CONFIDENTIAL SEVERANCE AND CONSULTING AGREEMENT
This Confidential Severance and Consulting Agreement ("Agreement") is
entered into as of the 2nd day of November, 1998 (the "Termination Date") in the
State of Arizona by and between Xxxxx X. Xxxxxx ("Employee"), and Viasoft, Inc.,
a Delaware corporation, (the "Company").
RECITALS
WHEREAS, Employee is currently employed by the Company as President and
Chief Operating Officer; and
WHEREAS, Employee desires, as of the Termination Date, to resign as an
officer and employee of the Company; and
WHEREAS, the Company is willing to accept such resignations but
desires, commencing on the Termination Date, to retain the services of Employee
to provide for a smooth transition of the duties of his office and for the
purpose of providing consulting advice in the areas of general operations and
strategic partnerships; and
WHEREAS, the parties desire to express in a written agreement their
mutual agreements, covenants, promises, and understandings with respect to the
termination of Employee's employment relationship and the terms of the
consulting relationship.
AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual
agreements, covenants, and provisions contained in this Agreement, the parties
agree and declare as follows:
1. TERMINATION OF EMPLOYMENT. Employee hereby resigns as an employee
and officer of the Company, effective as of November 2, 1998, and the Company
accepts such resignation. Employee acknowledges that the Company paid Employee
on or before October 31, 1998, for his regular existing salary through October
31, 1998 and his accrued but unused vacation time, all net of applicable
withholding taxes. Employee acknowledges that the Company has paid Employee all
wages and compensation to which he was entitled as an employee of the Company.
The parties acknowledge and agree that Employee shall not be an employee of the
Company after the Termination Date, notwithstanding Employee's continued receipt
of certain sums as described in this Agreement.
2. SEVERANCE BENEFITS.
x. XXXXXXXXX PAY. The Company will: (1) continue paying
Employee his existing salary, net of applicable withholding, through April 30,
1999, on the Company's regular pay days; and (2) continue Employee's group
health plan coverage through April 30, 1999, with Employee's portion of the
premium for such coverage deducted from the severance payments described above.
The Company also shall reimburse Employee for any valid business expenses he
incurred on or prior to October 31, 1998, in accordance with the Company's
Travel and Expense policy, provided the expenses are submitted to the Company on
or before November 30, 1998. The Company also shall reimburse Employee for
amounts, if any, for which Employee is entitled to reimbursement under the
Company's Employee Stock Purchase Plan through and including the Termination
Date.
b. CONDITIONS. Employee will be entitled to receive the
severance benefits and other consideration set forth in this Agreement provided
that:
(1) Employee has not revoked this Agreement within
the applicable revocation period described in Section 9 below; and
(2) The Company has received written confirmation
from Employee, in the form attached hereto as Exhibit A, dated not earlier than
the day after the expiration of the applicable revocation period described in
Section 9 below, that Employee has not revoked and will not revoke this
Agreement; and
(3) Employee fulfills his obligations as a
consultant, as reasonably requested by the Company, as set forth in Section 4
below.
c. CONSIDERATION. Employee acknowledges that it is not the
Company's usual policy to provide all of the severance benefits and other
consideration set forth in this Agreement, and that he would not be entitled to
those benefits and consideration if he were not releasing his Claims under this
Agreement.
3. WAIVER AND RELEASE OF CLAIMS. Employee covenants not to xxx for, and
waives and releases all of his existing rights to, any relief of any kind from
the Company, its insurers, affiliates, divisions, directors, officers,
shareholders, employees, agents, successors, assigns, and members ("the
Employer"), including without limitation all claims that arise out of or that
relate to his employment or the termination of his employment with the Company,
all claims that arise out of or that relate to the statements or actions of the
Employer or any oral or written contract or agreement with the Employer, all
claims that arise under the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Arizona Employment Protection Act, the Americans with
Disabilities Act, and the Arizona Civil Rights Act, all claims for relief or
other benefits under any federal, state, or local statute, ordinance,
regulation, or rule of decision, all claims that Employer engaged in conduct
prohibited on any basis under any federal, state, or local statute, ordinance,
regulation, or rule of decision, and all claims for stock options or other
rights with respect to the Company's equity securities, attorneys' fees,
liquidated damages, punitive damages, costs, and disbursements ("Claims");
provided, however, that this release does not apply to any rights of Employee
accrued through and including the Termination Date under the Employee's stock
option agreements listed in Exhibit C. If Employee breaches the covenant not to
xxx described in this paragraph, Employee agrees to indemnify, hold harmless,
and reimburse the Employer for attorneys' fees and costs the Employer incurs
defending Employee's action.
2
4. CONSULTING SERVICES.
a. ENGAGEMENT AS A CONSULTANT. Employee agrees to provide the
consulting services described on Exhibit B during the period commencing on the
Termination Date and ending on April 30, 1999 (the "Consulting Term"). Employee
shall devote such time, attention and energies to the business of the Company as
is reasonably necessary in order to provide the services described herein.
b. EXPENSES. During the Consulting Term, the Company shall
reimburse Employee for all reasonable out-of-pocket business expenses incurred
in performing the consulting services as documented in accordance with Company
policies. Single item expenses over $300 shall be approved by the Company prior
to Employee incurring those charges.
c. AMENDMENT OF EXISTING STOCK RIGHTS. Employee agrees, and
the Company hereby confirms, that as of immediately prior to the Termination
Date, all of Employee's vested and unvested rights to acquire stock or other
equity securities of the Company are accurately and completely set forth on
Exhibit C hereto. After this Agreement becomes effective in accordance with
Section 9 hereof, each stock option agreement described on Exhibit C, and
attached to Exhibit C, is hereby amended to provide that during the Consulting
Term, the options thereunder shall continue to vest and shall continue to be
exercisable, in accordance with the terms and conditions thereof, as if
Employee's employment with the Company had not terminated, except as set forth
in Section 4(e) below. Termination or expiration of this Agreement or the
Consulting Term shall be treated in the same manner as termination of employment
under such stock option agreements. Employee acknowledges and agrees that as a
result of the foregoing amendments, any incentive stock options described on
Exhibit C shall hereafter be treated as non-qualified stock options.
d. NATURE OF RELATIONSHIP. Employee acknowledges and agrees
that he is an independent contractor and will not act as an agent of the Company
nor be deemed an employee of the company for any purpose, including without
limitation for the purposes of any employee benefit programs, income tax
withholding, F.I.C.A. taxes, unemployment benefits, or otherwise. Employee shall
not enter into any agreement or incur any obligations on behalf of the Company,
or commit the Company in any manner without the Company's prior written consent.
Employee agrees to timely pay any and all taxes that may be owed to state and
federal taxing authorities related to the payments and other consideration paid
by the Company during the Consulting Term. In the event any person or entity,
including, without limitation, any governmental entity or any taxing authority,
challenges the characterization of the payments made by the Company under the
Consulting Term or the treatment of those items for tax purposes, or if it is
alleged or determined by any of the foregoing persons or entities that
withholding or other taxes are due and owing with respect to the payments made
by the Company under the Consulting Term, Employee agrees to indemnify, hold
harmless, and defend the Company on demand for, from, and against all liability,
loss, damage, or other allegations directly or indirectly arising from or
related to any such challenge, determination, or allegation, including without
limitation any and all state and federal taxes, interest, penalties, attorneys'
fees, and costs. The parties further agree that they will not challenge the
3
characterization of any payments and withholding treatment made by the Company
under the Consulting Term.
e. TERMINATION.
(1) TERMINATION BY EMPLOYEE FOR BREACH. The
Consulting Term may be terminated by Employee if the Company commits a material
breach of the terms and conditions of this Agreement and the Company fails to
cure such breach within thirty (30) days after delivery of Employee to the
Company of a written notice setting forth the nature and extent of such breach.
If the Consulting Term is terminated for Company breach, the Company shall
accelerate the vesting of all options that would have otherwise vested during
the Consulting Term in accordance with Section 4(c) above and shall reimburse
Employee in accordance with Section 4(b) above for all expenses reimbursable
thereunder incurred by Employee through the date of termination.
(2) TERMINATION BY COMPANY FOR BREACH. The Consulting
Term may be terminated by the Company if the Employee commits a material breach
of the terms and conditions of this Agreement or habitually neglects his duties
hereunder and the Employee fails to cure such breach within ten (10) days after
delivery of Company to the Employee of a written notice setting forth the nature
and extent of such breach. If the Consulting Term is terminated for Employee
breach, the Company shall continue to pay to Employee all severance and
insurance benefits hereunder through April 30, 1999, but all vesting of stock
options hereunder shall cease as of the date of the termination of the
Consulting Term.
f. EXCLUSIVE REMEDY. Except as expressly provided in this
Section 4, upon the expiration or termination of the Consulting Term, the
Company shall not have any liability or obligation of any kind or character to
Employee under the terms of this Agreement or in connection with the expiration
or termination hereof.
5. INDEMNIFICATION. Notwithstanding any other provision of this
Agreement, the Company agrees to indemnify Employee in accord with Article IX of
the Company's Restated Certificate of Incorporation dated February 23, 1995 as
the same may be amended from time to time.
6. MUTUAL CONFIDENTIALITY.
a. GENERAL STANDARD. The parties intend that the terms and
conditions upon which this matter has been settled, including the provisions of
this Agreement ("Confidential Information"), will be forever treated as
confidential. Employee and the Company will not disclose Confidential
Information to any person or entity at any time, except as provided herein.
4
b. EXCEPTIONS.
(1) It will not be a violation of this Agreement for
Employee to disclose Confidential Information to his attorneys.
(2) It will not be a violation of this Agreement for
Employee to disclose Confidential Information to his spouse, to his accountants
or to his tax planners, provided that if Employee discloses Confidential
Information to any such person, he must simultaneously inform that person that
the information is considered confidential, and that the person cannot disclose
the information to any other person without the advance written consent of
Employee and the Company. Any disclosure of Confidential Information by any such
person will be considered a disclosure by Employee.
(3) It will not be a violation of this Agreement for
the Company to disclosure Confidential Information to its attorneys, to its
auditors, to its insurers, to its accountants, to its tax planners, to the
Securities and Exchange Commission, National Association of Securities' Dealers,
or other governmental entities or self-regulatory organizations, to its
affiliates, divisions, directors, officers, shareholders, employees,
representatives, or other agents who have a legitimate reason to obtain the
Confidential Information in the course of performing their duties or
responsibilities for the Company, or as necessary or advisable in compliance
with its disclosure obligations under applicable law or accounting rules.
(4) It will not be a violation of this Agreement for
either party to give truthful testimony in response to direct questions asked
pursuant to an enforceable court order obtained after providing notice to the
other party, which order pays due regard to the concerns for confidentiality
expressed by the parties herein.
7. NON-DISPARAGEMENT. Employee will not disparage, defame, or besmirch
the reputation, character, image, or services of the Company, its affiliates,
divisions, directors, officers, shareholders, employees, or agents.
8. CLAIMS INVOLVING THE COMPANY. Employee will not recommend or suggest
to any potential claimants or plaintiffs or their attorneys or agents that they
initiate claims or lawsuits against the Company or any of its affiliates,
divisions, directors, officers, shareholders, employees, agents, successors, or
assigns, nor will Employee voluntarily aid, assist, or cooperate with any such
claims or lawsuits; provided, however, that this paragraph will not be construed
to prevent Employee from giving truthful testimony in response to direct
questions asked pursuant to a lawful subpoena during any future legal
proceedings.
9. TIME TO CONSIDER AGREEMENT AND RIGHT TO REVOKE.
a. TIME TO CONSIDER AGREEMENT. Employee understands that he
may take at least 21 (twenty-one) calendar days to decide whether to sign this
Agreement, provided, however, that Employee has requested and the Company has
5
agreed that Employee may execute this Agreement before the expiration of that
period if he so chooses. Employee further understands that the Company's offer
as set forth in this Agreement shall expire on December 4, 1998 at 5:00 p.m.
unless Employee executes the Agreement and the Company receives it prior to that
time.
b. RIGHT TO REVOKE. Employee understands that he has the right
to revoke this Agreement for any reason within 7 (seven) calendar days after he
signs it by signing and delivering to the Company within this 7 (seven) day
period a letter indicating his intention to revoke this Agreement. Employee
understands that this Agreement will not become effective or enforceable unless
and until he has not revoked it and the applicable revocation period has
expired.
10. RETURN OF COMPANY PROPERTY. Employee agrees to promptly return to
the Company all property that belongs to the Company, including without
limitation all equipment, supplies, documents, files, computer disks, and
Employee agrees to remove from any personal computer all data files containing
Company information.
11. CONFIDENTIALITY AGREEMENT. Employee acknowledges and reaffirms his
obligations under the Company's Employment Confidentiality and Proprietary
Information Agreement dated January 18, 1993, a copy of which is attached as
Exhibit D hereto, and such obligations shall continue to apply during the
Consulting Term, and shall survive the consulting relationship, except as noted
in Section 12(f) below.
12. NON-COMPETITION AND SOLICITATION OF CUSTOMERS AND EMPLOYEES
a. NON-COMPETITION. Employee agrees that for a period of
twelve (12) months after the Termination Date, he shall not, alone or with
others, directly or indirectly, own, manage, operate, control, participate in,
or be connected in any way whatsoever (including without limitation as an
officer, agent, representative, consultant, employee, service provider, partner,
creditor, or guarantor) with any person or entity that is engaged or about to
become engaged in the business of providing any product or service which is then
competitive with, or substantially similar to, a product or service provided by
the Company anywhere in the world (a "Competing Business"). Ownership by
Employee, as a passive investment, of less than 1% of the outstanding shares of
capital stock of any corporation listed on a national securities exchange or
publicly traded in the over-the-counter market shall not constitute a breach of
this Section 12. Employee further agrees that for a period of twelve (12) months
from the Termination Date, he will not, directly or indirectly, assist or
encourage any other person in carrying out, directly or indirectly, any activity
that would be prohibited by this Section 12 if such activity were carried out by
Employee.
b. AGREEMENT NOT TO SOLICIT CUSTOMERS. Employee agrees that
for a period of twelve (12) months after the Termination Date, he will not,
either directly or indirectly, on his own behalf or in the service or on behalf
of others, solicit, divert or appropriate, or attempt to solicit, divert or
appropriate, to any Competing Business (a) any person or entity whose account
with the Company was sold or serviced (including maintenance) by the Company
6
during the twelve (12) months preceding the Termination Date, or (b) any person
or entity whose account with the Company has been directly solicited at least
twice by the Company within the twelve (12) month period prior to the
Termination Date.
c. AGREEMENT NOT TO SOLICIT EMPLOYEES AND CONTRACTORS.
Employee agrees that for a period of twelve (12) months after the Termination
Date, he will not, either directly or indirectly, on his own behalf or in the
service or on behalf of others, solicit, divert or hire away, or attempt to
solicit, divert or hire away, any person then employed by the Company or then
serving as a consultant, sales representative or distributor or reseller of the
Company. This Section 12(c) shall not prohibit Employee from hiring Xxxxxxxxx
Xxxxx only.
d. REFORMATION. In the event that any provision in this
Section 12 is held to be over broad as written, such provision shall be deemed
amended to narrow its application to the extent necessary to make the provision
enforceable to the fullest extent allowable. Employee and the Company hereby
agree that such amendment shall be accomplished as follows:
(1) In the case of duration, the length of the
covenant or provision shall be reduced in increments of one (1) month each until
it is of the greatest duration as may be enforceable under applicable law; and
(2) In the case of geographic scope, the geographic
scope of the covenant or provision shall be reduced until it is of the greatest
geographic scope as may be enforceable under applicable law, which reduction
shall be effected by eliminating in the following order, one by one, countries
outside the United States, beginning with the country in which the Company
received the least volume of gross revenue over the prior six (6) months, and
continuing in the inverse order ranked by the Company's gross revenue over the
prior six (6) months within each country until such scope is enforceable, and
then, if necessary, by eliminating in the following order, one by one,
individual States within the United States, beginning with the State in which
the Company received the least volume of gross revenue over the prior six (6)
months, and continuing in the inverse order ranked by the Company's gross
revenue over the prior six (6) months within each State until such scope is
enforceable, and then, if necessary and applicable, by eliminating in the
following order the counties in the State of Arizona, beginning with the county
in which the Company received the least gross revenue over the prior six (6)
months, and continuing in the inverse order ranked by the Company's gross
revenue over the prior six (6) months within each county in Arizona until such
scope is enforceable.
e. REASONABLENESS. Employee and the Company agree that the
covenants set forth in this Section 12 are appropriate and reasonable when
considered in light of the nature and extent of the Company's business and the
scope of Employee's responsibilities while employed by the Company. Employee
acknowledges that: (i) the Company has a legitimate interest in protecting the
Company's business activities; (ii) the covenants set forth herein are not
oppressive to Employee and contain reasonable limitations as to time, scope,
geographical area and activity; (iii) the covenants do not harm in any manner
whatsoever the public interest; (iv) Employee can earn a livelihood without
violating any of the covenants set forth herein; and (v) Employee has received
7
and will receive substantial consideration for agreeing to such covenants,
including without limitation the consideration received and to be received by
Employee under this Agreement.
f. SUPERSEDES PRIOR OBLIGATIONS. The parties agree that the
provisions of this Section 12 specifically supersede the obligations of Employee
under Section 2(c) of his Employment Confidentiality and Proprietary Information
Agreement, which is attached hereto as Exhibit D.
13. FULL COMPENSATION. The payments made and other consideration
provided under this Agreement constitute full compensation for and extinguish
all Employee's Claims, including, but not limited to, all Claims for attorneys'
fees, costs, and disbursements, and all Claims for any type of legal or
equitable relief. Without limiting the foregoing, termination of the Consulting
Term in accordance with Section 4(e) above shall not reinstate any extinguished
Claims.
14. EMPLOYEE COOPERATION. Employee agrees to cooperate in all
reasonable requests of the Company, in connection with any litigation,
administrative proceeding or any other claim of a third party against the
Company relating to acts or omissions of Employee or of which Employee would
have personal knowledge or other information, including, without limitation,
providing information, deposition testimony, appearing in court, etc. The
Company agrees to pay Employee all reasonable out-of-pocket expenses in
connection with such assistance.
15. NO ADMISSION OF WRONGDOING. This Agreement does not constitute an
admission that any person or entity violated any local, state, or federal
ordinance, regulation, ruling, statute, rule of decision, or principle of common
law, or that any person or entity engaged in any improper or unlawful conduct or
wrongdoing. Employee will not characterize this Agreement or the payment of any
money or other consideration in accord with this Agreement as an admission or
indication that any person or entity engaged in any improper or unlawful conduct
or wrongdoing.
16. LEGAL REPRESENTATION. Employee acknowledges that the Company has
advised him to consult a lawyer regarding this Agreement before signing it, and
that Employee has retained and consulted with his own attorneys prior to
executing this Agreement. Employee acknowledges that he has had a full
opportunity to consider this Agreement, that he has had a full opportunity to
ask any questions that he may have concerning this Agreement, and that in
deciding whether to sign this Agreement he has not relied upon any statements
made by the Company or its attorneys, other than the statements made in this
Agreement. Employee further acknowledges that he has read and understands the
contents to this Agreement and that he executes this Agreement knowingly and
voluntarily and based upon and with the opportunity to obtain independent legal
advice of his own choosing. The parties acknowledge and agree that each party
has participated in the drafting of this Agreement and that this document has
been reviewed by the respective legal counsel for the parties hereto, or have
had the opportunity for such counsel to review this Agreement, and that the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be applied to the interpretation
8
of this Agreement. No inference in favor of, or against, any party shall be
drawn from the fact that one party has drafted any portion hereof.
17. AUTHORITY. Employee represents and warrants that he has the
authority to enter into this Agreement, and that he has not assigned any Claims
to any person or entity.
18. INVALIDITY. In the event that a court of competent jurisdiction
determines that any provision of this Agreement is invalid, illegal, or
unenforceable in any respect, such a determination will not affect the validity,
legality, or enforceability of the remaining provisions of this Agreement, and
the remaining provisions of this Agreement will continue to be valid and
enforceable.
19. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and
inure to the benefit of the parties and their respective heirs, representatives,
successors, and assigns.
20. ENTIRE AGREEMENT. This Agreement and the other agreements
referenced herein are intended to and do define the full extent of the legally
enforceable undertakings of the parties, and no promises or representations,
written or oral, that are not set forth explicitly in this Agreement are
intended by any party to be legally binding, and all other agreements and
understandings between Employee and the Company relating to Employee's
employment with the Company are hereby superseded. No provision of this
Agreement shall be amended, waived, or modified except by an instrument in
writing, signed by all parties hereto.
21. HEADINGS. The descriptive headings of the Sections and paragraphs
of this Agreement are intended for convenience only, and do not constitute parts
of this Agreement.
22. COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
23. GOVERNING LAW. This Agreement will be construed in accord with, and
any dispute or controversy arising from any breach or asserted breach of this
Agreement will be governed by, the laws of the State of Arizona.
24. DISPUTE RESOLUTION. If there shall be any dispute between the
Company and Employee whatsoever, the dispute shall be resolved in accordance
with the dispute resolution procedures set forth in Exhibit E hereto, the
provisions of which are incorporated as a part hereof, and the parties hereto
agree that such dispute resolution procedures shall be the exclusive method for
resolution of disputes under this Agreement. Notwithstanding anything herein to
the contrary, nothing in this Section 24 or Exhibit E shall preclude either
party from seeking interim or provisional relief, in the form of a temporary
restraining order, preliminary injunction or other interim equitable relief
concerning a dispute, either prior to or during any of the negotiations or
proceedings provided for herein, if deemed necessary by the party, in its
discretion, to protect its interests. Further, this Section 24 shall be
specifically enforceable. IT IS EXPRESSLY UNDERSTOOD THAT BY SIGNING THIS
9
AGREEMENT, WHICH INCORPORATES BINDING ARBITRATION, THE COMPANY AND EMPLOYEE
AGREE TO WAIVE COURT OR JURY TRIAL AND TO WAIVE PUNITIVE, STATUTORY,
CONSEQUENTIAL AND ANY DAMAGES, OTHER THAN COMPENSATORY DAMAGES, TO THE FULLEST
EXTENT ALLOWED BY LAW.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
dates indicated below.
DATED this 28th day of December, 1998.
/s/ Xxxxx X. Xxxxxx
----------------------------------------
Xxxxx X. Xxxxxx
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this 28TH day of
DECEMBER, 1998, by XXXXX X. XXXXXX .
/s/ Xxxx X. Xxxxxxx
----------------------------------------
Notary Public
My Commission Expires:
MARCH 30, 2000
DATED this 5th day of February, 1999.
Viasoft, Inc.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
10
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this 5TH day of
February,1999, by XXXXXX X. XXXXXXXX.
/s/ Xxxx X. Xxxxxxx
---------------------------------------
Notary Public
My Commission Expires:
MARCH 30, 2000
11
List of Exhibits
Exhibit A Form of Non-Revocation Letter
Exhibit B Description of Consulting Services
Exhibit C Existing Stock Rights
Exhibit D Employee Proprietary Rights Agreement
Exhibit E Dispute Resolution Procedures
12
