Exhibit 10.6
INDUS INTERNATIONAL, INC.
CHANGE OF CONTROL SEVERANCE AGREEMENT
This Change of Control Severance Agreement (the "Agreement") is made and
entered into by and between Xxxx X. Xxxxx (the "Executive") and Indus
International, Inc., a Delaware Corporation (the "Company"), effective as of
October 1, 2005 (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 Executive and can cause the Executive
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 Executive,
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 Executive with an incentive to continue his or
her employment and to motivate the Executive 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 Executive with
certain severance benefits upon the Executive's termination of employment
following a Change of Control. These benefits will provide the Executive 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 Executive by the Company, the parties agree as
follows:
1. Term of Agreement. This Agreement shall be for a one year term
commencing on the Effective Date; provided, however, that the Compensation
Committee may affirmatively extend the term of the Agreement at any time. The
Executive may, by notice to the Company given not less than 60 days, but not
more than 90 days, prior to the expiration of the then-current term, cause the
term of this Agreement not to be extended. In the event that the Compensation
Committee does not extend the term of the Agreement, or upon such notice of
non-renewal by the Executive, the term of this Agreement shall terminate upon
the expiration of the then-current term, including any prior extensions.
2. At-Will Employment. This Agreement is not an employment agreement and
does not guarantee any specific term of employment. The Company and the
Executive acknowledge that the Executive'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 Executive (an "Employment Agreement").
3. Severance Benefits.
(a) Involuntary Termination Following a Change of Control. If within
twenty-four (24) months following a Change of Control (A) the Executive
terminates his or her employment with the Company (or any parent or subsidiary
of the Company) for "Good Reason" (as defined herein) or the Company (or any
parent or subsidiary of the Company) terminates the Executive's employment for
other than "Cause" (as defined herein), and (B) the Executive signs the
Company's standard separation agreement and release of claims with the Company,
then the Executive shall be entitled to receive the following severance benefits
from the Company: (i) a lump sum amount equal to one (1) times the sum of (x)
Executive's then-current base salary plus (y) a payment equal to Executive's
annual bonus target for the performance year in which the Change in Control
occurs, or if such amount is not determinable, Executive's annual bonus paid or
payable, including any bonus or portion thereof which has been earned but
deferred, for the most recently completed fiscal year; and (ii) reimbursement
for full COBRA (for the Executive and any of Executive's dependents that
Executive had elected to cover by Company's benefit plans during Executive's
employment at the Company) expenses for the earlier of eighteen (18) months or
until Executive receives health, medical and/or dental benefits, respectively,
from a new employer. In addition, Executive's outstanding options to purchase
shares of the Company's Common Stock (the "Options") and unvested restricted
shares of the Company's Common Stock (the "Restricted Stock") shall immediately
vest and, in the case of Options, become exercisable. In all other respects the
Options and Restricted Stock shall continue to be bound by and subject to the
terms of their respective agreements.
(b) Timing of Severance Payments. The severance payments to which the
Executive is entitled shall be paid by the Company to the Executive in a lump
sum in cash within 30 days after the date of termination.
(c) Voluntary Resignation; Termination For Cause. If the Executive's
employment with the Company terminates (i) voluntarily by the Executive or (ii)
for Cause by the Company, then the Executive 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 his or her Employment Agreement or other written agreements, if any,
with the Company.
(d) Disability; Death. If the Company terminates the Executive's
employment as a result of the Executive's Disability, or the Executive's
employment terminates due to his or her death, then the Executive 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 written severance and
benefits plans and practices or pursuant to his or her Employment Agreement or
other written agreements, if any, with the Company.
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(e) Termination Apart from Change of Control. In the event the
Executive's employment is terminated for any reason, either prior to the
occurrence of a Change of Control or after a twenty-four (24) month period
following a Change of Control, then the Executive shall not be entitled to
receive any payments, benefits, damages, awards, or compensation other than as
provided under the Company's then-existing written severance and benefits plans
and practices or pursuant to his or her Employment Agreement or other written
agreements with the Company.
(f) Exclusive Remedy. In the event of a termination of Executive's
employment within twenty-four (24) 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 Executive or the Company may otherwise
be entitled, whether at law, tort or contract, in equity, or under this
Agreement. The Executive shall be entitled to no benefits, compensation or other
payments or rights upon termination of employment within twenty-four (24) months
following a Change in Control other than those benefits expressly set forth in
this Section 3.
(g) Termination in Anticipation of a Change of Control. If a Change of
Control occurs, and if Executive's employment with the Company is terminated by
the Executive for Good Reason or by the Company (or any parent or subsidiary of
the Company) for other than Cause within six (6) months prior to the date on
which the Change of Control occurs, and if it is reasonably demonstrated by
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or in anticipation of a Change of
Control, then for purposes of this Section 3, such termination of employment
shall be deemed to have occurred immediately following the Change of Control and
Executive shall be entitled to the benefits described in Section 3(a).
4. Limitation on Payments. In the event that the severance and other
benefits provided for in this Agreement or otherwise payable to the Executive
(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 Executive's severance and benefits 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 Executive 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 Executive 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 Executive 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
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Company and the Executive 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:
(a) Cause. "Cause" means (i) an act of dishonesty made by the
Executive in connection with such Executive's responsibilities as an Executive,
(ii) the Executive's indictment for, conviction of, or plea of guilty or 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
Executive's gross misconduct, (iv) the Executive's continued substantial failure
to perform such Executive's duties after the Executive has received a written
demand for performance from the Company which specifically sets forth the
factual basis for the Company's belief that the Executive has not substantially
performed such Executive's duties, (v) the willful and continued material
violation of written Company policies or procedures by Executive, after a
written demand for substantial compliance with such policies or procedures is
delivered to Executive by the Compensation Committee of the Board of Directors
of the Company which specifically identifies the manner in which such Committee
or the Board believes that Executive has not substantially complied with the
same, or (vi) Executive's breach of any of the provisions of Sections 7 through
12 of this Agreement.
(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) is or 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 Company's then outstanding
voting securities; or
(ii) A change in the composition of the Board 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
(iii) The date of the consummation of a merger or consolidation
of the Company with any other corporation that has been approved by the
stockholders of the Company, 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 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, or the stockholders of the Company approve a plan of complete
liquidation of the Company; or
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(iv) The date of the consummation of the sale or disposition by
the Company of all or substantially all the Company's assets.
(c) Disability. If the Company determines in good faith that the
Disability of Executive has occurred, it may give to Executive written notice of
its intention to terminate Executive's employment. In such event, Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such written notice by Executive, provided that, within the 30 days
after such receipt, Executive shall not have returned to full-time performance
of Executive's duties. For purposes of this Agreement, "Disability" shall mean
the inability of Executive, as determined by the Board, to perform the essential
functions of his regular duties and responsibilities, with or without reasonable
accommodation, due to a medically determinable physical or mental illness which
has lasted (or can reasonably be expected to last) an aggregate of 180 days in a
12-month period. At the request of Executive or his personal representative, the
Board's determination that the Disability of Executive has occurred shall be
certified by a physician mutually agreed upon by Executive, or his personal
representative, and the Company. Failing such independent certification (if so
requested by Executive), Executive's termination shall be deemed a termination
by the Company without Cause and not a termination by reason of his Disability.
(d) Good Reason. "Good Reason" means without the Executive's consent
(i) a significant reduction or elimination of the Executive's duties or
responsibilities, unless the Executive is provided with a comparable position
(i.e., a position of equal or greater duties, compensation and status),
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by Executive; (ii) a reduction by the Company in the
base compensation of the Executive as in effect immediately prior to such
reduction other than in connection with a generally applicable reduction in
executive officer compensation; or (iii) the involuntary relocation of the
Executive to a facility or a location more than fifty (50) miles from such
Executive's then current location; (iv) any failure by the Company to comply
with and satisfy Section 6(a) of this Agreement; or (v) the material breach by
the Company of any provision of this Agreement.
Good Reason shall not include Executive's death or Disability. Executive's
continued employment shall not constitute consent to, or a waiver of rights with
respect to, any circumstance constituting Good Reason hereunder. Any good faith
determination of Good Reason made by Executive shall be conclusive, but the
Company shall have an opportunity to cure any claimed event of Good Reason
within 30 days of notice from Executive and the Board's good faith determination
of cure shall be binding. The Company shall notify Executive of the timely cure
of any claimed event of Good Reason and the manner in which such cure was
effected, and any notice of termination delivered by Executive based on such
claimed Good Reason shall be deemed withdrawn and shall not be effective to
terminate the Agreement.
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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 Executive's Successors. The terms of this Agreement and all
rights of the Executive hereunder shall inure to the benefit of, and be
enforceable by, the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
7. Conditional Nature of Severance Payments. The parties agree that the
following sections of Executive's Employment Agreement with the Company, dated
as of the Effective Date, or as such sections may be amended from time to time,
shall be incorporated herein and shall be deemed to be operative provisions of
this Agreement notwithstanding any future termination of such Employment
Agreement: (i) Section 9, Nondisclosure of Trade Secrets and Confidential
Information, (ii) Xxxxxxx 00, Xxxxxxxxxxxxxx, Xxxxxxxxxxxxxxx xxx Xxxxxxxxxxxxxx
Xxxxxxxxx, (xxx) Section 11, Ownership of Protected Works, (iv) Section 12,
Rights to Materials and Return of Materials, (v) Section 13, Inventions,
Discoveries and Improvements, and (vi) Section 14, Works Made for Hire.
8. Arbitration.
(a) With the exception of any dispute arising under Section 5 of this
Agreement, the Company and Executive agree that 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 XXXX COUNTY,
GEORGIA 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 will 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) will apply SOUTH CAROLINA law to the merits of
any dispute or claim, without reference to rules of conflicts of law. The
arbitration proceedings will be governed by federal arbitration law and by the
Rules, without reference to state arbitration law. The Executive hereby consents
to the personal jurisdiction of the state and federal courts located in GEORGIA
for any action or proceeding arising from or relating to this Agreement or
relating to any arbitration in which the parties are participants.
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(c) EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE
AGREES TO SUBMIT 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, AND THAT THIS ARBITRATION
CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL AND RELATES TO
THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EXECUTIVE
RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, DISCRIMINATION CLAIMS.
All parties must initial here for Section 8 to be effective:
JDG
GJD
9. 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 Executive, 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 Chief Executive Officer,
with a copy to the General Counsel.
(b) Notice of Termination. Any termination by the Company for Cause or
by the Executive 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 9(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 Executive to include in the notice any fact or
circumstance which contributes to a showing of Good Reason shall not waive any
right of the Executive hereunder or preclude the Executive from asserting such
fact or circumstance in enforcing his or her rights hereunder.
10. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Executive 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 Executive 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 Executive and by an authorized officer of the Company
(other than the Executive). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this
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Agreement by 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) 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. Except as provided in Section 7, 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
South Carolina.
(f) 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.
(g) Withholding. All payments made pursuant to this Agreement will be
subject to withholding of applicable income and employment taxes.
(h) 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.
(i) Code Section 409A. This Agreement is to be construed and the
compensation and benefits provided hereunder are to be paid in such manner and
at such times as shall comply with Code Section 409A and the regulations and
guidance promulgated thereunder by the U.S. Department of the Treasury.
Notwithstanding anything to the contrary herein, such payments shall be delayed
to the extent necessary, but only to such extent, (i) to comply with Code
Section 409A and such regulations and provisions and (ii) to avoid the payment
of any penalties thereunder.
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
By: /s/ Xxxxxxx X. Xxxxx 10/3/05
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Title: President and Chief
Executive Officer
EXECUTIVE
By: s/ Xxxx X. Xxxxx
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Title: Executive Vice President
of Field Operations
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