental illness, and such inability, at least 26 weeks after
its commencement, is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to you or your legal
representative (such agreement as to acceptability not to be unreasonably
withheld). Termination resulting from Disability may only be effected after at
least 30 days' written notice by the Company of its intention to terminate your
employment. In the event that you resume the performance of substantially all of
your duties as an employee of the Company before the termination of your
employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.
SUCCESSOR. "Successor" of PRI Automation, Inc. ("PRI") shall mean
any entity with which PRI may merge, consolidate or otherwise combine or to
which PRI may sell or otherwise dispose all or substantially all of its assets.
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2. SEVERANCE COMPENSATION. Upon the termination of your employment by the
Company without your consent, other than for Cause or Disability, or upon
Involuntary Termination, in each instance only if it occurs within twelve (12)
months following a Change of Control, the Company will pay you, in a single
payment, an amount equal to the sum of (a) one year of your base compensation,
at the rate in effect on the date of such termination or Involuntary
Termination, (b) an amount equal to your "target bonus" for the fiscal year of
the Company most recently-ended before such termination or Involuntary
Termination, and (c) a fraction of the amount of your "target bonus" for the
fiscal year of the Company during which your employment is terminated or
Involuntary Termination occurs, such fraction to be equal to the fraction of
such fiscal year that has elapsed as of the date of such termination or
Involuntary Termination.
3. ACCELERATION OF VESTING. Upon termination of your employment at a time
and under circumstances that entitle you to payment of severance compensation
under Section 2 hereof, or, if you have remained in the employ of the Company
until the first anniversary of a Change of Control, whichever occurs first, 100%
of the otherwise unexercisable (i.e., unvested) portion of each option to
purchase stock of the Company held by you immediately before the Change in
Control shall become vested and fully-exercisable and 100% of each option or
other right then held by the Company to repurchase stock of the Company owned by
you shall terminate.
4. EXTENSION OF OPTION. Upon termination of your employment by the Company
without your consent, other than for Cause or Disability, or upon Involuntary
Termination, in each instance only if it occurs within twenty-four (24) months
following a Change of Control, the expiration date of any stock option that you
held on the date of the Change of Control, including any stock option granted on
that date, shall, notwithstanding any other provision of any such option, be the
earlier of (i) the first anniversary of such termination or Involuntary
Termination and (ii) the original expiration date of such option.
5. POOLING. In the event it is determined in good faith by the Company's
independent public accountants, or those of any other entity with which the
Company proposes to effect a business combination that would or is reasonably
expected to effect a Change of Control, that the enforcement of any provision of
this agreement, including, but not limited to, Section 3 hereof, would preclude
accounting for the proposed business combination as a pooling of interests, and
the Company intends to enter into such a proposed business combination but for
preclusion of such accounting treatment, then any such provision shall be null
and void.
6. OTHER AGREEMENTS. Nothing herein is intended to supersede or affect
any other agreement between you and the Company, including agreements
regarding your obligation to maintain in confidence the Company's
confidential information and any agreement restricting or prohibiting your
competing with the Company for a specified period after termination of your
employment, provided however, that this agreement shall supersede and cancel
any prior retention agreement between the Company and you and, provided
further, that this agreement is intended to modify the terms of options held
by you as provided herein.
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7. TERM. This agreement shall apply only to each Change of Control that
occurs after the date hereof and on or before the third anniversary of the first
Change of Control to occur after the date hereof.
8. IRC SECTION 280G LIMITATIONS. It is our intention that no payments by
the Company to or for your benefit under this agreement or any other agreement
or plan pursuant to which you are entitled to receive payments or benefits shall
be non-deductible to the Company by reason of the operation of Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code") relating to excess
parachute payments. Accordingly, and notwithstanding any other provision of this
agreement or any such agreement or plan, if by reason of the operation of said
Section 280G, any such payments exceed the amount which can be deducted by the
Company (or its successor), such payments shall be reduced to the maximum amount
which can be deducted by the Company (or its successor). Determinations of the
foregoing tax matters under this Section 9 shall be made by the independent
public accountants of the Company and shall be conclusive and binding on the
parties if made in good faith.
To the extent that payments exceeding such maximum deductible amount have
been made to or for your benefit, such excess payments shall be refunded to the
Company with interest thereon at the applicable Federal Rate determined under
Section 1274(d) of the Code, compounded annually, or at such other rate as may
be required in order that no such payments shall be non-deductible to the
Company by reason of the operation of said Section 280G. To the extent that
there is more than one method of reducing the payments to bring them within the
limitations of said Section 280G, you shall determine which method shall be
followed, provided that if you fail to make such determination within forty-five
days after the Company has sent you written notice of the need for such
reduction, the Company may determine the method of such reduction in its sole
discretion.
Sincerely,
PRI AUTOMATION, INC.
By: __________________________________
duly authorized by the Board of Directors
Accepted and agreed to:
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