SPECTRIAN CORPORATION
CHANGE OF CONTROL SEVERANCE AGREEMENT
This Change of Control Severance Agreement (the "Agreement") is made
and entered into effective as of ___________________, 2000 (the "Effective
Date"), by and between ___________________________ (the "Employee") and
Spectrian Corporation, a Delaware corporation (the "Company"). Certain
capitalized terms used in this Agreement are defined in Section 1 below.
R E C I T A L S
A. It is expected that the Company from time to time will consider the
possibility of a Change of Control. The Board of Directors of the Company (the
"Board") recognizes that such consideration can be a distraction to the Employee
and can cause the Employee to consider alternative employment opportunities.
B. The Board believes that it is in the best interests of the Company
and its shareholders to provide the Employee with an incentive to continue his
employment and to maximize the value of the Company upon a Change of Control for
the benefit of its shareholders.
C. In order to provide the Employee with enhanced financial security
and sufficient encouragement to remain with the Company notwithstanding the
possibility of a Change of Control, the Board believes that it is imperative to
provide the Employee with certain severance benefits upon the Employee's
termination of employment following a Change of Control.
AGREEMENT
In consideration of the mutual covenants herein contained and the
continued employment of Employee by the Company, the parties agree as follows:
1. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
(a) Cause. "Cause" shall mean (i) any act of personal
dishonesty taken by the Employee in connection with his responsibilities as an
employee which is intended to result in substantial personal enrichment of the
Employee, (ii) Employee's conviction of a felony which the Board reasonably
believes has had or will have a material detrimental effect on the Company's
reputation or business, (iii) a willful act by the Employee which constitutes
misconduct and is injurious to the Company, and (iv) continued willful
violations by the Employee of the Employee's obligations to the Company after
there has been delivered to the Employee a written demand for performance from
the Company which describes the basis for the Company's belief that the Employee
has not substantially performed his duties.
(b) Change of Control. "Change of Control" shall mean the
occurrence of any of the following events:
(i) the approval by shareholders of the Company of a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation which 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) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; (ii) any approval by
the shareholders of the Company of a plan of complete liquidation of the Company
or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets; (iii) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) becoming the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly, of securities of the Company representing 50% or
more of the total voting power represented by the Company's then outstanding
voting securities; or (iv) a change in the composition of the Board, as a result
of which fewer than a majority of the directors are Incumbent Directors.
"Incumbent Directors" shall mean directors who either (A) are directors of the
Company as of the date hereof, or (B) are elected, or nominated for election, to
the Board with the affirmative votes of at least a majority of those directors
whose election or nomination was not in connection with any transaction
described in subsections (i), (ii) or (iii) or in connection with an actual or
threatened proxy contest relating to the election of directors of the Company.
(c) Involuntary Termination. "Involuntary Termination" shall
mean (i) without the Employee's express written consent, a significant reduction
of the Employee's duties, position or responsibilities relative to the
Employee's duties, position or responsibilities in effect immediately prior to
such reduction, or the removal of the Employee from such position, duties and
responsibilities, unless the Employee is provided with comparable duties,
position and responsibilities; (ii) without the Employee's express written
consent, a substantial reduction, without good business reasons, of the
facilities and perquisites (including office space and location) available to
the Employee immediately prior to such reduction; (iii) a reduction by the
Company of the Employee's base salary or target bonus as in effect immediately
prior to such reduction; (iv) a material reduction by the Company in the kind or
level of employee benefits to which the Employee is entitled immediately prior
to such reduction with the result that the Employee's overall benefits package
is significantly reduced; (v) without the Employee's express written consent,
the relocation of the Employee to a facility or a location more than thirty-five
(35) miles from his current location; (vi) any purported termination of the
Employee by the Company which is not effected for Cause or for which the grounds
relied upon are not valid; or (vii) the failure of the Company to obtain the
assumption of this Agreement by any successors contemplated in Section 5 below.
2. Term of Agreement. This Agreement shall terminate upon the date that
all obligations of the parties hereto under this Agreement have been satisfied.
3. At-Will Employment. The Company and the Employee acknowledge that
the Employee's employment is and shall continue to be at-will, as defined under
applicable law. If the
-2-
Employee's employment terminates for any reason, the Employee shall not be
entitled to any payments, benefits, damages, awards or compensation other than
as provided by this Agreement, or as may otherwise be established under the
Company's then existing employee benefit plans or policies at the time of
termination.
4. Change of Control and Severance Benefits.
(a) Termination Following A Change of Control.
(i) Severance Payments. If the Employee's employment
with the Company terminates as a result of an Involuntary Termination [at any
time] after a Change of Control, then the Employee shall be entitled to receive
a sum equal to twelve (12) months of his or her annualized base salary and
targeted bonus (as in effect immediately prior to the Change of Control). Such
severance payments shall be paid bi-weekly in accordance with the Company's
normal payroll practices. In addition, the Company shall continue to make
available to the Employee and Employee's spouse and dependents covered under any
group health plans or life insurance plans of the Company on the date of such
termination of employment, all group health, life and other similar insurance
plans in which Employee or such Covered Dependents participate on the date of
the Employee's termination.
(ii) Option Acceleration. If the Employee's
employment with the Company terminates as a result of an Involuntary Termination
[at any time] after a Change of Control, then the vesting and exercisability of
each option granted to the Employee by the Company (the "Options") shall be
automatically accelerated in full.
(iii) Other Termination. If the Employee's employment
with the Company terminates other than as a result of an Involuntary Termination
[after a Change of Control], then the Employee shall not be entitled to receive
severance or other benefits hereunder, but may be eligible for those benefits
(if any) as may then be established under the Company's then existing severance
and benefits plans and policies at the time of such termination.
(b) Accrued Wages and Vacation; Expenses. Without regard to
the reason for, or the timing of, Employee's termination of employment: (i) the
Company shall pay the Employee any unpaid base salary due for periods prior to
the date of termination; (ii) the Company shall pay the Employee all of the
Employee's accrued and unused vacation through the date of termination; and
(iii) following submission of proper expense reports by the Employee, the
Company shall reimburse the Employee for all expenses reasonably and necessarily
incurred by the Employee in connection with the business of the Company prior to
the date of termination. These payments shall be made promptly upon termination
and within the period of time mandated by law.
5. Successors.
(a) Company's Successors. Any successor to the Company
(whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets shall assume the Company's obligations under
this Agreement and agree expressly to perform the Company's obligations under
this Agreement in the same manner and to the same extent as the Company would be
required to perform such obligations in the absence of a succession. For all
purposes under this Agreement, the term
-3-
"Company" shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this
subsection (a) or which becomes bound by the terms of this Agreement by
operation of law.
(b) Employee's Successors. Without the written consent of the
Company, Employee shall not assign or transfer this Agreement or any right or
obligation under this Agreement to any other person or entity. Notwithstanding
the foregoing, the terms of this Agreement and all rights of Employee hereunder
shall inure to the benefit of, and be enforceable by, Employee's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
6. Notices.
(a) General. Notices and all other communications contemplated
by this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or when mailed by U.S. registered or certified
mail, return receipt requested and postage prepaid. In the case of the Employee,
mailed notices shall be addressed to him at the home address that he most
recently communicated to the Company in writing. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all notices
shall be directed to the attention of its Secretary.
(b) Notice of Termination. Any termination by the Company for
Cause or by the Employee as a result of a voluntary resignation or an
Involuntary Termination shall be communicated by a notice of termination to the
other party hereto given in accordance with this Section. Such notice shall
indicate the specific termination provision in this Agreement relied upon, shall
set forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination under the provision so indicated. The failure by the
Employee to include in the notice any fact or circumstance which contributes to
a showing of Involuntary Termination shall not waive any right of the Employee
hereunder or preclude the Employee from asserting such fact or circumstance in
enforcing his rights hereunder.
7. Arbitration.
(a) Except as provided in Section 7(d) below, any dispute or
controversy arising out of, relating to, or in connection with this Agreement,
or the interpretation, validity, construction, performance, breach, or
termination thereof, shall be settled by binding arbitration to be held in Palo
Alto, California, in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association (the
"Rules"). The arbitrator may grant injunctions or other relief in such dispute
or controversy. The decision of the arbitrator shall be final, conclusive and
binding on the parties to the arbitration. Judgment may be entered on the
arbitrator's decision in any court having jurisdiction.
(b) The arbitrator(s) shall apply California law to the merits
of any dispute or claim, without reference to conflicts of law rules. The
arbitration proceedings shall be governed by federal arbitration law and by the
Rules, without reference to state arbitration law. Employee hereby consents to
the personal jurisdiction of the state and federal courts located in California
for any
-4-
action or proceeding arising from or relating to this Agreement or relating to
any arbitration in which the parties are participants.
(c) Employee understands that nothing in this Section modifies
Employee's at-will employment status. Either Employee or the Company can
terminate the employment relationship at any time, with or without cause.
(d) EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH
DISCUSSES ARBITRATION. EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING
OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE
INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION
THEREOF TO BINDING ARBITRATION TO THE EXTENT PERMITTED BY LAW, AND THAT THIS
ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EMPLOYEE'S RIGHT TO A JURY TRIAL AND
RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING
CLAIMS:
(i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF
EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT
OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL
MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR
PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.
(ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL
STATE OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE
CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION
IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR
LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR
CODE SECTION 201, et seq;
(iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER
LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.
8. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement, nor shall any
such payment be reduced by any earnings that the Employee may receive from any
other source.
(b) Waiver. No provision of this Agreement may be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by the Employee and by an authorized officer of the
Company (other than the Employee). No waiver by either party of any breach of,
or of compliance with, any condition or provision of this Agreement by
-5-
the other party shall be considered a waiver of any other condition or provision
or of the same condition or provision at another time.
(c) Integration. This Agreement and the stock option
agreements representing the Options represent the entire agreement and
understanding between the parties as to the subject matter herein and supersede
all prior or contemporaneous agreements, whether written or oral.
(d) Choice of Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the internal substantive
laws, but not the conflicts of law rules, of the State of California.
(e) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(f) Employment Taxes. All payments made pursuant to this
Agreement shall be subject to withholding of applicable income and employment
taxes.
(g) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
COMPANY: SPECTRIAN CORPORATION
By:
------------------------------------------
Title:
---------------------------------------
EMPLOYEE:
---------------------------------------------
-6-