EXHIBIT 10.3
INDUS INTERNATIONAL, INC.
CHANGE OF CONTROL SEVERANCE AGREEMENT
This Change of Control Severance Agreement (the "Agreement") is made
and entered into by and between Xxxxxxx X. Xxxxx (the "Employee") and Indus
International, Inc., a Delaware Corporation (the "Company"), effective as of
September 16, 2002 (the "Effective Date").
RECITALS
1. It is expected that the Company from time to time will
consider the possibility of an acquisition by another company or other 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. The Board 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 the Employee, notwithstanding the possibility, threat or occurrence of a
Change of Control (as defined herein) of the Company.
2. The Board believes that it is in the best interests of the
Company and its stockholders to provide the Employee with an incentive to
continue his or her employment and to motivate the Employee to maximize the
value of the Company upon a Change of Control for the benefit of its
stockholders.
3. 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. These benefits will provide the
Employee with enhanced financial security and incentive and encouragement to
remain with the Company notwithstanding the possibility of a Change of Control.
4. Certain capitalized terms used in the Agreement are defined
in Section 5 below.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and the continued employment of Employee by the Company, the parties
agree as follows:
1. Term of Agreement. This Agreement shall terminate upon the
date that all of the obligations of the parties hereto with respect to this
Agreement have been satisfied.
2. 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, except as may otherwise be specifically provided under
the terms of any written formal employment agreement between the Company and
the Employee (an "Employment Agreement"). If the Employee's employment
terminates for any reason, including (without limitation) any termination prior
to a Change of Control, the Employee shall not be entitled to any payments,
benefits, damages,
awards or compensation other than as provided under his or her Employment
Agreement or as may otherwise be established under the Company's then existing
employee benefit plans or policies at the time of termination.
3. Severance Benefits
(a) Involuntary Termination Following a Change of
Control. If within twelve (12) months following a Change of Control (A) either
(i) the Employee terminates his or her employment with the Company (or any
parent or subsidiary of the Company) for "Good Reason" (as defined herein) or
(ii) the Company (or any parent or subsidiary of the Company) terminates the
Employee's employment for other than "Cause" (as defined herein), and (B) the
Employee signs the Company's standard release of claims with the Company, then
the Employee shall receive the following severance benefits from the Company:
(i) Severance Payment. The Employee shall
receive severance pay (less applicable withholding taxes) for a period of
twelve (12) months from the date of such termination equal to the Employee's
base salary (such base salary as in effect immediately prior to (A) the Change
of Control, or (B) the Employee's termination, whichever is greater).
(ii) Option Acceleration. Those outstanding
options to purchase shares of the Company's Common Stock granted to the
Employee by the Company prior to the Change of Control shall accelerate and be
automatically vested in full and become exercisable.
(iii) Group Health Insurance Benefits. The
Company shall reimburse Employee for the premiums necessary to continue the
Employee's participation in the Company's group health insurance plan pursuant
to COBRA provided that the Employee takes the steps necessary to continue such
coverage pursuant to COBRA.
(b) Timing of Severance Payments. The severance payments
to which the Employee is entitled shall be paid by the Company to the Employee
as salary continuation on the same basis and timing as in effect immediately
prior to the Change of Control and in accordance with the Company's standard
payroll practices. If the Employee should die before all amounts have been
paid, such unpaid amounts shall be paid in a lump-sum payment (less any
withholding taxes) to the Employee's designated beneficiary, if living, or
otherwise to the personal representative of the Employee's estate.
(c) Voluntary Resignation; Termination For Cause. If the
Employee's employment with the Company terminates (i) voluntarily by the
Employee or (ii) for Cause by the Company, then the Employee shall not be
entitled to receive severance or other benefits except for those (if any) as
may then be established under the Company's then existing severance and
benefits plans and practices or pursuant to other written agreements with the
Company.
(d) Disability; Death. If the Company terminates the
Employee's employment as a result of the Employee's Disability, or the
Employee's employment terminates due to his or her death, then the Employee
shall not be entitled to receive severance or other benefits except for those
-2-
(if any) as may then be established under the Company's then existing written
severance and benefits plans and practices or pursuant to other written
agreements with the Company.
(e) Termination Apart from Change of Control. In the
event the Employee's employment is terminated for any reason, either prior to
the occurrence of a Change of Control or after a twelve (12) month period
following a Change of Control, then the Employee shall be entitled to receive
severance and any other benefits only as may then be established under the
Company's existing written severance and benefits plans and practices or
pursuant to other written agreements with the Company, including but not
limited to, the Employment Agreement between the Company and Employee
(f) Exclusive Remedy. In the event of a termination of
Employee's employment within twelve (12) months following 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 the Employee or the Company may
otherwise be entitled, whether at law, tort or contract, in equity, or under
this Agreement. The Employee shall be entitled to no benefits, compensation or
other payments or rights upon termination of employment following a Change in
Control other than those benefits expressly set forth in this Section 3.
4. Limitation on Payments. In the event that the severance and
other benefits provided for in this Agreement or otherwise payable to the
Employee (i) constitute "parachute payments" within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code") and (ii) but for
this Section 4, would be subject to the excise tax imposed by Section 4999 of
the Code, then the Employee's severance benefits under Section 4(a)(i) shall be
either:
(a) delivered in full, or
(b) delivered as to such lesser extent 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 income taxes and the excise tax
imposed by Section 4999, results in the receipt by the Employee on an after-tax
basis, of the greatest amount of severance benefits, notwithstanding that all
or some portion of such severance benefits may be taxable under Section 4999 of
the Code. Unless the Company and the Employee otherwise agree in writing, any
determination required under this Section 4 shall be made in writing by the
Company's independent public accountants immediately prior to Change of Control
(the "Accountants"), whose determination shall be conclusive and binding upon
the Employee and the Company for all purposes. For purposes of making the
calculations required by this Section 4, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. The Company and the Employee shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section. The Company shall
bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 4.
5. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
-3-
(a) Cause. "Cause" means (i) an act of dishonesty made
by the Employee in connection with such Employee's responsibilities as an
employee, (ii) the Employee's arrest for, conviction of, or plea of nolo
contendre to, a felony which the Board reasonably believes had or will have a
material detrimental effect on the Company's reputation or business, (iii) the
Employee's gross misconduct, (iv) the Employee's continued substantial
violations of such Employee's duties as an employee after the Employee has
received a written demand for performance from the Company which specifically
sets forth the factual basis for the Company's belief that the Employee has not
substantially performed such Employee's duties.
(b) Change of Control. "Change of Control" means the
occurrence of any of the following:
(i) 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 seventy-five
percent (75%) or more of the total voting power represented by the Company's
then outstanding voting securities; or
(ii) Any action or event occurring within a
two-year period, 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 the Incumbent Directors at the time of such election or nomination
(but shall not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election
of directors to the Company), or (C) are approved by Warburg Pincus LLC so long
as it is the beneficial owner of not less than twenty-five percent (25%) of the
then outstanding voting securities; or
(iii) The consummation 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) at least fifty-five percent (55%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or
(iv) The consummation of the sale, lease or
other disposition by the Company of all or substantially all the Company's
assets.
(c) Disability. "Disability" shall mean that the
Employee has been unable to perform his Company duties as the result of his
incapacity due to physical or mental illness, and such inability, at least
twenty-six (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 the Employee or the Employee's 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 the Employee's employment. In the event
that the Employee resumes the performance of substantially all of his duties
hereunder before the
-4-
termination of his employment becomes effective, the notice of intent to
terminate shall automatically be deemed to have been revoked.
(d) Good Reason. "Good Reason" means without the
Employee's consent (i) a significant reduction or elimination of the Employee's
duties or responsibilities , unless the Employee is provided with a comparable
position (i.e., a position of equal or greater duties, compensation and
status); (ii) 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 in the base compensation of the Employee as in effect immediately prior
to such reduction other than in connection with a general reduction in
executive officer compensation; (iv) a material reduction by the Company in the
kind or level of benefits to which the Employee was entitled immediately prior
to such reduction with the result that such Employee 's overall benefits
package is significantly reduced other than in connection with a general
reduction in the kind or level of benefits offered by the Company; (v) the
relocation of the Employee to a facility or a location more than fifty (50)
miles from such Employee's then current location.
6. Successors.
(a) The Company's Successors. Any successor to the
Company (whether direct or indirect and whether by purchase, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets shall assume the obligations under this
Agreement and agree expressly to perform the 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 "Company" shall include any successor to the Company's
business and/or assets which executes and delivers the assumption agreement
described in this Section 6(a) or which becomes bound by the terms of this
Agreement by operation of law.
(b) The Employee's Successors. The terms of this
Agreement and all rights of the Employee hereunder shall inure to the benefit
of, and be enforceable by, the Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
7. Conditional Nature of Severance Payments.
(a) Conditions Precedent and Subsequent. Notwithstanding
anything in this Agreement to the contrary, Employee's full compliance with the
terms of the covenants set forth in this Section 7 is an express condition
precedent to his or her right to receive the compensation set forth in Section
3. In the event that Employee violates any of the terms of the covenants set
forth in this Section 7, Employee shall have no right to receive any
compensation under Section 3 of this Agreement. Employee acknowledges and
agrees that he or she may receive compensation pursuant to Section 3 prior to
the expiration of the covenants set forth in this Section 7. Under such
circumstances, Employee's continued compliance with the terms of the covenants
in this Section 7 is an express condition subsequent to his right to receive
and retain the compensation set forth in Section 3. In the event that Employee
violates any of the terms of the covenants set forth in this Section 7 after
Employee already has received some or all of the compensation to which he or
she
-5-
otherwise is entitled under Section 3, all amounts previously paid to Employee
by the Company must be returned to the Company immediately and Employee will
not be entitled to receive any such compensation thereafter.
(b) Non-Solicitation of Customers. Employee agrees that,
during his or her employment and for a period of twelve (12) months immediately
following his or her resignation for "Good Reason" or termination by the
Company for a reason other than "Cause," he or she will comply with the
provisions of Section 5(b) of his Employment Agreement.
(c) Non-Solicitation of Employees. Employee agrees that,
during his or her employment and for a period of twelve (12) months immediately
following his or her resignation for "Good Reason" or termination by the
Company for "Cause", he or she will comply with the provisions of Section 5(a)
of his Employment Agreement.
(d) Nondisclosure of Trade Secrets and Confidential
Information. Employee agrees that, during his or her employment and following
his or her resignation for "Good Reason" or termination by the Company for
"Cause", he or she will comply with the provisions of Section 4 of his
Employment Agreement.
(e) Covenant Not to Compete. Employee currently is employed
in the position of EXECUTIVE VICE PRESIDENT OF WORLDWIDE OPERATIONS. Employee
agrees that attached hereto as Exhibit A, and expressly incorporated herein by
reference, is a true and correct copy of the job description of his or her
position. Employee acknowledges that this job description accurately describes
his or her duties and responsibilities for Employer. Employee agrees that,
during his or her employment, and for a period of twelve (12) months
immediately following his or her resignation for "Good Reason" or termination
by the Company for a reason other than "Cause," he or she will not, in the
Restricted Territory, provide services that are the same or substantially
similar to some or all of the duties and obligations described on Exhibit A to
or on behalf of himself, herself or any other person or entity engaged in the
Business in competition with the Company. For purposes of this provision,
"Restricted Territory" means Atlanta, Georgia and "Business" means the design,
product development, sale, marketing, implementation or support of enterprise
asset management computer software products or services. Employee and Employer
acknowledge and agree that Employee's job duties may change during the term of
this Agreement such that the job description attached hereto as Exhibit A is no
longer a complete and/or accurate description of Employee's duties and
responsibilities. Under such circumstances, either Employee or Employer may
request that Exhibit A be revised to accurately and/or completely describe
Employee's job, and Employer and Employee agree to negotiate reasonably and in
good faith regarding such revisions.
(f) Severability. The covenants set forth herein are
separate and independent. If any portion of any covenant is held to be invalid,
void or unenforceable in any court of competent jurisdiction, such defect shall
not render invalid, void or unenforceable any other portion of this Agreement.
If any portion of this Agreement is found to be invalid or unenforceable by a
court of competent jurisdiction because its duration, territory, or
definition(s) of activities or information covered is unreasonable, the
unreasonable term shall be redefined or replaced such that the intent of the
parties in entering this Agreement will not be impaired and the provision in
question will be enforceable to the fullest extent of the applicable laws.
-6-
(g) Reasonableness and Relief. Employee agrees that the
covenants contained herein are reasonable and necessary means to protect the
Company's interests in its goodwill, Trade Secrets, Confidential Information
and intellectual property and that they will not unreasonably interfere with
his or her ability to earn a living should his or her employment be terminated.
Employee agrees that any breach by him or her of these covenants will cause
irreparable harm and injury to the Company and will leave it with no adequate
remedy at law. Employee agrees that, in the event that such a breach occurs,
the Company will be entitled to recover any remedy permitted under applicable
law in addition to any remedy provided herein, including, among other
appropriate relief, injunctive relief in any appropriate court without the
necessity of posting a bond.
(h) Understanding of Covenants. The Employee represents
that he (i) is familiar with the foregoing covenants, and (ii) is fully aware
of his or her obligations hereunder, including, without limitation, the
reasonableness of the length of time, scope and geographic coverage of these
covenants.
8. Notice.
(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 or her at the home
address which he or she 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
President.
(b) Notice of Termination. Any termination by the
Company for Cause or by the Employee for Good Reason or as a result of a
voluntary resignation shall be communicated by a notice of termination to the
other party hereto given in accordance with Section 8(a) of this Agreement.
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,
and shall specify the termination date (which shall be not more than thirty
(30) days after the giving of such notice). The failure by the Employee to
include in the notice any fact or circumstance which contributes to a showing
of Good Reason shall not waive any right of the Employee hereunder or preclude
the Employee from asserting such fact or circumstance in enforcing his or her
rights hereunder.
9. 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 shall 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 the
other
-7-
party shall be considered a waiver of any other condition or provision or of
the same condition or provision at another time.
(c) Headings. All captions and section headings used in
this Agreement are for convenient reference only and do not form a part of this
Agreement.
(d) Entire Agreement. Together with the Employment
Agreement between the parties, this Agreement constitutes the entire agreement
of the parties hereto and supersedes in their entirety all prior
representations, understandings, undertakings or agreements (whether oral or
written and whether expressed or implied) of the parties with respect to the
subject matter hereof.
(e) Choice of Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Georgia.
(f) Consent to Jurisdiction and Service of Process. Each
party hereby irrevocably submits to the jurisdiction of The United States
District Court for the Northern District of Georgia or any court of the State
of Georgia located in Xxxxxx County and in any action, suit or proceeding
arising in connection with this Agreement, agrees that any such action, suit or
proceeding may be brought in such court (and waives any objection based on
forum non conveniens or any other objection to venue therein to the extent
permitted by law), provided, however, that such consent to jurisdiction is
solely for the purpose referred to in this Section and shall not be deemed to
be a general submission to the jurisdiction of said courts. Nothing herein
shall affect the right of any party to commence legal proceedings or otherwise
proceed against the other in any other jurisdiction.
(g) Severability; Withholding; Counterparts. 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. All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes. 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 set forth below.
COMPANY EMPLOYEE
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxx
------------------------ ---------------------------
Title: Chief Executive Officer Title: EVP of Worldwide Operations
Date: 9-13-02 Date: 9/6/02
------------------------ ---------------------------
-8-
