EXHIBIT 10.5
EMPLOYMENT AGREEMENT
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Executive Vice President
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THIS EMPLOYMENT AGREEMENT, is made and entered into as of the 24th day of
September, 1999, by and between TEMPLATE SOFTWARE, INC., a Virginia corporation
(the "Company") and Xxxxxxxx X. Xxxxxxxxxx, XX (the "Executive").
RECITALS
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A. The Company desires to retain Executive to provide the services
hereinafter set forth.
B. Executive is willing to provide such services to the Company on the
terms and conditions hereinafter set forth.
AGREEMENT
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In consideration of the promises and the terms and conditions set forth in
this Agreement, the parties agree as follows:
1. Employment and Term. The Company agrees to employ the Employee and the
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Employee agrees to work for the company, effective as of the date hereof,
subject to the terms and conditions below. This Agreement shall be for a term
of twelve (12) months after the date hereof, provided, that the term of this
Agreement shall automatically extend for one additional month at the end of each
month during the term hereof unless either party provides thirty (30) days prior
written notice to the other of its desire not to automatically extend the term
of this Agreement.
2. Compensation; Benefits. Subject to the terms and conditions of this
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Agreement, the Company shall pay to the Executive a base salary as set forth on
Schedule A, attached hereto and made a part hereof, payable in accordance with
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the Company's regular payroll policies. In addition to this base salary, the
Executive shall be entitled to the benefits and bonuses described on Schedule A,
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subject to the terms and conditions described therein. In addition, the
Executive shall be entitled to receive such other benefits including, but not
limited to, vacation, holidays and sick leave, as the Company generally provides
to its employees holding similar positions as that of the Executive.
Notwithstanding the foregoing, the Company reserves the right to adopt, amend or
discontinue any employee benefit plan or policy in accordance with then-
applicable law.
3. Duties. The Executive shall initially be employed as Executive Vice
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President. The Executive shall diligently and conscientiously devote the
Executive's full time, attention and best efforts to discharge the duties
assigned to the Executive by the Company. The Executive shall perform such
duties as may be assigned to the Executive from time to time by the Company.
4. Right to Contract; Conflict of Interest. The Executive hereby represents
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and warrants to the Company that (i) the Executive has full right and authority
to enter into this Agreement and to perform
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the Executive's obligations hereunder and (ii) the execution and delivery of
this Agreement by the Executive and the performance of the Executive's
obligations hereunder will not conflict with or breach any agreement, order or
decree to which the Executive is a party or by which the Executive is bound.
During the term of this Agreement, the Executive shall not directly or
indirectly consult, advise, be retained or employed by, or in any manner perform
any service with any other business or entity engaged in a competing business to
that of the Company without first obtaining consent in writing from the Company.
5. Transfer by Company. If at any time during the term of this Agreement,
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the Company transfers the Executive to another location, the Company will
reimburse the Executive for all reasonable moving expenses incurred as a result
of such transfer. In the event that the Executive terminates this Agreement
without cause pursuant to Section 9 hereof within one year after any such
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transfer, the Executive shall refund to the Company all amounts paid to the
Executive by the Company as moving expenses (including temporary housing and
incidental expenses) pursuant to this Section 5. The Executive agrees that any
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amounts owing to the Company under this Section 5 may be deducted from any
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salary, bonuses or other amounts owed to the Executive by the Company,
consistent with applicable law.
6. Termination by the Company.
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(a) The Company shall have the right to terminate this Agreement with or
without cause at any time during the term of this Agreement by giving written
notice to the Executive. The termination shall become effective on the date
specified in the notice, which termination date shall not be a date prior to the
date 5 days following the date of the notice of termination itself. In the
event that the Executive is terminated for cause, the Company shall pay the
Executive base salary through the day on which such termination is effective.
In the event that the Executive is terminated without cause, the Company shall
pay to the Executive compensation equal to 6 months salary and bonus prorated
for 6 months. The bonus paid will be for 6 months, paid monthly at a monthly
rate, and calculated by taking the bonus earned for the prior twelve months,
based on the quarterly achievements of the most recent 4 reporting quarters of
the Company. Thus, should termination occur in late February, then the "bonus
year" would be the calendar year of the preceding year. Should termination
occur in late May, then the bonuses for the 2nd, 3rd, and 4th quarter of the
preceding year and the bonus for the 1st quarter of the same year constitute the
"prior twelve" months or stated in the prior paragraph. Benefits (insurance,
etc.) that are in force prior to termination will continue to be carried by the
Company for 6 months or until the Executive begins full time employment with
another organization, whichever occurs first.
(b) For purposes of this Section 6 and Section 8, "cause" shall mean (i)
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a material breach by the Executive of any covenant or condition hereunder; (ii)
a material neglect of duty by the Executive; (iii) the commission by the
Executive of any act or omission constituting gross negligence, dishonesty,
fraud, immoral or disreputable conduct which is, or in the reasonable opinion of
the Company's Board of Directors is likely to be, harmful to the Company or its
reputation; (iv) conviction of, or a plea or nolo contendere by, the Executive
with respect to any crime consisting of a felony; (v) violation by the Executive
of the Company's material policies as set forth in the Company's personnel
handbook, if one has been adopted, or announced by Company management from time
to time, which violation remains uncured thirty (30) days after written notice
to the Executive by the Company regarding such violation has been provided; (vi)
violation of the Company's drug and alcohol policy as set forth in the Company's
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personnel handbook, if one has been adopted, or announced by Company management
from time to time; or (vii) the performance by the Executive of any act or
omission demonstrating an intentional or reckless disregard of the interests of
the Company.
7. Termination by Death or Disability of the Executive.
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(a) In the event of the Executive's death during the term of this
Agreement, all obligations of the parties hereunder shall terminate immediately,
and the Company shall pay to the Executive's beneficiary or estate, the base
salary and other compensation due the Executive through the day on which the
Executive's death shall have occurred.
(b) If the Executive is unable to perform the Executive's duties
hereunder due to mental, physical or other disability for a period of 90
consecutive business days, as determined by the Company, or for 90 business days
in any period of 12 consecutive months, this Agreement may be terminated by the
Company, at its option, by written notice to the Executive, effective on the
termination date specified in such notice, provided such termination date shall
not be a date prior to the date of the notice of termination itself. The Company
shall pay to the Executive compensation equal to 6 months salary and bonus
prorated for 6 months. The bonus paid will be for 6 months, paid monthly at a
monthly rate, and calculated by taking the bonus earned for the prior twelve
months, based on the quarterly achievements of the most recent 4 reporting
quarters of the Company. Thus, should termination occur in late February, then
the "bonus year" would be the calendar year of the preceding year. Should
termination occur in late May, then the bonuses for the 2nd, 3rd, and 4th
quarter of the preceding year and the bonus for the 1st quarter of the same year
constitute the "prior twelve" months or stated in the prior paragraph. Benefits
(insurance, etc.) that are in force prior to termination will continue to be
carried by the Company for 6 months or until the Executive begins full time
employment with another organization, whichever occurs first.
8. Change of Control of the Company and Termination. In the event of a Change
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of Control (as defined below) of the Company, then following the
consummation of such Change of Control and termination by the Company of
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the Executive without cause (as defined in Section 6) within 12 months of
the date of consummation of such Change of Control, all unexercisable
Incentive and Non-Qualified Stock Options granted to the Executive prior to
such date will become immediately exercisable in full upon such
termination. For purposes of this Section 8, "termination by the Company of
the Executive" shall be constituted by: Termination of the Executive by the
Company without cause (as defined in Section 6) within 12 months of the
date of consummation of such Change of Control; Or, at the discretion of
the Executive, shall be constituted by any of the following circumstances:
A reduction by the Company in the Executive's Base Salary as in effect
as of the date hereof or as the same may be increased from time to
time;
The relocation of the Company's principal executive offices to a
location more than 30 miles from the location as of the date hereof or
the company's requiring the Executive to be based anywhere other than
the Company's principal executive offices, except for
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required travel on the Company's business to an extent substantially
consistent with the Executive's present business travel obligations.
The Company and the Executive will promptly enter into amendments to the
appropriate stock option agreements governing the Executive's previously-
granted stock options to reflect these agreements.
For purposes of this Section 8, a Change of Control shall mean any of the
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following:
(a) the merger or consolidation of the Company with or into another
unaffiliated entity, or the merger of another unaffiliated entity into the
company or any subsidiary thereof with the effect that immediately after such
transaction the stockholders of the Company immediately prior to such
transaction hold less than fifty percent (50%) of the total voting power of
all securities generally entitled to vote in the election of directors,
managers or trustees of the entity surviving such merger or consolidation;
(b) the sale, lease or other transfer of all or substantially all of
the Company's assets to an unaffiliated person or group (as such term is used
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) or
the sale or transfer of more than fifty-one percent (51%) of the Company's
then outstanding voting stock (other than in a restructuring transaction
which results in the continuation of the Company's business by an affiliated
entity) to such persons or group; or
(c) the adoption by the stockholders of the Company of a plan relating
to the liquidation or dissolution of the Company.
9. Termination by the Executive.
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(a) The Executive may voluntarily terminate this Agreement at any
time, with or without cause, by giving 30 days written notice to the Company.
Any such termination, if without cause, shall become effective on the date
specified in such notice, provided that the Company may elect to have such
termination become effective on a date after, but not more than 14 days after,
the date of the notice. If such termination is with cause, it shall become
effective on the date 30 days after the date of such notice, provided the
Company has failed to cure the cause specified in the notice.
(b) After the date of any such termination, the Executive shall be
entitled to the base salary due the Executive through the day on which such
termination becomes effective, unless such termination was for cause, in which
case the Executive shall be entitled to receive from the Company compensation
equal to the compensation the Executive would have received had the Company
terminated this Agreement without cause pursuant to Section 6(a).
(c) For purposes of this Section 9, "cause" shall mean a material
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failure by the Company to perform its obligations under this Agreement.
10. Suspension. In the event the Company has reasonable cause to believe
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that there exists cause for termination of this Agreement as defined in Section
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6, immediately upon written notice to the Executive, the Company may but shall
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not be obligated to suspend the Executive, with pay, for a period
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not to exceed four (4) weeks, either as a disciplinary measure or in order to
investigate the Company's belief that such cause exists. No such suspension
shall prevent the Company from thereafter exercising its rights to terminate
this Agreement in accordance with its terms.
11. Non-Competition and Non-Solicitation.
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(a) Non-Competition. The Executive agrees that, during the Executive's
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employment hereunder, and for a period of two (2) months after the later of (i)
the effective date of termination of this Agreement, (ii) the date on which the
Executive's period of compensated severance hereunder expires or (iii) the date
of entry by a court of competent jurisdiction of a final judgment enforcing this
covenant, the Executive will not, in any geographic area where the Company
engages in its Business (as defined below) or maintains sales or service
representatives or employees:
(A) compete with the Company, or any subsidiary or affiliate of the
Company;
(B) interfere with or disrupt, or attempt to interfere with or
disrupt, the relationship, contractual or otherwise, between the Company, or any
subsidiary or affiliate of the Company, and any customer, supplier or employee
of the Company, or any such subsidiary or affiliate;
(b) Non-Solicitation. The Executive agrees that, during the Executive's
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employment hereunder, and for a period of two (2) years after the later of (i)
the effective date of termination of this Agreement, (ii) the date on which the
Executive's period of compensated severance hereunder expires or (iii) the date
of entry by a court of competent jurisdiction of a final judgment enforcing this
covenant, the Executive will not directly solicit any current employee of the
Company to accept employment elsewhere.
(c) The following terms, as used in this Section 11 shall have the
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meanings set forth below:
(A) The Company's "Business" means the development and sale of
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software products intended specifically to facilitate the connection and
integration of multiple application software programs to achieve the sharing of
data and cooperative processing among those programs or the provision of
services related to such software products.
(B) The term "compete" means to engage in competition, directly or
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indirectly, individually or through a family member or other person acting on
the Executive's behalf, as an employee, officer, director, proprietor, partner
or stockholder or other security holder (other than of a corporation listed on a
national securities exchange or the securities of which are regularly traded in
the over-the-counter market, provided that the Executive at no time owns in
excess of 5% of the outstanding securities of such corporation entitled to vote
for the election of directors) of any firm, corporation or entity of any nature
whatsoever.
(C) The term "affiliate" means any person, firm or corporation,
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directly or indirectly through one or more intermediaries, controlling,
controlled by or under common control with the Company.
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(d) The Executive further acknowledges that this Section 11 is an
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independent covenant within this Agreement, and that this covenant shall survive
any termination of Agreement and shall be treated as an independent covenant for
the purposes of enforcement. With respect to this covenant, the Executive
hereby acknowledges receipt of Ten Dollars ($10.00) and other good and valuable
consideration stated herein including the consideration of the Executive's
continued employment by the Company.
(e) The Executive shall, during the term of this Agreement and
thereafter, notify any prospective employer of the terms and conditions of this
Agreement regarding confidentiality, non-disclosure and non-competition.
12. Confidentiality and Non-Disclosure.
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(a) The Executive shall hold in strict confidence and shall not, either
during the term of this Agreement or after the termination hereof, disclose,
directly or indirectly, to any third party, person, firm, corporation or other
entity, irrespective of whether such person or entity is a competitor of the
Company or is engaged in a business similar to that of the Company, any trade
secrets or other proprietary or confidential information of the Company or any
subsidiary or affiliate (as defined in Section 11) of the Company obtained by
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the Executive from or through the Executive's employment hereunder. The
Executive hereby acknowledges and agrees that all proprietary information
referred to in this Section 12 shall be deemed trade secrets of the Company and
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of its subsidiaries and affiliates, as defined in Section 11, and that the
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Executive shall take such steps, undertake such actions and refrain from taking
such other actions, as mandated by the provisions hereof and by the provisions
of the Virginia Uniform Trade Secret Act. Executive further acknowledges that
the Company's products and titles consist of copyrighted material, and Executive
shall exercise the Executive's best efforts to prevent the use of such
copyrighted material by any person or entity which has not prior thereto been
authorized to use such information by the Company.
(b) The Executive further hereby agrees and acknowledges that any
disclosure of any proprietary information prohibited herein, or any breach of
the provisions of Sections 4 or 11 of this Agreement, may result in irreparable
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injury and damage to the Company which will not be adequately compensable in
monetary damages, that the Company will have no adequate remedy at law therefor,
and that the Company may obtain such preliminary, temporary or permanent
mandatory or restraining injunctions, orders or decrees as may be necessary to
protect the Company against, or on account of, any breach by the Executive of
the provisions contained in Sections 4, 11 or 12.
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(c) The Executive further agrees that, upon termination of this
Agreement, whether voluntary or involuntary or with or without cause, the
Executive shall notify any new employer, partner, associate or any other firm or
corporation with whom the Executive shall become associated in any capacity
whatsoever of the provisions of this Section 12, and that the Company may give
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such notice to such firm, corporation or other person.
13. Assignment and Disclosure of Inventions.
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(a) From and after the date the Executive first became employed with the
Company, the Executive hereby agrees to promptly disclose in confidence to the
Company all inventions,
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improvements, designs, original works of authorship, formulas, processes,
compositions of matter, computer software programs, databases, mask works, and
trade secrets ("Inventions"), whether or not patentable, copyrightable or
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protectible as trade secrets, that are made or conceived or first reduced to
practice or created by the Executive, either alone or jointly with others,
during the period of the Executive's employment, whether or not in the course of
the Executive's employment.
(b) The Executive hereby acknowledges that copyrightable works prepared
by the Executive within the scope of the Executive's employment are "works for
hire" under the Copyright Act and that the Company will be considered the author
thereof. The Executive hereby agrees that all Inventions that (a) are developed
using equipment, supplies, facilities or trade secrets of the Company, (b)
result from work performed by the Executive for the Company or (c) relate to the
Company's business or current or anticipated research and development, will be
the sole and exclusive property of the Company and are hereby assigned by the
Executive to the Company.
14. Severability. The Company and the Executive recognize that the laws and
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public policies of the Commonwealth of Virginia are subject to varying
interpretations and change. It is the intention of the Company and of the
Executive that the provisions of this Agreement shall be enforced to the fullest
extent permissible under the laws and public policies of the Commonwealth of
Virginia, but that the unenforceability (to the modification to conform to such
laws or public policies) of any provision or provisions hereof shall not render
unenforceable, or impair, the remainder of this Agreement. Accordingly, if any
provisions of this Agreement shall be determined to be invalid or unenforceable,
either in whole or in part, this Agreement shall be deemed amended to delete or
modify, as necessary, the offending provision or provisions and to alter the
balance of this Agreement in order to render it valid and enforceable.
15. Assignment. Neither the rights nor obligations under this Agreement may
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be assigned by either party, in whole or in part, by operation of law or
otherwise, except that it shall be binding upon and inure to the benefit of any
successor of the Company and its subsidiaries and affiliates, whether by merger,
reorganization or otherwise, or any purchaser of all or substantially all of the
assets of the Company.
16. Notices. Any notice expressly provided for under this Agreement shall
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be in writing, shall be given either manually or by mail and shall be deemed
sufficiently given when actually received by the party to be notified or when
mailed, if mailed by certified or registered mail, postage prepaid, addressed to
such party at their addresses as set forth below. Either party may, by notice
to the other party, given in the manner provided for herein, change their
address for receiving such notices.
(a) If to the Company, to:
Template Software, Inc.
00000 Xxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Chief Executive Officer
with a copy to:
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Xxxxxx Godward LLP
0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esquire
(b) If to the Executive, to
_____________________________
_____________________________
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17. Governing Law. This Agreement shall be executed, construed and
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performed in accordance with the laws of the Commonwealth of Virginia without
reference to conflict of laws principles.
18. Headings. The section headings contained in this Agreement are for
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reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
19. Entire Agreement; Amendments. This Agreement constitutes and embodies
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the entire agreement between the parties in connection with the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings in connection with such subject matter. No covenant or condition
not expressed in this Agreement shall affect or be effective to interpret,
change or restrict this Agreement. In the event of a conflict or inconsistency
between the terms of this Agreement and the Company's policies regarding
employees, the terms of this Agreement shall supersede the conflicting or
inconsistent Company policies. No change, termination or attempted waiver of
any of the provisions of this Agreement shall be binding unless in writing
signed by the Executive and on behalf of the Company by an officer thereunto
duly authorized by the Company's Board of Directors. No modification, waiver,
termination, rescission, discharge or cancellation of this Agreement shall
affect the right of any party to enforce any other provision or to exercise any
right or remedy in the event of any other default.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
TEMPLATE SOFTWARE, INC.
By: /s/ Xxxxxx X. Xxx
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Xxxxxx X. Xxx
Chief Executive Officer
EXECUTIVE:
/s/ Xxxxxxxx X. Xxxxxxxxxx XX
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Xxxxxxxx X. Xxxxxxxxxx, XX
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