EXHIBIT 10.94
PEERLESS SYSTEMS CORPORATION
AMENDED AND RESTATED TRANSACTION INCENTIVE PLAN
This Amended and Restated Transaction Incentive Plan (the "Plan") is
hereby adopted by Peerless Systems Corporation (the "Company") as of August 17,
2005 (the "Effective Date").
1. Purpose. The purposes of the Plan are to incentivize certain key
executives of the Company in securing and completing a corporate transaction,
align such executives' interests in maximizing value to the shareholders,
directly tie the bonus pool to the transaction value and compensate such
executives for prior salary adjustments and periodic stock option grants that
were not made.
2. Definitions. The following terms as used herein shall have the meanings
set forth in this Section 2.
"Board" shall mean the Board of Directors of the Company.
"Bonus" shall mean a Participant's Target Bonus; provided, however,
that in the event the Price Per Share is less than or equal to $2.50, Bonus
shall mean 75% of such Target Bonus and in the event the Price Per Share is
greater than $4.50, Bonus shall mean 125% of such Target Bonus.
"Bonus Pool" shall mean 5% of the Enterprise Value.
"Cause" shall mean (i) willful and continued failure by the
Participant to perform his or her duties (other than any such failure resulting
from the Participant's incapacity due to physical or mental illness or
disability), (ii) willful commission of an act of fraud or dishonesty resulting
in economic or financial injury to the Company, (iii) conviction of, or entry by
the Participant of a guilty or no contest plea to, the commission of a felony or
a crime involving moral turpitude, (iv) a willful breach by the Participant of
his or her fiduciary duty to the Company which results in economic or other
injury to the Company, or (v) willful and material breach of the Participant's
confidentiality and non-solicitation covenants. The Company shall provide
written notice to the Participant of its determination that Cause exists and
give the Participant an opportunity to cure such Cause and to have the matter
heard by the Company's Board.
"Change in Control" shall mean: (i) the acquisition by any person,
entity or group (other than the Company, its subsidiaries or any employee
benefit plan of the Company) of fifty percent (50%) or more of the combined
voting power of the Company's then outstanding securities, (ii) a change, during
any period of two consecutive years, in a majority or more of the Board, if the
new members have not been approved by at least two-thirds of the incumbent
Board, (iii) the consummation by the Company of a merger, consolidation,
reorganization or
business combination of the Company, a sale or other disposition of all or
substantially all of the Company's assets or the acquisition of assets or stock
of another entity, in each case other than a transaction in which the holders of
voting securities of the Company immediately prior thereto collectively hold,
directly or indirectly, at least fifty percent (50%) of the combined voting
power of the outstanding voting securities of the surviving entity (or in the
case of a sale of all or substantially all of the Company's assets, the
purchasing entity) immediately after such transaction, or (iv) a liquidation or
dissolution of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the common stock of the Company, par value
$.001 per share.
"Committee" shall mean the Compensation Committee of the Board.
"Enterprise Value" shall mean the Transaction Value minus
$23,100,000.
"Excise Tax" shall mean the excise tax imposed by Section 4999 of
the Code, together with any interest or penalties imposed with respect to such
excise tax.
"Participant" shall mean any employee of the Company who is
designated in writing as a participant in the Plan pursuant to Section 3.
"Percentage Interest" shall mean a grant to a Participant, pursuant
to the Plan, of a percentage of the Bonus Pool.
"Price Per Share" shall mean the fair market value of the per share
consideration received by the Company and/or the holders of the Common Stock
upon a Change in Control.
"Target Bonus" for a Participant shall mean an amount equal to such
Participant's Percentage Interest multiplied by the Bonus Pool.
"Transaction Value" shall mean the product of (i) the Price Per
Share and (ii) the number of shares of Common Stock outstanding immediately
prior to the Change in Control.
3. Participants. The Participants in the Plan shall be the Company's Chief
Participant Officer ("CEO"), Chief Financial Officer ("CFO") and any other
officer or officers of the Company designated in writing by the Committee from
time to time.
4. Allocation of Bonus Pool. The Percentage Interests awarded to the CEO
and CFO shall be 50% and 35% respectively. The remaining 15% may be allocated
among the other Participants as designated in writing by the Committee from time
to time.
5. Payment of Bonuses.
(a) Subject to Sections 5(b) and 6 hereof, upon a Change in Control,
each Participant shall be entitled to receive payment of the Participant's Bonus
under the Plan, and in the sole discretion of the Committee, such payment shall
be made either at the time the Company
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or its stockholders receive payments on or following the Change in Control or in
a lump sum upon the Change in Control (with any lump sum payment to be equal to
the present value of the sum of payments to be received over time by the Company
or its stockholders, as determined by the Committee in its reasonable and good
faith discretion); provided, however, that Bonuses under the Plan shall be
payable in the same kind and form or forms as the consideration received by the
Company or its stockholders; provided, further, that to the extent that the
consideration received by the Company or its stockholders pursuant to the Change
in Control is comprised (whether in whole or in part) of consideration other
than cash and the Company is unable to provide such form of consideration to the
Participants, the Company may made payments under the Plan in the form of cash.
The Company may withhold from any amounts payable under the Plan such federal,
state, local or foreign taxes as shall be required to be withheld pursuant to
any applicable law or regulation.
(b) Except as otherwise provided below, a Participant must be
employed by the Company upon a Change in Control in order for the Participant to
be eligible to receive a Bonus and a termination of a Participant's employment
with the Company prior to such date shall result in the forfeiture of the
Participant's contingent right to receive any Bonus that would otherwise have
become payable on or after the date of the Participant's termination of
employment with the Company. In the event a Participant's employment with the
Company is terminated by reason of the Participant's death or disability, the
Participant (or his or her beneficiary, in the case of his or her death) shall
be entitled to receive 75% of such Participant's Bonus. In addition, in the
event that a Change in Control is consummated (A) with a party with whom the
Company has entered into a non-disclosure agreement while the Participant was
employed by the Company and (B) within one (1) year following the termination of
the Participant's employment by the Company without Cause, the Participant shall
be entitled to receive a Bonus payment under the Plan, subject to no pro ration.
The Committee may impose any additional conditions on the payment of a Bonus as
it reasonably determines to be appropriate. Any Bonus or portion of a Bonus that
is not payable to any Participant shall be retained by the Company and shall not
increase the Bonus or Percentage Interest of any other Participant.
6. Section 280G Parachute Payment Taxes.
(a) If any payment or distribution to or for the benefit of the
Participant (whether paid or payable or distributed or distributable) pursuant
to the terms of the Plan or otherwise (a "Payment") would constitute a
"parachute payment" within the meaning of Section 280G of the Code, the Payments
shall be reduced to the extent necessary so that no portion of the Payments
shall be subject to the Excise Tax, but only if, by reason of such reduction,
the net after-tax benefit to the Participant shall exceed the net after-tax
benefit to the Participant if no reduction was made.
(b) All determinations required to be made under Section 6(a),
including whether a reduction of any Payment is required and the assumptions to
be utilized in arriving at such determination, shall be made by the Company's
independent certified public accountants serving immediately prior to the Change
in Control, or such other nationally recognized accounting firm as may be agreed
by the Company and the Participant (the "Accounting Firm"); provided, that the
Accounting Firm's determination shall be made based upon "substantial
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authority" within the meaning of Section 6662 of the Code. Any determination by
the Accounting Firm hereunder shall be binding upon the Company and the
Participant.
7. Administration. The Plan shall be administered by the Committee.
Subject to the provisions of the Plan, the Committee shall have full authority
and discretion to take any actions it deems necessary or advisable for the
administration of the Plan. Subject to the provisions of the Plan, the Committee
has the authority to determine, in its sole discretion, to whom, and the time or
times at which, Bonuses may be paid as well as the allocation of interests in
the Plan. The Committee has the authority to prescribe, amend and rescind rules
and regulations relating to the Plan and to make all other determinations
necessary or advisable for Plan administration. All decisions, interpretations
and other actions of the Committee shall be final, conclusive and binding on all
parties who have an interest in the Plan. No member of the Committee shall be
liable for any action or determination made by the Committee with respect to the
Plan or any Bonus paid under the Plan. All expenses and liabilities which
members of the Committee incur in connection with the administration of the Plan
shall be borne by the Company or its successor. No member of the Committee shall
be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or any Bonus paid hereunder, and all members
of the Committee shall be fully indemnified and held harmless by the Company or
its successor in respect of any such action, determination or interpretation.
8. Certain Corporate Events. In the event that the Committee determines
that any dividend or other distribution (whether in the form of cash, common
stock, other securities, or other property), recapitalization, reclassification,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale,
transfer, exchange or other disposition of all or substantially all of the
assets of the Company, or exchange of common stock or other securities of the
Company, issuance of warrant or other rights to purchase common stock or other
securities of the Company, or other similar corporate transaction or event,
affects the Common Stock such that an adjustment is appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan or with respect to a Bonus, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the Bonus Pool, (ii) the Enterprise Value, (iii) the Percentage Interests,
(iv) the Transaction Value, and (v) the Price Per Share.
9. At-Will Employment. Nothing contained in the Plan shall (i) confer upon
any person any right to continue in the employ of the Company, (ii) constitute
any contract or agreement of employment, or (iii) interfere in any way with the
at-will nature of a Participant's employment with the Company.
10. No Equity Interest. Neither the Plan nor any allocation of interests
hereunder creates or conveys any equity or ownership interest in the Company nor
any rights commonly associated with such interests, including, without
limitation, the right to vote on any matters put before the stockholders of the
Company.
11. Funding. No provision of the Plan shall require the Company, for
purposes of satisfying any obligations under the Plan, to purchase assets or
place any assets in a trust or other entity to which contributions are made or
otherwise to segregate any assets, nor shall the Company maintain separate bank
accounts, books, records or other evidence of the existence of a
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segregated or separately maintained or administered fund for such purposes.
Participants shall have no rights under the Plan other than as unsecured general
creditors of the Company or its successor.
12. Term. The Plan shall be effective immediately and shall terminate upon
the payment of all Bonuses, if any, under the Plan for the first Change in
Control occurring after the Effective Date, provided that if no Change in
Control has occurred on or before July 31, 2006, the Plan shall terminate on
January 31, 2007.
13. Amendment and Termination. Except as provided herein, the Plan may be
amended or terminated at any time or from time to time by the Company; provided,
however, that, subject to Section 12 hereof, no such amendment or termination
shall impair the then-existing rights of a Participant with regard to the Plan
absent (a) his consent or (b) the approval by the Participants holding at least
a majority of the total value of the Bonus Pool then held by all Participants.
14. Assumption of Plan. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, whether pursuant
to a Change in Control or otherwise, to expressly assume and agree to perform
the obligations under the Plan in the same manner and to the same extent the
Company would be required to perform if no such succession had taken place.
15. Choice of Law. All questions concerning the construction, validation
and interpretation of the Plan shall be governed by the law of the State of
California without regard to its conflict of laws provision.
16. Stockholder Approval. The Plan shall be disclosed to the Company's
stockholders at the time any Change in Control transaction is submitted for
stockholder approval.
17. Hypothetical Illustration. Solely for explanatory purposes, attached
to the Plan as Exhibit A is an example illustrating the Target Bonuses upon a
Change in Control.
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IN WITNESS WHEREOF, the undersigned has executed the foregoing Amended and
Restated Transaction Incentive Plan as of _________________, 2005.
PEERLESS SYSTEMS CORPORATION
By:_______________________________
Robert G. Barrett
Title: Director
Date:_____________________________
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EXHIBIT A
HYPOTHETICAL ILLUSTRATION
Example. Assuming that there are 15,400,000 shares of Common Stock
outstanding immediately prior to the Change in Control and that the Price Per
Share is $3.50, then the Transaction Value would be $53,900,000 or [$3.50 x
15,400,000], the Enterprise Value would be $30,800,000 or [$53,900,000 -
$23,100,000], the Bonus Pool would be $1,540,000 or [0.05 x $30,800,000] and the
Target Bonus allocated to the CEO, CFO and other Participants would be $770,000
or [0.50 x $1,540,000], $539,000 or [0.35 x $1,540,000], and $231,000 or [.15 x
$1,540,000], respectively.