Exhibit 10.5
MUTUAL RELEASE
This Mutual Release ("Agreement") is made and entered into by and
between Xxxxxxx X. Xxxxxxx, on behalf of himself and his heirs, executors and
administrators or agents thereof (hereinafter referred to as the "Executive")
and MetaSolv Software, Inc., (the "Company"), (hereinafter collectively referred
to as the "Parties"), and is made and entered into with reference to the
following facts:
A. Executive is a founder of the Company and has been a Director of
the Company since its inception; and
B. In January 1996, Executive became employed by the Company in the
capacity of Chief Executive Officer; and
C. On November 2, 1998, Executive resigned from his employment with
the Company and from his position as a Director; and
D. The Company desires to resolve, fully and finally, any and all
claims or disputes that exist or may exist on Executive's behalf against
the Company from the beginning of time to the date of this Agreement.
NOW THEREFORE, in consideration of the covenants and promises
contained herein, the Parties hereto agree as follows:
1. Agreement by the Company. In exchange for Executive's agreement to be
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bound by the terms of this entire Agreement, the Company agrees to provide
Executive with the following:
a. Salary continuation in the amount of Eleven Thousand Six Hundred
Sixty Six dollars and 67/100 ($11,666.67), per month, less statutory
deductions and withholdings, which represents Executive's base salary as of
the Resignation Date (defined below) (hereinafter referred to as "Salary
Continuation"), until the earlier of (i) the end of Executive's Initial
Public Offering lock-up as set forth in paragraph 1.13 of the Investors'
Rights Agreement dated June 2, 1998; (ii) the acquisition of the Company as
defined in paragraph 9(ii) of the Right of First Refusal and Co-Sale
Agreement dated June 2, 1998; (iii) Executive's full-time employment by an
entity other than one that Executive founds or one that obtains
institutional venture financing; or (iv) the expiration of eighteen (18)
months from the effective date of this Agreement. Payments pursuant to
this paragraph shall be made in accordance with the Company's regular
payroll practices and shall begin on the first regular payroll date
following the Effective Date of this Agreement (defined in Section 3
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below). The Company may, at any time and at its sole discretion,
accelerate the Salary Continuation by providing Executive with a lump-sum
payment equal to the unpaid portion of the Salary Continuation (less
statutory deductions and withholdings). Under no circumstances will the
total payment to Executive pursuant to this Section 1.a. exceed Two Hundred
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Ten Thousand dollars and 06/100 ($210,000.06). All checks shall be made
payable to "Xxxxxxx X. Xxxxxxx" and shall be deposited pursuant to the
direct deposit instructions in effect for Executive on his last date of
employment with the Company.
b. A lump-sum payment in the amount of Eighty Thousand dollars
($80,000), less statutory deductions and withholdings, in a check payable
to "Xxxxxxx X. Xxxxxxx," which shall be deposited in the same manner as the
payments identified in Section 1.a above, within three (3) days of the
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Effective Date of this Agreement (defined in Section 3 below).
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PAGE 1 of 8
c. A lump-sum payment in the amount of Eighty Thousand dollars
($80,000) in a check payable to "Xxxxxxx X. Xxxxxxx" on the later of (i)
January 1, 1999; or (ii) Executive's delivery to the Company, Austin
Ventures, and Xxxxx, Xxxx and Xxxxx of a "business audit" of the Company
which Executive will prepare from materials already in his possession, for
which a Form 1099 to Xxxxxxx X. Xxxxxxx for 1999 shall be issued.
d. Continuation of health and welfare benefits for Executive and his
dependents to the same extent that such benefits were maintained during
Executive's employment as CEO for the same duration as Executive's salary
continuation under Section 1.a of this Agreement. The Company may satisfy
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its obligation under this Section by paying Executive's premium for
continuation of health coverage under Federal COBRA for the applicable
period.
e. The Company will permit executive to retain the following property
of the Company currently in Executive's possession: the Gateway 2000
notebook, the Gateway 2000 desktop.
f. The Company hereby expressly waives, releases, acquits and forever
discharges Executive and his executors, assigns, estates and heirs, from
any and all claims, demands, and causes of action which the Company has or
claims to have, whether known or unknown, of whatever nature, which exist
or may exist on the Company's behalf from the beginning of time up to and
including the date of this Agreement. As used in this paragraph, "claims,"
"demands," and "causes of action" include, but are not limited to, claims
based on contract, fraud, stock fraud, defamation, estoppel, equity, tort,
intellectual property, personal injury, spoilation of evidence, public
policy, statute or common law, claims for debts, accounts, compensatory
damages, punitive or exemplary damages.
g. The Company agrees to reimburse Executive for reasonable expenses
including those Executive has incurred in connection with this Agreement
from October 30, 1998 through the Effective Date of this Agreement,
including telephone and travel expenses but excluding attorneys' fees,
provided that Executive delivers receipts and other documentation
evidencing such reimbursable expenses to the Company within forty-five (45)
days of his execution of this Agreement. The expense reimbursement
pursuant to this paragraph shall be deposited in the same manner as the
payments identified in Section 1.a of this Agreement.
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h. The Company agrees to respond to any inquiry regarding Executive's
departure from the Company in a manner that is consistent with the press
release attached hereto as Exhibit A and incorporated herein by this
reference.
i. The Company agrees that, with the exception of former Company
employees, it will not solicit any employee of any non-competitive company
started by Executive after the Effective Date of this Agreement.
2. Agreement by Executive. In consideration for the compensation and
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other consideration provided herein, the receipt and sufficiency of which are
hereby acknowledged, Executive agrees to be bound by the terms of this entire
Agreement, including the following:
a. Termination of Employment and Director Status. Executive
---------------------------------------------
understands and agrees that effective November 2, 1998, his employment with
the Company has been terminated and that he is no longer an Officer or
Director of the Company (hereinafter the "Resignation Date"), and that he
has no authorization to act as an agent of the Company or in any other
capacity at any time in the future.
PAGE 2 of 8
b. Return of Company Property. Executive acknowledges that he has
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returned to the Company all Company files, disks, documents, credit cards,
keys, security cards, and all other property of the Company (with the
exception of those items identified in Section 1.e, which the Company has
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agreed to allow Executive to retain).
c. Release of Claims. Executive hereby expressly waives, releases,
-----------------
acquits and forever discharges the Company and its divisions, subsidiaries,
affiliates, parents, related entities, partners, officers, directors,
shareholders, investors, executives, managers, employees, agents,
attorneys, representatives, successors and assigns (hereinafter
collectively referred to as "Releasees"), from any and all claims, demands,
and causes of action which Executive has or claims to have, whether known
or unknown, of whatever nature, which exist or may exist on Executive's
behalf from the beginning of time up to and including the date of this
Agreement. As used in this paragraph, "claims," "demands," and "causes of
action" include, but are not limited to, claims based on contract, fraud,
stock fraud, defamation, wrongful termination, estoppel, equity, tort,
retaliation, intellectual property, personal injury, spoilation of
evidence, emotional distress, public policy, wage and hour law, statute or
common law, claims for severance pay, vacation pay, debts, accounts,
compensatory damages, punitive or exemplary damages, liquidated damages,
and any and all claims arising under any federal, state, or local statute,
law, or ordinance prohibiting discrimination on account of race, color,
sex, age, disability or national origin, including but not limited to,
Title VII of the Civil Rights Act of 1964, as amended, the Texas Commission
on Human Rights Act, the Age Discrimination in Employment Act, and the
Americans with Disabilities Act.
d. Release of Age Discrimination Claims. Executive understands and
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agrees that this Agreement is intended to and does release any and all
claims he may have against Releasees under the federal Age Discrimination
in Employment Act or any similar state or local statute, law, ordinance or
regulation prohibiting discrimination on the basis of age. In this regard,
Executive understands and agrees as follows:
(1) The terms reflected in this Agreement shall remain
available to Executive for consideration for a period of twenty-
one (21) days from the day he receives this Agreement.
(2) Executive has been advised to consult with an attorney
of his choice prior to signing this Agreement.
(3) Executive shall have the right to revoke this Agreement
for a period of seven (7) days following his execution thereof by
delivering written notice of revocation to the Company through its
agent, Xxx Xxxxxxx and/or Xxxx Xxxxxxxx, on or before the seventh
(7th) day after he has signed this Agreement.
(4) This Agreement shall become effective, enforceable and
irrevocable upon the expiration of seven (7) days following the
date Executive executes and delivers this Agreement to the
Company, provided that Executive does not revoke this Agreement
pursuant to Section 2.d.(3) above.
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e. Payment of Wages and other Compensation. Executive acknowledges
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that he has received payment for all wages, salary, bonuses, vacation pay,
and all other compensation owed by Releasees.
PAGE 3 of 8
f. Non-competition And Non-solicitation.
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(1) In consideration of the compensation provided herein,
following the Resignation Date, Executive will not, directly or
indirectly, participate in the ownership, management, operation,
financing or control of, or be employed by or consult for, or
otherwise render services to any entity identified in Exhibit B-1
to this Agreement and/or to any person, corporation, firm or other
entity which competes in the United States or anywhere in the
world with the Company (hereinafter "Competitor"), as defined
below. Notwithstanding the foregoing, Executive is permitted to
own up to 5% of any class of securities of any corporation that is
traded on a national securities exchange or through Nasdaq.
Executive agrees that the entities identified in Exhibit B-1 are
all of the competitors of the Company known to the Company as of
the Resignation Date and that other competitors will emerge from
time to time. For purposes of this Agreement, Competitor means any
entity which has as its primary business developing software for
telecom carriers that enables order management, network design,
provisioning, trouble management, or work management.
(2) In consideration for the compensation provided herein,
Executive agrees that for a period of eighteen (18) months
following the Resignation Date, Executive will not, directly or
indirectly, participate in the ownership, management, financing or
control of, or be employed by any entity identified in Exhibit B-2
to this Agreement. Nothing contained in this Agreement shall
prevent Executive from performing services for the Companies
identified in Exhibit B-2 as a non-employee independent contractor
as defined in the Internal Revenue Code and IRS Regulations and
from receiving compensation for such services in the form of
options or warrants.
(3) For a period of eighteen (18) months following the
Resignation Date, Executive will not, without the express prior
written consent of the Company, individually or on behalf of any
other person, corporation, firm or other entity, solicit or
encourage any employee of the Company to terminate his or her
employment relationship with the Company.
(4) For a period of eighteen (18) months following the
Resignation Date, Executive will not, directly or indirectly,
individually or on behalf of any person, corporation, firm or
other entity, solicit any customer of the Company on behalf of a
Competitor identified in Exhibit B-1 or B-2 to this Agreement or
as the term Competitor is defined in Section 2.f.(1) of this
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Agreement.
(5) The Company agrees that Executive may start a non-
competitive professional services company which among other
services may offer "business audits" for software companies. It
is also agreed that Executive may use Xxxxx, Xxxx and Xxxxx and
Austin Ventures as customer references.
g. Non-disparagement. Executive agrees that he will not disparage
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or in any way criticize the Company and/or its executives, managers,
employees, shareholders, investors, agents, successors and assigns to any
third party, including but not limited to customers, prospective customers,
business partners, and prospective business partners, at any time in the
future. Nothing in this Agreement is intended to interfere with
Executive's duty to testify truthfully in any legal proceeding.
PAGE 4 of 8
h. Tax Liability. Executive acknowledges and agrees that he is
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personally responsible for the payment of all federal, state and local
taxes that are due, or may be due, for any payments received by Executive
under this Agreement. Executive agrees to indemnify the Company and hold
the Company harmless for any and all taxes, penalties and/or other
assessments that the Company is, or may become, obligated to pay on account
of any payments made to Executive under this Agreement. Nothing in this
paragraph shall release the Company from any liability arising out of its
own errors and omissions.
i. Cooperation. In connection with any and all claims, disputes,
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negotiations, investigations, lawsuits, arbitrations, and/or administrative
proceedings involving the Company, Executive agrees to make himself
available, upon reasonable notice from the Company, to provide information
or documents, provide declarations or statements to the Company, meet with
attorneys or other representatives of the Company, prepare for and give
depositions or testimony, and otherwise cooperate in the investigation,
defense, or prosecution of any or all such claims and other proceedings.
j. Non-disclosure. Executive agrees to execute and to be bound by
--------------
the Company's "Agreement Regarding MetaSolv Software, Inc. Information and
Property and Restriction on Use of Third Party Information" attached hereto
as Exhibit C and incorporated herein by this reference.
k. Restrictions on Transfers of Shares. Executive agrees to sign the
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"Amended and Restated Right of First Refusal and Co-Sale Agreement"
substantially in the form attached hereto as Exhibit D and incorporated
herein by this reference, on behalf of himself and the Xxxxxxx Children
Trust, which provides, in principle, as follows:
(1) Holders of 2% or more of the Company's stock shall not
sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of any of the stock of the Company
during the period beginning on the date that the Company's Board
of Directors, by resolution, chooses an underwriter for its
initial public offering and ending on the date of the closing of
the Company's initial public offering; and
(2) Holders of 2% or more of the Company's stock shall not
sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of any of the stock of the Company
to any prohibited transferee as identified in the attachment to
the "Amended and Restated Right of First Refusal and Co-Sale
Agreement."
It is understood and agreed that Executive will not be
subject to or bound by any agreement pursuant to this Section
that is not signed by all holders of 2% or more of the Company's
stock as of the Effective Date of this Agreement.
l. Indemnification of Executive. It is understood and agreed that
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nothing contained in this Agreement shall add to, delete from, modify,
create or destroy any obligation the Company has or may have to indemnify
Executive in connection with claims arising out of his role as an officer
and director of the Company.
PAGE 5 of 8
m. Adequacy of Consideration. Executive acknowledges that he has no
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contractual or other right or entitlement to the payments and other
consideration the Company has agreed to provide under Section 1 of this
---------
Agreement and that such payments and other consideration represent and
constitute good and valuable consideration for this entire Agreement.
3. Acceptance of Agreement. Executive acknowledges that he received
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this Agreement on October 30, 1998. Executive may accept this Agreement by
executing and delivering this Agreement to the company on or before November 20,
1998. The entire Agreement, including the offer of compensation contained
herein, will automatically expire if Executive does not accept the Agreement in
the manner specified in this section on or before Novmeber 20, 1998. This
Agreement will become effective, enforceable, and irrevocable upon the
expiration of the seven (7) day period following Executive's execution and
delivery of this Agreement to the Company as explained in Section 2.d.(3) above
---------------
(hereinafter the Effective Date").
4. Non-Admission of Liability. The Company and Executive agree that this
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Agreement reflects their mutual desire to resolve potential claims and disputes
without litigation, and is not, nor may it be construed or treated as, an
admission by the Company or Executive of any wrongdoing or liability.
5. Ownership of Claims. The Company and Executive represent and warrant
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that they are the sole and lawful owners of all rights, title and interest in
and to all released matters, claims and demands referred to herein. The Company
and Executive further represent and warrant that there has been no assignment or
any other transfer of any interest in any such matters, claims or demands that
the Company or Executive may have against the other party.
6. Confidentiality. The Company and Executive understand and agree that
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this Agreement, and the matters discussed in negotiating its terms, are entirely
confidential. It is therefore expressly understood and agreed that, subject to
the requirements of law, the Company and Executive will not reveal, discuss,
publish or in any way communicate the terms, amount or fact of this Agreement to
any person, organization or other entity, with the exception of their respective
accountants and legal representatives and Executive's immediate family members.
7. Texas Law Applies. This Agreement, in all respects, shall be
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interpreted, enforced and governed by and under the laws of the State of Texas.
8. Successors And Assigns. It is expressly understood and agreed by the
----------------------
Company and Executive that this Agreement and all of its terms shall be binding,
as applicable, on their respective representatives, heirs, executors,
administrators, successors and assigns.
9. ARBITRATION. Subject to the exceptions set forth below, the Parties
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agree that any and all claims or disputes arising out of this Agreement shall be
resolved through final and binding arbitration, as specified herein. The only
claims or disputes not covered by this Section are disputes related to Sections
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2.f, 2.j, and/or 2.k of this Agreement, which claims or disputes shall not be
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subject to arbitration and will be resolved pursuant to applicable law.
Binding arbitration will be conducted in Dallas, Texas in accordance with
the rules and regulations of the American Arbitration Association (AAA). The
Parties understand and agree that the arbitration shall be instead of any jury
trial and that the arbitrator's decision shall be final and binding to the
fullest extent permitted by law and enforceable by any court having jurisdiction
thereof.
The prevailing party in any arbitration, legal, or equitable action under
this Agreement shall be entitled to recover costs and reasonable attorneys'
fees.
PAGE 6 of 8
10. Consultation with Counsel. Executive acknowledges that he has to
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consulted with legal counsel of his choice prior to execution and delivery of
this Agreement.
11. Entire Agreement.
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a. This Agreement constitutes an integrated, written contract,
expressing the entire agreement between the Parties with respect to the
subject matter hereof. In this regard, Executive represents and warrants
that he is not relying on any promises or representations that do not
appear written herein. Executive further understands and agrees that this
Agreement can be amended or modified only by a written agreement, signed by
all of the Parties hereto.
b. This Agreement renders null and void and supercedes any and all
prior agreements between the Parties with the exception of those agreements
expressly referenced herein, the agreements and policy statements
previously signed by Executive and attached hereto as Exhibit E, any and
all agreements or other documents signed by Executive that relate, in any
way, to the Company's proprietary or confidential information or trade
secrets, Executive's buy-sell agreement, and any other agreements signed by
Executive pertaining to his ownership of stock in the Company and/or
agreements signed by Executive in his capacity as a shareholder of the
Company or Trustee for other shareholders of the Company.
12. Counterparts. This Agreement may be executed in separate counterparts
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and by facsimile, and each such counterpart shall be deemed an original with the
same effect as if all Parties had signed the same document.
13. Headings. The headings in each paragraph herein are for convenience
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of reference only and shall be of no legal effect in the interpretation of the
terms hereof.
14. Voluntary Agreement. Executive understands and agrees that he may be
-------------------
waiving significant legal rights by signing this Agreement, and represents that
he has entered into this Agreement voluntarily, with a full understanding of and
in agreement with all of its terms.
15. Severability.
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a. The Parties acknowledge and agree that each agreement and covenant
set forth herein constitutes a separate agreement independently supported
by good and adequate consideration and that each such agreement shall be
severable from the other provisions of this Agreement and shall survive
this Agreement.
b. The Parties intend Section 2.f of this Agreement to be enforced to
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the fullest extent permitted by law. Accordingly, if a court of competent
jurisdiction determines that the scope and/or operation of Section 2.f is
-----------
too broad to be enforced as written, the Company and Executive intend that
the court should reform such provision to such narrower scope and/or
operation as it determines to be enforceable. If, however, Section 2.f is
-----------
held to be illegal, invalid, or unenforceable under present or future law,
and not subject to reformation, then (i) such provision shall be fully
severable, (ii) this Agreement shall be construed and enforced as if such
provision was never a part of this Agreement, and (iii) the remaining
provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid, or unenforceable provision
or by its severance.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the dates provided below.
PAGE 7 of 8
DATED: November 20, 1998 XXXXXXX X. XXXXXXX
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
DATED: November 20, 1998 THE XXXXXXX CHILDREN TRUST
C/O XXXXXXX X. XXXXXXX, TRUSTEE
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------
Xxxxxxx X. Xxxxxxx
DATED: November 20, 1998 METASOLV SOFTWARE, INC.
By: /s/ Xxxx Xxxxxxxx
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Its: Director
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[SIGNATURE PAGE TO MUTUAL RELEASE]
PAGE 8 of 8
EXHIBIT A
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MetaSolv Announces Milestones Amid Competitive Telephony Boom
PLANO, TX, November 9, 1998 - MetaSolv Software today announces the
achievement of a number of milestones in its emergence as the leading
supplier of operational support systems to telecommunications carriers.
These milestones fall into the categories of management evolution,
financial strength, company growth, and customer successes.
Management Evolution
Xxx Xxxxxxx, MetaSolv's President and co-founder will assume the duties of
Xxxx Xxxxxxx, formerly the company's CEO. Xxxxxxx leaves MetaSolv to
pursue other entrepreneurial opportunities in conjunction with Austin
Ventures, the company's lead investor. "Xxxx and Xxx have grown MetaSolv
more than ten-fold in only two and a half years and have built a terrific
team together," said Xxxx Xxxxxxxx, an Austin Ventures General Partner and
MetaSolv board member. "Xxxx is eager to work with other young companies
again, and we're eager to help him."
"MetaSolv's early growth phase has been very exciting, and I'm planning to
work with other companies facing challenges similar to those we've faced,"
said Xxxxxxx. "When you've been doing this for as long as I have, some
patterns begin to emerge."
Other additions to the senior management team include Xxx Xxxxx, former
Director of Service Management, TeleManagement Forum (TMF) and noted
telecom industry speaker and writer, who joined the company as VP
Consulting; and Xxx Xxxxxx, a software industry veteran who was promoted
to VP Business Services.
Financial Strength
MetaSolv will exit 1998 with its strongest balance sheet ever. The
company recently completed a $10 million expansion financing led by Xxxxx
Xxxx & Xxxxx Venture Partners, a leading venture firm and the backers of
such successful companies as Ciena, Genesys Labs, and Vantive. The
company will close on an additional $15 million bank credit in the fourth
quarter.
Company Growth
MetaSolv will nearly triple revenue in 1998 and will exit the year with
over 300 employees. The company recently broke ground on a 100,000 square
foot facilities addition at its Plano headquarters, and has added
substantial capacity in its McLean VA, Denver, and San Francisco offices.
Customer Successes
MetaSolv has increased its customer base 80% during the first ten months
of 1998. U.S. customers such as Allegiance Telecom, Timer Warner Telecom,
and Qwest Communications International increasingly realize that
operational efficiency is the key to sustaining competitive advantage in
the newly competitive telephony market. International carriers are also
increasingly subject to competitive pressures, and MetaSolv will announce
its first major non-U.S. business in the fourth quarter. The company
continues to enhance its Telecom Business Solution * (TBS*) software and
address the growing importance of data services to its customers. The most
recent software release added the capability to order and provision
broadband services.
About MetaSolv Software, Inc.
MetaSolv Software, Inc., headquartered in Plano, Texas was founded in 1992
to develop and market integrated client/server-based software solutions
for the telecommunications industry. MetaSolv's Telecom Business
Solution(TM) (TBS*) software enables service providers to automatically
manage and synchronize their entire order processing, provisioning and
service assurance cycle from telephony to enhanced services in the local
exchange, long distance, and wireless markets. MetaSolv Software is an
active participant of the Ordering & Billing Forum (OBF) and of the
TeleManagement Forum (TMF). MetaSolv has regional offices in Chicago,
Denver, San Francisco, and McLean VA. MetaSolv's web site is
xxx.xxxxxxxx.xxx, or contact MetaSolv directly at (000) 000-0000.
EXHIBIT B-1
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Archetel
Nightfire
OSI
Bellcore
CSSI
Eftia
Lucent
FreeTel
FirstTel
EXHIBIT B-2
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Xxxxxxx
Xxxxx
Quintesant
DSET
AI Metrix
Beechwood
TCSI
ISR Global
Cisco
