Exhibit 10.4
ASCENTIAL SOFTWARE CORPORATION
AMENDED AND RESTATED CHANGE OF CONTROL AND SEVERANCE AGREEMENT
This Amended and Restated Change of Control and Severance Agreement
(the "Agreement") is made and entered into by and between Xxxxx Xxxxxx (the
"Executive") and Ascential Software Corporation (the "Company"), effective as of
the last date set forth by the signatures of the parties below (the "Effective
Date").
RECITALS
A. 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
(as defined below). The Board of Directors of the Company (the "Board")
recognizes that such consideration, and the possibility that the Executive's
employment could be terminated by the Company for a reason other than for cause,
can be distractions 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 of
the Company or the termination by the Company of the Executive's employment for
a reason other than for cause.
B. 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 with the Company, or a wholly-owned subsidiary of
the Company, as the case may be, and to motivate the Executive to maximize the
value of the Company upon a Change of Control for the benefit of its
stockholders.
C. The Board believes that it is imperative to provide the Executive
with certain benefits upon a Change of Control or upon the termination by the
Company of the Executive's employment for a reason other than cause, thereby
encouraging the Executive to remain with the Company notwithstanding the
possibility of a Change of Control or termination of employment for a reason
other than for cause.
D. The Executive and the Corporation are parties to a Change in
Control and Severance Agreement effective August 16, 2000 (the "Prior
Agreement") and desire to amend and restate the entire Prior Agreement.
Now, therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Executive
hereby agree to amend and restate the Prior Agreement as follows:
1. PRIOR AGREEMENT. The Prior Agreement is hereby amended by
deleting the entirety of the Prior Agreement and restating the Prior Agreement
as follows:
2. TERM OF AGREEMENT. This Agreement shall terminate upon the date
that all obligations of the Company and the Executive with respect to this
Agreement have been satisfied.
3. AT-WILL 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, and may be terminated at any time by either party, with or
without cause.
4. CHANGE OF CONTROL. In the event a Change of Control (as defined
below) occurs within six months following the effective date of options granted
to the Executive to purchase the Company's common stock, and if the Executive is
employed by the Company as of the date of the Change of Control,
the Executive's stock options shall have their vesting accelerated as to two
years' additional vesting. In the event that stock option vesting is accelerated
pursuant to the preceding sentence, the remaining stock options, if any, shall
continue to vest at a monthly rate equal to the total number of shares
originally subject to the option divided by the number of months in the original
vesting schedule. In the event a Change of Control occurs on or after six months
following the effective date of options granted to the Executive to purchase the
Company's common stock, and if the Executive is employed by the Company as of
the date of the Change of Control, the Executive's Stock Options shall have
their vesting accelerated in full so as to become 100% vested. In the event
that: (a) accelerated vesting of stock options occurs pursuant to this Section
4; and (b) the Executive becomes entitled to severance pursuant to Section 6
hereof, the Executive will have a period of twenty seven months from and after
the date of a Non-Cause Termination of the Executive during which to exercise
all such vested options. However, if the Executive becomes employed by a
competitor of the Company: (a) the Executive shall immediately notify the
Company in writing of the name and location of Executive's new employer
("Competitive Employment"); and (b) the extended period in which Executive has
to exercise all vested options described in the preceding sentence will
terminate immediately upon the earlier to occur of written notice by the Company
to the Executive or the actual date upon which the Executive commenced
Competitive Employment.
For the purposes of this Agreement, "Change of Control" shall mean:
(a) the approval by the stockholders of the Company 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) fifty percent (50%) or more 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
(b) any approval by the stockholders of the Company of a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(c) any "person" (as that term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) becoming the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended), directly or indirectly, of securities of the Company
representing 50% or more of the total voting power represented by the Company's
then outstanding voting securities; or
(d) a change in the composition of the Board, as a result of
which less 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 Effective Date; or (b) are elected, or nominated for election, to the
Board with the affirmative votes of at least a majority of those directors whose
election or nomination was not in connection with any transaction described in
subsections (a), (b), or (c) above, or in connection with an actual or
threatened proxy contest relating to the election of directors of the Company.
5. GOLDEN PARACHUTE EXCISE TAXES. Anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined that any payment
or distribution, or any acceleration of vesting of any benefit or award, by the
Company or its affiliated companies to or for the benefit of the Executive,
payable within the meaning of Section 280G of the Internal Revenue Code (the
"Code") (whether paid or payable, distributed or distributable or accelerated or
subject to acceleration pursuant to the terms of this Agreement or otherwise,
but determined without regard to any additional payments required under this
Section 5) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Code, or any interest or penalties are incurred by the Executive
with respect to such excise tax
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(such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") on an amount
such that after payment by the Executive of all taxes imposed upon the Gross-Up
Payment and any interest or penalties imposed with respect to such taxes, the
Executive retains an amount of the Gross-Up Payment equal to the sum of: (a) the
Excise Tax imposed upon the Payments; and (b) the product of any deductions
disallowed because of the inclusion of the Gross-Up Payment in the Executive's
adjusted gross income and the highest applicable marginal rate of federal income
taxation for the calendar year in which the Gross-Up Payment is to be made. For
purposes of determining the amount of the Gross-Up Payment, the Executive shall
be deemed to have: (a) paid federal income taxes at the highest marginal rates
of federal income taxation for the calendar year in which the Gross-Up Payment
is to be made; (b) paid applicable state and local income taxes at the highest
rate of taxation for the calendar year in which the Gross-Up Payment is to be
made, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes; and (c) otherwise
allowable deductions for federal income tax purposes at least equal to those
which would be disallowed because of the inclusion of the Gross-Up Payment in
the Executive's adjusted gross income. The payment of a Gross-Up Payment under
this Section 4 shall in no event be conditioned upon the Executive's termination
of employment or the receipt of severance benefits under this Agreement.
6. SEVERANCE.
(a) If the Executive is employed by the Successor (as defined in
Section 8(a) below), and if within one year after a Change of Control, the
Executive's employment is terminated (as defined below) for any reason other
than for Cause (as defined below) by the Successor or for Good Reason (as
hereinafter defined) by the Executive (hereinafter referred to as a "Non-Cause
Termination Of Employment"), the Company shall pay the Executive: (i) a lump sum
cash severance payment in the amount of (A) two years of the Executive's total
annual compensation in effect at the time of Non-Cause Termination of
Employment, it being understood that the Executive's total annual compensation
consists of base salary plus any then applicable incentive or bonus amount
calculated at 100% of the target bonus for Executive for the then current fiscal
year, or, if greater, (B) $1,000,000 ("Base Severance") plus an additional
amount equal to 100% of the Base Severance; and (ii) continued payment by the
Company on behalf of the Executive, for a period of two years following the
Non-Cause Termination of Employment of Executive, for benefits substantially
similar to those to which the Executive was entitled on the date of the Change
of Control ("Benefits Continuation"). However, if the Executive becomes employed
during the two-year period described in the preceding sentence: (i) the
Executive must immediately notify the Company in writing of the identity of
Executive's new employer; and (ii) the Company's obligation to continue to pay
for Benefits Continuation will terminate as of the date Executive is first so
employed. The severance payment required pursuant to this section will be made
by the Company within ten (10) days following Non-Cause Termination of
Employment and the amount paid will be net of withholding taxes and all usual
payroll deductions.
(b) In the event of Executive's Non-Cause Termination of
Employment: (i) prior to or in the absence of a Change of Control; or (ii) more
than one year following a Change of Control following which the Executive
continues to be employed by the Company, the Company shall: (i) pay the
Executive a lump sum cash severance payment in the amount of (A) two years of
the Executive's base salary in effect at the time of Non-Cause Termination of
Employment, it being understood that base salary shall, in such an instance, not
include any incentive or then applicable target bonus amount, or, if greater,
(B) the Base Severance; and (ii) for a period of two years from the date of the
Non-Cause Termination, pay on behalf of the Executive, for benefits
substantially similar to those to which the Executive was entitled on the date
of the Non-Cause Termination of Employment. Further, in the event of a Non-Cause
Termination of Employment of the Executive, all stock options that were unvested
as of July 1, 2001 shall immediately vest 100%. All other options held by
Executive shall continue to vest for one year after the date of such Non-Cause
Termination under this Section 6.b. and shall be exercisable for a period of
fifteen months from and after such date of Non-Cause Termination under this
Section 6.b.
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However, if the Executive becomes employed during the one-year period described
in the preceding sentence: (i) the Executive must immediately notify the Company
in writing of the identity of Executive's new employer; and (ii) the Company's
obligation to continue to pay for Benefits Continuation will terminate as of the
date Executive is first so employed. The severance payment required pursuant to
this section will be made by the Company within ten (10) days following
Non-Cause Termination of Employment and the amount paid will be net of
withholding taxes and all usual payroll deductions.
(c) If (i) the Executive's employment is terminated for Cause by
either the Company or by a Successor, (ii) the Executive continues to be
employed by the Company following a Change of Control, or (iii) the Executive
voluntarily resigns, other than for Good Reason, the Executive shall not be
entitled to nor shall the Executive receive any severance payment whatsoever.
(d) For purposes of this Agreement, "Cause" shall mean the
occurrence of one or more of the following: (i) Executive's conviction by, or
entry of a plea of guilty or nolo contendre in, a court of competent
jurisdiction for any crime which constitutes a felony in the jurisdiction in
which the conduct alleged to constitute the felony occurred; (ii) Executive's
misappropriation of funds or property or commission of an act of fraud, whether
prior or subsequent to the Effective Date; (iii) gross negligence or
recklessness by the Executive in the scope of the Executive's services to the
Company; (iv) a breach by the Executive of a material provision of this
Agreement which is not cured within 30 days of notice; (v) a willful failure by
the Executive substantially to perform his or her duties and responsibilities as
an Executive after notice of such failure; or (vi) a material breach by the
Executive of the Company's policies or procedures.
(e) GOOD REASON. For purposes of this Agreement, "Good Reason"
for Executive's termination of his employment shall mean the occurrence of any
of the following circumstances without Executive's express written consent:
(i) A substantial adverse alteration in responsibilities or
the conditions of his employment from those in effect
immediately prior to the date of this Agreement;
(ii) a reduction by the Company in Executive's annual base
salary as in effect on the date hereof or ineligibility of
the Executive to participate in the Company's then current
executive bonus plan;
(iii) the Company requiring Executive to be based more than 50
miles from the Company's offices at which he was
principally employed immediately prior to the date of this
Agreement;
(iv) the failure by the Company to continue in effect a health
or disability insurance plan in which Executive
participates immediately prior to the date of this
Agreement unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to
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 his participation relative to
other participants, than existed at the time of the date
of this Agreement;
(v) the failure of the Company to obtain a satisfactory
agreement from any Successor to assume and agree to
perform all obligations of the Company under this
Agreement, as contemplated in Section 8 hereto.
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Executive's right to terminate his employment pursuant to this
Agreement shall not be affected by his incapacity due to physical or mental
illness. Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.
7. ATTORNEY FEES, COSTS AND EXPENSES. The Company promptly shall
reimburse the Executive, on a monthly basis, for the reasonable attorney fees,
costs and expenses incurred by the Executive in connection with any action
brought by Executive to enforce his or her rights under this Agreement,
regardless of the outcome of the action.
8. SUCCESSORS.
(a) 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 ("Successor") 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," except where otherwise noted, shall include any successor to the
Company's business and/or assets which executes and delivers an assumption
agreement pursuant to this Section 8(a), or which becomes bound by the terms of
this Agreement by operation of law.
(b) 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, heirs, distributees, devisees and legatees.
9. MISCELLANEOUS PROVISIONS.
(a) 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 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.
(b) WHOLE AGREEMENT. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof. This Agreement
represents the entire understanding of the Company and the Executive with
respect to the subject matter of this Agreement and the parties agree and
understand that this Agreement is intended by the parties to and hereby does
terminate and supersede all prior similar types of agreements, arrangements and
understandings to which the Executive is a party regarding or relating to the
subject matters of this Agreement, including without limitation any and all
agreements between the Company and Executive relating to any past or future
change of control of the Company. Accordingly, the Executive agrees that he or
she shall not be entitled to any stock option vesting or payments pursuant to
any prior agreement, arrangement or understanding to which the Executive and the
Company or any affiliate thereof is or was a party and that all matters related
to that subject are superceded by this Agreement.
(c) CHOICE OF LAW. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the
Commonwealth of Massachusetts.
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(d) 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.
(e) 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.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, under seal, as of the
day and year set forth below.
ASCENTIAL SOFTWARE CORPORATION
By: /s/ Xxxxx Xxxx
-------------------------------------------------
Xxxxx Xxxx, Director and Chairman of the
Compensation Committee, and
By: /s/ Xxxxx Xxxxxxxxxxx
------------------------------------------------
Xxxxx Xxxxxxxxxxx, Director and Member of the
Compensation Committee
Dated: Effective as of May 1, 2002
EXECUTIVE
/s/ Xxxxx Xxxxxx
-----------------------------------------------------
Xxxxx Xxxxxx
Dated: Effective as of May 1, 2002
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