1
EXHIBIT 99.A-2
Form 8-K
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), dated as of March 5, 1999,
is by and among TouchStone Software Corporation, a Delaware corporation (the
"Company"), Unicore Software, Inc., a Massachusetts corporation and a
wholly-owned subsidiary of the Company (the "Subsidiary") and Xxxxxx X. Xxxxxx
("Xxxxxx"). This Agreement shall for all purposes be deemed to be effective as
of March 1, 1999 (the "Effective Date"). In consideration of the mutual
covenants and conditions set forth below, the Company, the Subsidiary and Narath
hereby agree as follows:
1. EMPLOYMENT. The Company and the Subsidiary hereby employ Narath and
Narath hereby accepts employment with the Company and the Subsidiary subject to
the covenants and conditions of this Agreement.
2. DUTIES. Narath shall be employed in the capacity of President and
Chief Executive Officer of the Company and President, Treasurer and Clerk of the
Subsidiary. During the term of employment (as defined below), Narath shall, on a
substantially full time basis, use his skills and render services to the best of
his ability in performing such duties as are consistent with his position,
subject to the direction of the Board of Directors of the Company. It is
understood by the parties that Narath may pursue certain business ventures,
provided that such ventures do not substantially interfere with his employment
under this Agreement.
3. TERM. Subject to earlier termination as hereafter provided, this
Agreement shall have an original term of three (3) years commencing on the
Effective Date and shall be automatically extended thereafter for successive
terms of one (1) year each (the "Extended Term"), unless either party provides
notice to the other at least six (6) months prior to the expiration of the
original term or the Extended Term that the Agreement is not to be extended. The
term of this Agreement, as from time to time extended or renewed, is herein
referred to as the "term of employment," the "term of this Agreement" or the
"term hereof".
4. BASE SALARY. During the term of Narath's employment hereunder,
Narath shall be paid a base salary at an annual rate of Two Hundred Thousand
($200,000.00) Dollars for the period from the Effective Date to December 31,
1999, at an annual rate of Two Hundred and Ten Thousand ($210,000.00) Dollars
for the period from January 1, 2000 - December 31, 2000 and at an annual rate of
Two Hundred and Twenty Five Thousand ($225,000.00) Dollars for the period from
January 1, 2001 - December 31, 2001. During the Extended Term, Narath shall be
paid a base salary at an annual rate to be mutually agreed between the Company
and Narath, with such annual rate to be not less than Two Hundred and Twenty
Five Thousand ($225,000.00) Dollars or such higher amount as may be mutually
agreed by the parties. Payments of base salary shall be in equal installments at
the end of such regular payroll periods as are established by the Company, or in
such other installments upon which the parties hereto shall mutually agree.
2
5. INCENTIVE COMPENSATION. In addition to the base salary, Narath shall
be entitled to receive incentive bonus compensation in accordance with the terms
established from time to time by the Board of Directors of the Company and/or
the Subsidiary. In addition to the foregoing, Narath shall be provided with a
bonus equal to the product of (i) the aggregate gross sales, less all returns,
of the Company, Unicore and all of their subsidiaries and affiliates in the
fiscal year ended December 31, 1999, in excess of Six Million ($6,000,000.00)
Dollars; multiplied by (ii) 3.5%. Such bonus shall be paid by the Company to
Narath in cash no later than March 1, 2000. For fiscal years after the year
ended December 31, 1999, the amount of Narath's bonus shall be mutually agreed
upon by Narath and the Board of Directors of the Company.
6. PARTICIPATION IN BENEFIT PLANS. Narath shall be entitled to
participate in, and receive benefits under, all the Company's employee benefit
plans and arrangements as in effect from time to time (including, but not
limited to, participation in any pension, profit sharing, stock option, stock
bonus or employee stock ownership plan adopted by the Company). Such benefit
plans and arrangements shall not be less than any benefit plans and arrangements
which the Subsidiary currently maintains.
7. VACATION DAYS. Narath shall be entitled to twenty (20) vacation
days, which number may be increased from time to time as determined by the
Company to be appropriate for similarly situated senior executives of the
Company and paid holidays in each year as are determined by the Company from
time to time for similarly situated senior executives; provided that the
aggregate annual number of such vacation days and paid holidays shall at no time
fall below the number of days per year to which Narath was entitled with the
Subsidiary immediately prior to the Effective Date.
8. PERQUISITES. The Company shall provide Narath with life, health,
dental, disability and other insurance at a level not less than the level to
which Narath was entitled with the Subsidiary immediately prior to the Effective
Date. The Company shall provide Narath with a new motor vehicle every two (2)
years, such motor vehicle to be selected by Narath and to be substantially
similar to the motor vehicle to which Narath was entitled with the Subsidiary
immediately prior to the Effective Date, and the Company shall pay to, or for
the benefit of, Narath all motor vehicle expenses, any applicable loan or lease
payments, customary insurance, gas, taxes, maintenance and any other costs
related thereto.
9. EXPENSES. Narath shall receive prompt reimbursement for all
reasonable travel, entertainment and business-related expenses in connection
with his employment hereunder, in accordance with the reasonable policies of the
Board of Directors of the Company, including, but not limited to, the cost of
all telephone and telephone-related expenses incurred at his personal residence
in respect of business matters.
10. TRAVEL/RELOCATION. Narath shall not be required to travel in
connection with his employment hereunder to any extent materially greater than
the normal and customary travel incurred by him with the Subsidiary during the
one (1) year period of time immediately prior to the Effective Date. The Company
shall not locate or relocate the Company's offices
2
3
at which Narath is principally employed to a location more than 25 miles from
the Subsidiary's offices in North Andover, Massachusetts and the Company shall
not require Narath to be based anywhere other than the Subsidiary's offices at
such location.
11. DIRECTOR. During the term of this Agreement, the Company agrees to
propose to the stockholders of the Company at each Annual Meeting of such
shareholders during the term hereof the election or re-election of Narath as a
member of the Board of Directors of the Company. During the term of this
Agreement, the Company agrees to vote its shares of the Subsidiary in favor of
the election of Narath as a member of the Board of Directors of the Subsidiary.
During the period in which Narath is a director of the Company or the
Subsidiary, and for a period of three (3) years thereafter, the Company shall
maintain directors and officers' liability insurance coverage for the Company
and the Subsidiary in an amount not less than the coverage amount currently in
force.
12. TERMINATION OF EMPLOYMENT. a) During the term of this Agreement,
the Company may terminate Narath's employment with the Company only for the
following reasons:
1. Upon the death of Narath.
2. If Narath is (a) permanently disabled as defined and
determined under any disability insurance policy carried
by the Company covering Narath or (if no such policy is
then in place) if Narath is unable to perform his duties
effectively for reasons such as mental illness, injury,
physical illness or disability and such inability has
continued for a period in excess of six (6) months, as
evidenced by a written statement of Narath's physician, or
(b) deemed incapacitated by a court of competent
jurisdiction in a final ruling.
3. As a result of any tender or exchange offer, merger,
consolidation or other business combination, sale of
assets or contested election, or any combination of the
foregoing transactions: (a) the persons who were directors
of the Company before such transaction shall cease to
constitute a majority of the Board of Directors of the
Company (or of any successor entity), (b) the Company is
not the surviving corporation in the transaction, or (c)
the stockholders of the Company immediately prior to such
transaction do not hold immediately after such transaction
a majority in the aggregate of the outstanding common
shares of the surviving entity.
4. The sale or disposition of all or substantially all of the
assets of the Company in one transaction or in a series of
transactions.
5. The liquidation or dissolution of the Company.
6. The willful and continued failure by Narath to
substantially perform his duties with the Company (other
than failure resulting from the incapacity of Narath due
to physical or mental illness) after a written demand for
substantial performance is delivered to Narath by the
Company which demand specifically identifies the manner in
which the Company believes that Narath has not
substantially performed Narath's duties and provided that
3
4
Narath fails to cure such performance within thirty (30)
days following said written demand.
7. The willful and intentional engagement by Narath in
conduct which is demonstrably and materially injurious to
the Company or the Subsidiary, including material unlawful
conduct, material and conscious falsification or
unauthorized disclosure of important records, embezzlement
or unauthorized conversion of property.
8. By the Company for any reason by giving Narath thirty (30)
days written notice specifying the date as of which his
termination is to become effective.
b) During the term of this Agreement, Narath may terminate his
employment with the Company at any time for Good Reason. For purposes of this
Agreement the term "Good Reason" shall mean: (i) the assignment to Narath
without his consent of any duty which is inconsistent in any material respect
with Narath's position, authority, duties or responsibilities as specified in
Section 2 above; or (ii) a material breach by the Company of the terms of this
Agreement which breach is not cured within thirty (30) days after written notice
from Narath.
c) In addition to a termination for Good Reason, during the term of
this Agreement, Narath may terminate his employment with the Company for any
reason by giving thirty (30) days written notice to the Company specifying the
date as of which his termination is to become effective. Upon voluntary
termination by Narath of his employment pursuant to this Section 12(c), the
Company shall have no further obligation to Narath under this Agreement except
to distribute to Narath his base salary due pursuant to Section 4 hereof and
accrued vacation pay and expenses up to the date of termination, together with
any bonus accrued to Narath as of the date of termination. This Section 12(c)
shall not apply to a termination by Narath for Good Reason, which shall be
governed by the terms of Section 12(b) above and Section 13 below.
13. EFFECT OF TERMINATION.
a) Upon the occurrence of any event listed in Section 12(a)(3) or
12(a)(4) (a "Change in Control") which has not been approved by Narath in his
capacity as a director of the Company, and the termination of this Agreement at
any time within Twelve (12) months of the Change in Control, including, without
limitation, any termination by Narath for Good Reason, the Company, upon such
termination, shall make a lump sum cash payment to Narath equal to the sum of
(collectively, the "Change in Control Payment"): (i) 200% of the annual base
salary payable in cash or its equivalent, or agreed to be paid in lieu of cash
compensation to Narath at the time of termination of Narath's employment; plus
(ii) 200% of the amount of any bonuses paid to, or earned by, Narath during the
previous calendar year; plus (iii) a gross-up payment in the amount of all
deductions for all federal, state and local income taxes, excise tax and FICA
and Medicare withholding taxes such that the net payment to Narath shall equal
the sum of i and ii above. The Company shall continue to provide to Narath, at
no charge, for a period of eighteen (18) months after the date of termination,
Narath's then-existing coverage under the Company's health, dental, life and
disability insurance plans or, if continued coverage under such plans cannot be
provided, substantially equivalent coverage under
4
5
alternative arrangements. In the event that the benefits payable to Narath under
this Section are subject to the 20% excise tax under Section 4999 of the
Internal Revenue Code of 1986, as amended, the Company shall pay to Narath an
additional payment in the amount of all deductions for all federal, state and
local income taxes, excise tax and FICA and Medicare withholding taxes
attributable to the excise tax, such that the net payment to Narath shall equal
the Change in Control Payment.
b) Upon the occurrence of a Change in Control which has been approved
by Narath in his capacity as a director of the Company, Narath shall
nevertheless continue to be entitled to terminate his employment for Good
Reason, in which case the provisions of Section 13(c) below shall apply.
c) Upon termination of Narath's employment pursuant to Sections
12(a)(1), 12(a)(2), 12(a)(5), 12(a)(8) or 12(b) hereof, the Company shall make a
lump sum cash payment to Narath equal to the sum of: (a) one year's base salary
payable in cash or its equivalent, or agreed to be paid in lieu of cash
compensation to Narath at the time of Narath's termination of employment; plus
(b) the amount of any bonuses paid to, or earned by, Narath during the previous
calendar year. The Company shall continue to provide to Narath, at no charge,
for a period of eighteen (18) months after the date of termination, Narath's
then-existing coverage under the Company's health, dental, life and disability
insurance plans or, if continued coverage under such plans cannot be provided,
substantially equivalent coverage under alternative arrangements.
Upon termination of Narath's employment pursuant to Section 12(a)(6) or
12(a)(7), the Company shall have no further obligation to Narath under this
Agreement except to deliver to Narath his base salary due pursuant to Section 4
and accrued vacation pay and expenses up to the date of termination, together
with any bonus accrued to Narath as of the date of termination.
14. WITHHOLDING. Subject to the terms of Section 13 hereof, all
payments made by the Company under this Agreement shall be reduced by any tax or
other amounts required to be withheld by the Company under applicable law.
15. COMPETITIVE EMPLOYMENT. For a period of one (1) year after the date
of the termination of his employment, Narath shall not engage in Directly
Competitive Employment (as hereinafter defined). For purposes of this Agreement,
"Directly Competitive Employment" shall mean employment with those employers who
have been individually and specifically determined by the Company in a written
notice given to Narath by the Company, at or within five (5) days of Narath's
termination, to offer directly competitive employment with respect to Narath's
former employment with the Company. In making its determination under this
Section, the Company shall determine that Narath's knowledge of such matters as
the Company's particular methods, policies, customers, suppliers, personnel or
plans, as distinguished from the skills, experience and services of Narath in
general, would materially enhance Narath's new employer. For purposes of this
Agreement, the Company shall identify not more than five (5) persons, firms, or
corporations which would constitute Directly
5
6
Competitive Employment. Narath believes that the restrictions in this Section
are reasonable and they will not prevent Narath from pursuing his livelihood.
However, should a court or tribunal find that the definition of Directly
Competitive Employment is unreasonable, then Narath recognizes that the court
shall interpret and enforce the definition to the maximum lawful extent.
16. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Narath shall protect,
safeguard, and keep secret business, technical and trade information that has
been discovered or accumulated by or for the Company (the "Confidential
Information"), except as otherwise authorized by the Company in writing and as
is required in the performance of his duties pursuant to this Agreement, during
Narath's employment and thereafter. For purposes of this Agreement, the term
"Confidential Information" shall not include information that Narath acquires
from parties other than the Company, or to any information, matter or thing that
is in the public domain or has been disclosed to others by the Company or its
subsidiaries, employees or agents. Narath shall also use the Confidential
Information only for the Company's benefit and only at the Company's direction.
Narath shall not, and shall not allow another to, publish or disclose the
Confidential Information to any third party or use it for any other purpose,
other than as required pursuant to court order, subpoena in a governmental
proceeding, arbitration or other process of law. Narath understands that such
Confidential Information includes, but is not limited to, trade secrets,
business or financial information (including markets, sales, profits, pricing,
and customer lists), plans or projections for future development, ideas,
technical data or other information which have been kept secret or confidential
by the Company, regardless of whether the Confidential Information is merely
remembered or embodied in a tangible medium, developed in whole or part by
Narath, or whether it was provided to Narath. Immediately upon termination of
employment for any reason, Narath shall return to the Company all records,
files, computer disks, stored computer data or other tangible or electronic
media containing such Confidential Information, including all copies.
17. AUTHORIZATION AND EXECUTION. The Company hereby represents and
warrants that the execution and delivery of the Agreement by the Company has
been authorized by all necessary corporate action of the Company, including the
unanimous consent of the Board of Directors (excluding Narath), and the
Agreement constitutes a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, except to the extent limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by general equitable principles.
18. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes any
and all prior agreements, understandings and communications between the parties,
oral or written, with respect to such subject matter.
19. MODIFICATION AND TERMINATION. Any waiver, termination, alteration,
amendment or modification of any provision of this Agreement shall not be valid
unless in writing signed by the party against whom enforcement is sought.
6
7
20. SEVERABILITY. Each term and provision of this Agreement is intended
to be enforced to the maximum extent permitted by applicable law. If any term or
provision of this Agreement, or the applicability thereof to any person or
circumstances, shall to any extent be invalid or unenforceable, the remainder of
this Agreement, or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and shall continue in full force and effect.
21. NOTICE. All notices and other communications required or permitted
under this Agreement shall be in writing and shall be deemed received and
effective upon the earlier of (i) hand delivery to the recipient, (ii) two (2)
days after posting by air courier, or (iii) five (5) days after posting by
certified or registered mail, postage prepaid, return receipt requested, or (iv)
when initially transmitted by facsimile transmission, if such notice is
concurrently sent by traceable mail:
(i) If to the Company or the Subsidiary:
TouchStone Software Corporation
0000 Xxxx Xxxxxx
Xxxxxxxxxx Xxxxx, XX 00000
Attention: Xxx Xxxx
(ii) If to Narath:
Xxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000
With a copy to:
Xxxx X. Xxxxx, Esq.
Xxxxxx, Xxxxxxxx & Branch, P.A.
00 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
or to such other person or address as either of the parties shall furnish in
writing to the other party from time to time.
22. CHOICE OF LAW. This Agreement shall be governed for all purposes by
the laws of the State of California, to the jurisdiction of whose courts the
parties hereto submit.
23. ATTORNEYS' FEES. In the event of litigation arising out of or in
connection with this Agreement, the prevailing party shall be entitled to
recover from the other party all of its attorneys' fees and other expenses
incurred in connection with such litigation.
7
8
24. SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
shall inure to the benefit of and shall be binding upon the heirs, personal
representatives, successors and assigns of the parties and no signature or other
indication of assent by any such person shall be required as a prerequisite to
enforceability; provided, however, that Narath's obligations to the Company are
personal to Narath and Narath acknowledges that Narath may not assign them.
25. HEADINGS AND GENDER. The headings of the Sections of this Agreement
have been included for convenience of reference purposes only and shall in no
way be interpreted to restrict or modify the terms hereof. The use of pronouns
of any gender herein shall include pronouns of all other genders, as applicable.
26. COUNTERPARTS. This Agreement may be signed in one or more
counterparts, each of which may be termed an original, but all of which together
shall constitute one Agreement.
IN WITNESS WHEREOF, the parties have executed or caused to be executed
this Agreement as of the date first above written.
TOUCHSTONE SOFTWARE CORPORATION
By:
------------------------------ ------------------------------
Witness Name:
Title: Chairman of the Board
of Directors
UNICORE SOFTWARE, INC.
By:
------------------------------ ------------------------------
Witness Name:
Title: Director
------------------------------ ---------------------------------
Witness Xxxxxx X. Xxxxxx
8
