EXHIBIT 10.22
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT by and between Art
Technology Group, Inc., a Delaware corporation (the "Company"), and Xxxxxx Xxxxx
(the "Executive Group") is made as of November 8, 2004 (the "Effective Date").
WHEREAS, the Company and the Executive entered into a letter agreement of
employment dated December 4, 2002, which was amended by a letter agreement dated
March 28, 2003 (together, the "Prior Agreement");
WHEREAS, the Company recognizes that, as is the case with many
publicly-held corporations, the possibility of a change in control of the
Company exists and that such possibility, and the uncertainty and questions
which it may raise among key personnel, may result in the departure or
distraction of key personnel to the detriment of the Company and its
stockholders;
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that appropriate steps should be taken to reinforce and encourage the
continued employment and dedication of the Company's key personnel without
distraction from the possibility of a change in control of the Company and
related events and circumstances; and
WHEREAS, the Company and the Executive desire to amend and restate the
Executive's employment agreement to include, among other provisions, certain
additional change in control protections for the Executive.
NOW, THEREFORE, in consideration of the Executive remaining in the
Company's employ and other good consideration, the receipt and sufficiency of
which is acknowledged by both parties, the Company and the Executive agree as
follows:
1. Key Definitions.
As used herein, the following terms shall have the following respective
meanings:
1.1. "Change in Control" means an event or occurrence set forth
in any one or more of subsections (a) through (d) below (including an event or
occurrence that constitutes a Change in Control under one of such subsections
but is specifically exempted from another such subsection):
(a) the acquisition by an individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership of any capital stock of the Company if, after such acquisition, such
Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) 50% or more of either (i) the then-outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then-outstanding securities of the Company entitled
to vote generally in the election of directors (the "Outstanding Company Voting
Securities"); or
(b) such time as the Continuing Directors (as defined
below) do not constitute a majority of the Board (or, if applicable, the Board
of Directors of a successor corporation to the Company), where the term
"Continuing Director" means at any date a member of the Board (i) who was a
member of the Board on the date of the execution of this Agreement or (ii) who
was nominated or elected subsequent to such date by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election or whose election to the Board was recommended or endorsed by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election; or
(c) the consummation of a merger, consolidation,
reorganization, recapitalization or statutory share exchange involving the
Company or a sale or other disposition of all or substantially all of the assets
of the Company in one or a series of transactions (a "Business Combination"),
unless, immediately following such Business Combination, each of the following
two conditions is satisfied: (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding securities entitled to vote generally in the election of
directors, respectively, of the resulting or acquiring corporation in such
Business Combination (which shall include, without limitation, a corporation
which as a result of such transaction owns the Company or substantially all of
the Company's assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the "Acquiring
Corporation") in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, respectively; and (ii)
no Person (excluding the Acquiring Corporation or any employee benefit plan (or
related trust) maintained or sponsored by the Company or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 30% or more of the then
outstanding shares of common stock of the Acquiring Corporation, or of the
combined voting power of the then-outstanding securities of such corporation
entitled to vote generally in the election of directors (except to the extent
that such ownership existed prior to the Business Combination); or
(d) the approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.
1.2. "Change in Control Date" means the first date during the
Employment Term (as defined in Section 3 of the Agreement) on which a Change in
Control occurs. Anything in this Agreement to the contrary notwithstanding, if
(a) a Change in Control occurs, (b) the Executive's employment with the Company
is terminated prior to the date on which the Change in Control occurs, and (c)
it is reasonably demonstrated by the 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 in Control or (ii) otherwise arose in
connection with or in anticipation of a Change in Control, then for all purposes
of this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
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1.3. "Cause" means:
(a) the Executive's willful and continued failure to
substantially perform his reasonable assigned duties as an officer of the
Company (other than any such failure resulting from incapacity due to physical
or mental illness or any failure after the Executive gives notice of termination
for Good Reason), which failure is not cured within 30 days after a written
demand for substantial performance is received by the Executive from the Board
which specifically identifies the manner in which the Board believes the
Executive has not substantially performed the Executive's duties; or
(b) the Executive's commission of a felony (other than
through vicarious liability or involving vehicular offense) which is materially
and demonstrably injurious to the Company or a crime involving fraud or
embezzlement against the Company.
For purposes of this Section 1.3, no act or failure to act by the
Executive shall be considered "willful" unless it is done, or omitted to be
done, in bad faith and without reasonable belief that the Executive's action or
omission was in the best interests of the Company.
1.4. "Good Reason" means the occurrence, without the Executive's
written consent, of any of the events or circumstances set forth in clauses (a)
through (j) below.
(a) a change in the Executive's titles of President and
Chief Executive Officer or the assignment to the Executive of duties
inconsistent in any material respect with the Executive's positions (including
status, offices, titles and reporting requirements), authority or
responsibilities, or any other action or omission by the Company which results
in a material diminution in such positions, authority or responsibilities;
(b) a reduction in any aspect of the Executive's
compensation as then may in effect;
(c) the failure by the Company to (i) continue in effect
any material compensation or benefit plan or program consistent with those
afforded to other senior executives of the Company (including without limitation
any life insurance, medical, health and accident or disability plan and any
vacation or automobile program or policy) in which the Executive participates or
which is applicable to the Executive, (ii) continue the Executive's
participation therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits provided and
the level of the Executive's participation relative to other participants, than
the basis existing immediately prior to the change, or (iii) award cash bonuses
to the Executive in amounts and in a manner substantially consistent with past
practice in light of the Company's financial performance;
(d) any alteration in the Company's 1996 Amended and
Restated Stock Option Plan in any manner that may exert an adverse impact on the
Executive for the grant of the option agreements granted to the Executive as of
December 4, 2002 and January 3, 2003 (the "Option Agreements");
(e) a change by the Company in the location at which the
Executive performs his principal duties for the Company to a new location that
is both (i) outside a radius
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of 35 miles from the Executive's principal residence immediately prior to that
change and (ii) more than 20 miles from the location at which the Executive
performed his principal duties for the Company immediately prior to the change;
(f) a material breach of this Agreement by the Company;
(g) a requirement by the Company that the Executive
travel on Company business to a substantially greater extent than required
immediately prior to a Change in Control;
(h) the failure of the Company to obtain the agreement
from any successor to the Company to assume and agree to perform this Agreement,
as required by Section 7.1;
(i) if, as a result of a Change of Control, the Company
no longer has a publicly traded class of equity securities and/or is no longer
subject to reporting requirements under the Securities Exchange Act of 1934; or
(j) any failure of the Company to pay or provide to the
Executive any portion of the Executive's compensation or benefits due under any
Company employee benefit plan within seven days of the date such compensation or
benefits are due.
For purposes of this Agreement, any good faith determination of "Good
Reason" made by the Executive shall be conclusive, binding and final. The
Executive's right to terminate his employment for Good Reason shall not be
affected by his incapacity due to physical or mental illness.
1.5. "Disability" means the Executive's absence from the
full-time performance of the Executive's duties with the Company for 180
consecutive calendar days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers.
2. Position and Duties. The Executive will serve as President and
Chief Executive Officer of the Company. The Executive will render such business
and professional services in the performance of the Executive's duties
consistent with the Executive's position within the Company and as reasonably
assigned to the Executive by the Board. During the Employment Term, the
Executive will serve as a member of the Board.
3. Employment Term. This Agreement, and all rights and obligations of
the parties hereunder, shall take effect upon the Effective Date and shall
continue in effect until the Date of Termination (as defined below) (the
"Employment Term"). The Executive or the Company may terminate Executive's
employment at any time, with or without Cause, subject to the severance
obligations described in Section 5.2 of the Agreement, except that the Company
or Executive shall communicate such termination by a written notice to the other
party hereto (the "Notice of Termination"), given in accordance with Section 8
of the Agreement. Any Notice of Termination shall: (a) indicate the specific
termination provision (if any) of this Agreement relied upon by the party giving
such notice; (b) to the extent applicable, set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's
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employment under the provision so indicated; and (c) specify the Date of
Termination. The effective date of an employment termination (the "Date of
Termination") shall be the close of business on the date specified in the Notice
of Termination (which date may not be less than 15 days or more than 120 days
after the date of delivery of such Notice of Termination), in the case of a
termination other than one due to the Executive's death, or the date of the
Executive's death, as the case may be. In the event the Company fails to satisfy
the requirements of this Section 3 regarding a Notice of Termination, the
purported termination of the Executive's employment pursuant to such Notice of
Termination shall not be effective for purposes of this Agreement. The failure
by the Executive or the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company, respectively,
hereunder or preclude the Executive or the Company, respectively, from asserting
any such fact or circumstance in enforcing the Executive's or the Company's
rights hereunder.
4. Compensation.
4.1. Base Salary. The Company will pay the Executive as
compensation for the Executive's services hereunder a base salary at the
annualized rate of $350,000 (less customary deductions) through December 31,
2004, such amount to be reviewed annually each January during the Employment
Term by the Compensation Committee of the Board in consultation with the
Executive (the "Base Salary"). The Base Salary will be paid in accordance with
the Company's normal payroll practices.
4.2. Annual Bonus. For each fiscal year of the Company ("Fiscal
Year") during the Employment Term, the Executive will be eligible to receive an
annual on target bonus of 50% of the Executive's then-current Base Salary (less
customary deductions) (the "Annual Bonus"), based upon the evaluation by the
Board in its sole discretion.
4.3. Equity Compensation. Each January during the Employment
Term, the Board, in consultation with the Executive, shall determine the extent
to which the Executive will be granted additional stock options by the Company
from time to time.
4.4. Employee Benefits. During the Employment Term, the
Executive will be entitled to participate in the employee benefit plans
currently and/or hereafter maintained by the Company that are generally
applicable to other senior executives of the Company. Examples of such benefits
might include life, disability, medical, dental and other insurance, as well as
a 401(k) plan, tax benefit and planning services, retirement, cell phone and
computer services and the like. For each calendar year during the Employment
Term, Executive will be entitled to 20 days paid vacation in accordance with
Company's standard vacation policy.
5. Additional Benefits.
5.1. Stock Acceleration. If the Change in Control Date occurs
during the Employment Term, then, effective upon the Change in Control Date, (a)
each outstanding option to purchase shares of Common Stock of the Company held
by the Executive shall become immediately exercisable in full and will no longer
be subject to a right of repurchase by the Company and (b) each outstanding
restricted stock award shall be deemed to be fully vested and
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will no longer be subject to a right of repurchase by the Company. This Section
5.1 shall supercede any provision of the Option Agreements to the contrary,
including, but not limited to, the second paragraph of Section 1(e) of each of
the Option Agreements.
5.2. Severance. When the Employment Term is terminated, the
Executive shall be entitled to the following benefits:
(a) Termination Without Cause or for Good Reason. If the
Executive's employment with the Company is terminated by the Company other than
for Cause, Disability or death, or by the Executive for Good Reason, then the
Executive shall be entitled to the following benefits:
(i) the Company shall pay to the Executive in a
lump sum in cash within 30 days after the Date of Termination the sum of (A) the
Executive's Base Salary through the Date of Termination as well as any Annual
Bonus or portion thereof which has been earned for the most recently completed
Fiscal Year, (B) the amount of any compensation previously deferred by the
Executive (together with any accrued interest or earnings thereon) and (C) any
accrued vacation pay, in each case to the extent not previously paid (the sum of
the amounts described in clauses (A), (B), and (C) shall be hereinafter referred
to as the "Accrued Obligations");
(ii) for 12 months after the Date of Termination,
the Company shall continue to pay to the Executive his Base Salary distributed
at regular pay period intervals;
(iii) for 12 months after the Date of Termination,
or such longer period as may be provided by the terms of the appropriate plan,
program, practice or policy, the Company shall continue to provide health
benefits to the Executive and the Executive's family at least equal to those
which would have been provided to them if the Executive's employment had not
been terminated, in accordance with the applicable Company employee benefit
plans in effect on the Date of Termination; (iv) outplacement services through
one or more outside firms of the Company's choosing, with such services to
extend until the earlier of (A) 12 months following the Date of Termination, or
(ii) the date the Executive secures full time employment; and
(v) to the extent not previously paid or
provided, the Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the Executive is
eligible to receive following the Executive's termination of employment under
any plan, program, policy, practice, contract or agreement of the Company and
its affiliated companies (such other amounts and benefits shall be hereinafter
referred to as the "Other Benefits").
Notwithstanding any provision in the Agreement to the contrary, if the Executive
becomes employed by any Competitor within the 12-month period following the
Executive's termination by the Company other than for Cause or Disability, or by
the Executive for Good Reason, the Company shall be entitled to cease paying the
Executive any compensation or benefits under Section 5.2(a)(ii), (iii) and (iv)
above. For purposes of this Agreement, "Competitor" means any
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of the following entities: BEA, the IBM Websphere business unit, Blue Martini,
Broadvision, and Vignette.
(b) Resignation without Good Reason; Termination for
Death or Disability. If the Executive voluntarily terminates his employment with
the Company without Good Reason, or if the Executive's employment with the
Company is terminated by reason of the Executive's death or Disability, then the
Company shall (i) pay the Executive (or his estate, if applicable), in a lump
sum in cash within 30 days after the Date of Termination, the Accrued
Obligations, and (ii) timely pay or provide to the Executive the Other Benefits.
(c) Termination for Cause. If the Company terminates the
Executive's employment with the Company for Cause, then the Company shall (i)
pay the Executive, in a lump sum in cash within 30 days after the Date of
Termination, the sum of (A) the Executive's Base Salary through the Date of
Termination and (B) the amount of any compensation previously deferred by the
Executive, in each case to the extent not previously paid, and (ii) timely pay
or provide to the Executive the Other Benefits.
5.3. Taxes.
(a) In the event that the Company undergoes a "Change in
Ownership or Control" (as defined below), the Company shall, within 30 days
after each date on which the Executive becomes entitled to receive (whether or
not then due) a Contingent Compensation Payment (as defined below) relating to
such Change in Ownership or Control, determine and notify the Executive (with
reasonable detail regarding the basis for its determinations) (i) which of the
payments or benefits due to the Executive (under this Agreement or otherwise)
following such Change in Ownership or Control constitute Contingent Compensation
Payments, (ii) the amount, if any, of the excise tax (the "Excise Tax") payable
pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), by the Executive with respect to such Contingent Compensation Payment
and (iii) the amount of the Gross-Up Payment (as defined below) due to the
Executive with respect to such Contingent Compensation Payment. Within 90 days
after the due date of each Contingent Compensation Payment to the Executive, the
Company shall pay to the Executive, in cash, the Gross-Up Payment with respect
to such Contingent Compensation Payment.
(b) For purposes of this Section 5.3, the following
terms shall have the following respective meanings:
(i) "Change in Ownership or Control" shall mean a
change in the ownership or effective control of the Company or in the ownership
of a substantial portion of the assets of the Company determined in accordance
with Section 280G(b)(2) of the Code.
(ii) "Contingent Compensation Payment" shall mean
any payment (or benefit) in the nature of compensation that is made or made
available (under this Agreement or otherwise) to a "disqualified individual" (as
defined in Section 280G(c) of the Code) and that is contingent (within the
meaning of Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or
Control of the Company.
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(iii) "Gross-Up Payment" shall mean an amount equal
to the sum of (i) the amount of the Excise Tax payable with respect to a
Contingent Compensation Payment and (ii) the amount necessary to pay all
additional taxes imposed on (or economically borne by) the Executive (including
the Excise Taxes, state and federal income taxes and all applicable withholding
taxes) attributable to the receipt of such Gross-Up Payment. For purposes of the
preceding sentence, all taxes attributable to the receipt of the Gross-Up
Payment shall be computed assuming the application of the maximum tax rates
provided by law.
(c) The provisions of this Section 5.3 are intended to
apply to any and all payments or benefits available to the Executive under this
Agreement or any other agreement or plan of the Company under which the
Executive receives Contingent Compensation Payments.
(d) The provisions of this Section 5.3 shall supercede
any provision of the Option Agreements to the contrary, including, but not
limited to, Section 12(a) of each of the Option Agreements.
5.4. Mitigation. The Executive shall not be required to mitigate
the amount of any payment or benefits provided for in this Section 5 by seeking
other employment or otherwise. Further, except as provided in Section
5.2(a)(ii), the amount of any payment or benefits provided for in this Section 5
shall not be reduced by any compensation earned by the Executive as a result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company or otherwise.
6. Settlement of Disputes; Arbitration. All claims by the Executive
for benefits under this Agreement shall be directed to and determined by the
Board and shall be in writing. Any denial by the Board of a claim for benefits
under this Agreement shall be delivered to the Executive in writing and shall
set forth the specific reasons for the denial and the specific provisions of
this Agreement relied upon. The Board shall afford a reasonable opportunity to
the Executive for a review of the decision denying a claim. Any disputes shall
be resolved by final and binding arbitration to be conducted in the Greater
Boston, Massachusetts area pursuant to American Arbitration Association's rules
for the resolution of employment disputes.
7. Successors.
7.1. Successor to Company. The Company shall require any person
or entity that purchases all or substantially all of the assets of the Company
expressly to assume and agree to perform this Agreement to the same extent that
the Company would be required to perform it if no such purchase had taken place.
As used in this Agreement, "Company" shall mean the Company as defined above and
any successor to its business or assets as aforesaid which assumes and agrees to
perform this Agreement, by operation of law or otherwise.
7.2. Successor to Executive. This Agreement 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. If the Executive should die while any amount would still
be payable to the Executive or his family hereunder if the Executive had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance
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with the terms of this Agreement to the executors, personal representatives or
administrators of the Executive's estate.
8. Notice. All notices, instructions and other communications given
hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) prepaid via a reputable
nationwide overnight courier service, in each case addressed to the Company, at
00 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000, and to the Executive at his
home (or to such other address as either the Company or the Executive may have
furnished to the other in writing in accordance herewith). Any such notice,
instruction or communication shall be deemed to have been delivered five
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service. Either party may give any notice,
instruction or other communication hereunder using any other means, but no such
notice, instruction or other communication shall be deemed to have been duly
delivered unless and until it actually is received by the party for whom it is
intended.
9. Miscellaneous.
9.1. Employment by Subsidiary. For purposes of this Agreement,
the Executive's employment with the Company shall not be deemed to have
terminated solely as a result of the Executive continuing to be employed by a
wholly-owned subsidiary of the Company.
9.2. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
9.3. Injunctive Relief. The Company and the Executive agree that
any breach of this Agreement by the Company is likely to cause the Executive
substantial and irrevocable damage and therefore, in the event of any such
breach, in addition to such other remedies which may be available, the Executive
shall have the right to specific performance and injunctive relief.
9.4. Governing Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the internal laws of the
Commonwealth of Massachusetts, without regard to conflicts of law principles.
9.5. Waivers. No waiver by the Executive at any time of any
breach of, or compliance with, any provision of this Agreement to be performed
by the Company shall be deemed a waiver of that or any other provision at any
subsequent time.
9.6. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original but both of which
together shall constitute one and the same instrument.
9.7. Tax Withholding. Any payments provided for hereunder shall
be paid net of any applicable tax withholding required under federal, state or
local law.
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9.8. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes and replaces the Prior Agreement, other than the Option
Agreements set forth in Exhibits A and B of the Prior Agreement which shall
remain in full force and effect (except as specifically modified by this
Agreement), and all other prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto in respect of the
subject matter contained herein; and any prior agreement of the parties hereto
in respect of the subject matter contained herein (other than the Option
Agreements) is hereby terminated and cancelled.
9.9. Amendments. This Agreement may be amended or modified only
by a written instrument executed by both the Company and the Executive.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the Effective Date.
ART TECHNOLOGY GROUP, INC.
By: /s/ Xxxx Xxxxxx
-----------------------------------
Name: Xxxx Xxxxxx
Title: Director
/s/ Xxxxxx Xxxxx
----------------------------------------
Xxxxxx Xxxxx
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