EMPLOYMENT AGREEMENT BETWEEN AFTERSOFT GROUP, INC. And CHARLES TRAPP (Executive)
BETWEEN
AFTERSOFT
GROUP, INC.
And
XXXXXXX
XXXXX
(Executive)
THIS
EMPLOYMENT AGREEMENT
(this
“Agreement”), dated as of December 1, 2008 (the “Effective Date”) is entered
into by and between Aftersoft Group, Inc., a Delaware corporation (the
“Company”), and Xxxxxxx Xxxxx, an individual with a physical address at 0000
Xxxxxxxx Xxxx, Xxxxxxxxxxx, XX 00000 (the “Executive”) (collectively, the
“Parties,” individually, a “Party”).
W
I T N E
S S E T H:
WHEREAS,
the Board of Directors of the Company (the “Board”) has requested and the
Executive has agreed to provide services to the Company as Executive Vice
President and Chief Financial Officer in order to continue his efforts on
behalf
of the Company; and
WHEREAS,
the Board has determined that it is in the best interest of the Company,
its
affiliates, and its stockholders to assure that the Company will have the
continued dedication of the Executive, notwithstanding the possibility, threat,
or occurrence of a Change of Control (as defined Article Seven herein); and
WHEREAS,
the Board has determined that it is in the best interests of the Company
and its
stockholders to indemnify the Executive for claims for damages arising out
of or
relating to the performance of such services to the Company in accordance
with
the terms and conditions set forth in this Agreement and pursuant to Delaware
law; and
WHEREAS,
as
an
inducement to serve and in consideration for such services, the Company has
agreed to indemnify the Executive for claims for damages
arising out of or relating to the performance of such services to the Company
in
accordance with the terms and conditions set forth in a separate agreement,
which indemnification agreement is attached as an exhibit hereto and is
incorporated herein by reference; and
WHEREAS,
in order to accomplish these objectives and establish the rights, duties
and
obligations of the Parties, which shall be generally stated herein and which
may
be more fully stated in other agreements between the Parties, including
equity-based agreements, indemnity agreements, and other employment or incentive
related agreements as the Company or the Board may adopt from time to time,
the
Board has caused the Company to enter into this Agreement;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements set forth herein, the Parties, intending to be legally bound,
hereby
agree as follows:
ARTICLE
ONE
DEFINITIONS
1. Definitions.
As used in this Agreement:
1.1 The
term
“Accrued Obligations,” when used in the case of the Executive’s death or
disability shall mean the sum of
(1) the that portion Executive’s Base Salary that was not previously paid
to the Executive from the last payment date through the Date of Termination,
and
(2) any Severance Benefit due.
1.2 The
term
“Automatic Extension” shall have the meaning set forth in Section 2.2
herein.
1.3 The
term
“Base Salary” shall have the meaning set forth in Section 3.1
herein.
1.4 The
term
“Board” shall have the meaning set forth in the recitals.
1.5 The
term
“Cause” shall have the meaning set forth in Section 4.3 herein.
1.6 The
term
“Common Stock” shall mean the Common Stock, par value $0.0001, of the
Company.
1.7 The
term
“Compensation Committee” shall mean the Compensation Committee of the
Company.
1.8 The
term
“Corporate Documents” shall mean the Company’s Certificate of Incorporation, as
amended and/or its Bylaws, as amended.
1.9 The
term
“Effective Date” shall have the meaning set forth in the preamble.
1.10 The
term
“Good Reason” shall have the meaning set forth in Section 4.4
herein.
1.11 The
term
“Initial Term” shall have the meaning set forth in Section 2.2
herein.
1.12 The
term
“Severance Benefit” shall have the meaning set forth in Section 4.8(a)(i)
herein.
1.13 The
term
“Without Cause” shall have the meaning set forth in Section 4.3
herein.
1.14 The
term
“Without Good Reason” shall have the meaning set forth in Section 4.5
herein.
ARTICLE
TWO
POSITION
& DUTIES
2. Employment.
2.1 Title.
The
Executive shall serve as the Executive Vice President and Chief Financial
Officer of the Company and agrees to perform services for the Company and
such
other affiliates of the Company, as described in Section 3 herein.
2.2 Term.
The
Executive’s employment shall be for an initial term of one (1) year (“Initial
Term”), commencing on the Effective Date. The Executive’s employment shall be
automatically extended on the day after the first year anniversary of the
Effective Date (“Automatic Extension”), and on each anniversary date thereof,
for additional one (1) year periods unless, with respect to any such Automatic
Extension, Executive’s employment is terminated by either party during the
60-day period prior to such anniversary date as provided in Article
Four.
2.3 Duties
and Responsibilities.
The
Executive shall report to the Board and in his capacity as an officer of
the
Company shall perform such duties and services as may be appropriate and
as are
assigned to him by the Board. During the term of this Agreement Executive
shall,
subject to the direction of the Board of the Company, oversee and direct
the
operations of the Company, and shall perform such duties as are customarily
performed by the Executive Vice President and Chief Financial Officer of
a
company such as the Company or as are otherwise delegated to him from time
to
time by the Board.
2.4 Performance
of Duties.
During
the term of the Agreement, except as otherwise approved by the Board or as
provided below, the Executive agrees to devote his full business time, effort,
skill and attention to the affairs of the Company and its subsidiaries, will
use
his best efforts to promote the interests of the Company, and will discharge
his
responsibilities in a diligent and faithful manner, consistent with sound
business practices. The foregoing shall not, however, preclude Executive
from
devoting reasonable time, attention and energy in connection with the following
activities, provided that such activities do not materially interfere with
the
performance of his duties and services hereunder:
(a) serving
as a director or a member of a committee of any company or organization,
if
serving in such capacity does not involve any conflict with the business
of the
Company or any subsidiary and such other company or organization is not in
competition, in any manner whatsoever, with the business of the Company or
any
of its subsidiaries;
(b) fulfilling
speaking engagements;
(c) engaging
in charitable and community activities;
(d) managing
his personal business and investments; and
(e) any
other
activity approved of by the Board. For purposes of this Agreement, any activity
specifically listed on Schedule
A
shall be
considered as having been approved by the Board.
2.5 Representations
and Warranties of the Executive with Respect to Conflicts, Past Employers
and
Corporate Opportunities.
The
Executive represents and warrants that:
(a) his
employment by the Company will not conflict with any obligations which he
has to
any other person, firm or entity; and
(b) he
will
not, without disclosure to and approval of the Board, directly or indirectly,
assist or have an active interest in (whether as a principal, stockholder,
lender, employee, officer, director, partner, venturer, consultant or otherwise)
in any person, firm, partnership, association, corporation or business
organization, entity or enterprise that competes with or is engaged in a
business which is substantially similar to the business of the Company;
provided,
however,
that
ownership of not more than two percent (2%) of the outstanding securities
of any
class of any publicly held corporation shall not be deemed a violation of
this
Section 2.6; provided, further, that any investment specifically listed on
Schedule A shall not be deemed a violation of this Section 2.6.
2.6 Activities
and Interests with Companies Doing Business with the Company.
In
addition to those activities and interests of Executive disclosed on
Schedule
A
attached
hereto, Executive shall promptly disclose to the Board, in accordance with
the
Company’s policies, full information concerning any interests, direct or
indirect, he holds (whether as a principal, stockholder, lender, executive,
director, officer, partner, venturer, consultant or otherwise) in any business
which, as reasonably known to Executive, purchases or provides services or
products to, the Company or any of its subsidiaries, provided that the Executive
need not disclose any such interest resulting from ownership of not more
than
two (2%) of the outstanding securities of any class of any publicly held
corporation.
2.7 Other
Business Opportunities.
Nothing
in this Agreement shall be deemed to preclude the Executive from participating
in other business opportunities if and to the extent that: (a) such business
opportunities are not directly competitive with, similar to the business
of the
Company, or would otherwise be deemed to constitute an opportunity appropriate
for the Company; (b) the Executive’s activities with respect to such
opportunities do not have a material adverse effect on the performance of
the
Executive’s duties hereunder, and (c) the Executive’s activities with respect to
such opportunity have been fully disclosed in writing to the Board.
2.8 Reporting
Location.
For
purposes of this Agreement, the Executive’s reporting location shall be
[Allentown, Pennsylvania], which shall include the metropolitan area within
a
40-mile radius from the Company’s current office; provided, however, that it is
understood and agreed that Executive’s responsibilities include frequent travel
to the United Kingdom with respect to the execution of his duties and
responsibilities with respect to the Company’s UK operations.
ARTICLE
THREE
COMPENSATION
3. Compensation.
3.1 Base
Salary.
(a) Executive
shall receive an initial annual base salary of two hundred and twenty thousand
dollars (US$220,000.00), payable bi-monthly in arrears (the “Base Salary”) and
subject to all applicable withholding requirements. The Base Salary shall
be
reviewed by the Board annually for adequacy.
3.2 Annual
Incentive.
Executive will be eligible to receive annual cash incentives payable for
the
achievement of performance goals established by the Compensation Committee;
provided,
however,
that no
covenants in any then-existing debt facility or any then-outstanding debt
issuance are or would be violated by payment of such Annual Incentive, if
paid
in cash. An Annual Incentive payment may be made in cash if such existing
covenants have been specifically and explicitly waived in writing by any
then-lender or investor; provided,
however,
that no
Annual Incentive can be paid if the Company would be required to pay for
such a
waiver. Executive will be entitled to an Annual Incentive provided the following
metrics, as applied to targets established by the Compensation Committee
or
independent directors (defined pursuant to NASDAQ rules and
regulations):
In
the event the Company’s results amount to less
than
80%
of the established target(s), the Executive will be entitled to no cash
bonus.
In
the event the Company’s results are
equal to
80%
of the established target(s), the Executive will be entitled to a cash bonus
of
50% of his Base Salary.
In
the event the Company’s results are
equal to
100%
of the established target(s), the Executive will be entitled to a cash bonus
of
100% of his Base Salary.
In
the event the Company’s results are
equal to or better than
120%
of the established target(s), the Executive will be entitled to a cash bonus
of
150% of his Base Salary.
Results
between the established parameters described herein will be
interpolated.
3.3
The
actual earned Annual Incentive, if any, payable to Executive for any performance
period will depend upon the extent to which the applicable performance goal(s)
specified by the Compensation Committee are achieved and will be decreased
or
increased for under- or over- performance. Except as specifically provided
herein, Executive’s Annual Incentive will be subject to the terms and conditions
of a formal bonus plan that may be adopted by the Compensation Committee
from
time to time; provided, that if there is no formal bonus plan that has been
established by the Company, the Executive’s Annual Incentives shall be establish
each year by the Compensation Committee. The Compensation Committee has
established the following targets for purposes of the fiscal year ended June
30,
2009, and has authorized the following payout in the event that the lender’s
covenants have not been waived as provided in Section 3.2
herein:
An
organic EBITDA target of $3.25 million, which is $250,000 above guidance
previously given to the Compensation Committee, shall entitle a payout to
an
executive pool of $250,000; provided, that cash of at least $50,000 above
a
lender’s covenants shall remain in the Company at all times net of such payout.
Assuming that there is sufficient cash of $50,000 as provided for herein
and
$250,000 is available for such a pool, Executive shall be entitled to $60,000
of
such bonus pool.
In
addition, for each organic EBITDA dollar ($1.00) over the organic EBITDA
target
provided for above, an additional pool 10% of all such additional organic
EBITDA
achieved over the $3.25 million target shall be established. Executive shall
be
entitled to 24% of such additional bonus pool.
3.4 Long
Term Incentives.
(i) Long-Term
Ongoing Performance Equity Incentive.
Executive will be eligible to receive long-term performance equity incentives
at
a level and on conditions as the Compensation Committee shall establish.
Any
long-term incentive will be subject to terms and conditions of the Company’s
2007 Stock Incentive Plan (the “LTIP”), or any successor thereto, or any other
equity-based compensation plan that may be established by the Committee and
approved by the shareholders. In addition, any long-term incentive will be
subject to the Committee’s standard terms and conditions for the applicable type
of award, including vesting criteria such as continued service or performance
objectives. The Committee has established criteria for the first grant to
Executive under the LTIP, which criteria shall be based on earnings per share
as
computed according US GAAP (“EPS”) and return on invested capital (“ROIC”),
which calculation shall be done in accordance with the calculation set forth
in
Schedule
B.
The
initial criteria are:
(1) EPS
targets of $0.01 for FY09, $0.02 for FY10, and $0.04 for FY11. The Executive
shall be awarded 300,000 performance share units as a base objective, with
30%
of the award vesting in the first year of the grant, provided that the base
target is met, 30% of the award vesting in the second year of the grant,
provided that the base target is met, and 40% of the award shall vest in
the
third and final year of the grant provided that the base target is
met.
(2) ROIC
targets of 3.50% for FY09, 8.00% for FY10, and 13.00% for FY11. The Executive
shall be awarded 300,000 performance share units as a base objective, with
30%
of the award vesting in the first year of the grant, provided that the base
target is met, 30% of the award vesting in the second year of the grant,
provided that the base target is met, and 40% of the award shall vest in
the
third and final year of the grant provided that the base target is
met.
(3) The
following metrics have been established for purposes of the vesting of the
2008
awards described in Section 3.4(i)(1) and Section 3.4(i)(2) above:
In
the event the Company’s results amount to less
than
80%
of the established target(s), none of the awards will vest.
In
the event the Company’s results are
equal to
80%
of the established target(s), 50% of the award will vest.
In
the event the Company’s results are
equal to
100%
of the established target(s), 100% of the award will vest.
In
the event the Company’s results are
equal to or better than
120%
of the established target(s), 150% of the award will vest.
Results
between the established parameters described herein will be
interpolated.
(ii) Stock
Options.
Executive will be granted 100,000 options as part of his equity compensation
component. The options will have a maximum term of ten (10) years. The options
will vest ratably over a three-year period. Under the first year’s grant, 33,333
options will have a strike price of $0.75 per share, 33,333 options will
have a
strike price of $1.00 per share, and the final tranche of 33,334 options
will
have a strike price of $1.25 per share. The Compensation Committee shall
consider the strike price of future awards of stock options to the Executive
from time to time in connection with its annual assessment of the Executive’s
compensation.
3.5 Participation
In Benefit Plans.
(a) Retirement
Plans.
Executive shall be entitled to participate, without any waiting or eligibility
periods, in all qualified retirement plans provided to other executive officers
and other key employees.
(b) Life
Insurance.
The
Company will purchase life insurance on the life of Executive in an amount
not
less than $1,500,000, the benefits of which will be payable one-half to the
Executive’s beneficiary and one-half to the Company. The Executive’s
“beneficiary” is the person or persons (who may be designated concurrently,
successively or contingently) designated by the Executive in his last effective
writing filed with the Company prior to his death, or if the Executive shall
have failed to make an effective designation, the Executive’s beneficiary is his
spouse, if the Executive is married and his spouse is living at the time
of each
payment, and otherwise his surviving children. The Executive shall assist
the
Company in procuring such insurance by submitting to such examinations and
by
signing such applications and other instruments as may be reasonable and
as may
be required by the insurance carriers to which application is made for any
such
insurance. The Executive represents that, to the best of his knowledge, he
is
currently insurable at standard premium rates for life insurance
policies.
(c)
Employee Benefit Plans and Insurance.
The
Executive shall have the right to participate in employee benefit plans and
insurance programs of the Company that the Company may sponsor from time
to time
and to receive customary Company benefits, if those benefits are so offered.
Nothing herein shall obligate Executive to accept such benefits if and when
they
are offered.
(d) Vacation.
(i) The
Executive shall be entitled to six weeks of vacation, with pay. No more than
1.5
times (1.5x) Executive’s authorized annual vacation allocation may be accrued,
at any given time. In the event that Executive has reached his maximum
authorized vacation allocation, accrual will not re-commence until Executive
uses some of his paid vacation credit and thereby brings the balance below
his
maximum. Accrued paid vacation credit forfeited because of an excess balance
can
not be retroactively reapplied.
(ii) Pay
will
only be provided for any unused, accrued paid vacation credit at the time
of
Executive’s separation from the business by the Company due to a reduction in
force, by Executive upon retirement, or upon his death or disability, provided
that Executive has been a regular full-time employee for three calendar months
prior to such event. Termination of employment for Cause by the Company,
or
Executive’s resignation, will result in the forfeiture of any unused paid
vacation credit.
(e) Paid
Holidays.
The
Executive shall be entitled to such paid holidays as are generally available
to
all employees.
3.6 Relocation
and Business-related Expenses.
In the
event that Executive is required to move from his primary
residence and consents to such move, then Executive shall be provided with
relocation assistance as provided below:
(a) Housing
and Temporary Lodging.
The
Company will pay the costs, for the Executive and his family, of house-hunting
trips and the cost of transporting the Executive, his spouse, furniture,
household effects, and vehicles, to the area in which the Company will be
headquartered. In addition, the Company will pay the cost of the Executive’s
travel, temporary living expenses, including housing, whether hotel or
apartment, and meals, during the period prior to the Executive’s move to the
city in which the Company will be headquartered.
(b) Reimbursement.
Executive shall be entitled to reimbursement within a reasonable time for
all
properly documented and approved expenses for travel. The Company shall
reimburse business expenses of Executive directly related to Company business,
including, but not limited to, airfare, lodging, meals, travel expenses,
medical
expenses while traveling not covered by insurance, business entertainment,
expenses associated with entertaining business persons, local expenses to
governments or governmental officials, tariffs, applicable taxes outside
of the
United States or United Kingdom, special expenses associated with travel
to
certain countries, supplemental life insurance or supplemental insurance
of any
kind or special insurance rates or charges for travel outside the Executive’s
country of residence (unless such insurance is being provided by the Company),
rental cars and insurance for rental cars, and any other expenses of travel
that
are reasonable in nature or that have been otherwise pre-approved. Executive
shall be governed by the travel and entertainment policy in effect at the
Company.
3.7 Severance
Benefit.
In the
event that Executive’s employment is terminated, other than for Cause, Executive
shall receive compensation pursuant to Section 4.8 herein.
3.8 Payroll
Procedures and Policies.
All
payments required to be made by the Company to the Executive pursuant to
this
Article Three shall be paid on a regular basis in accordance with the Company’s
normal payroll procedures and policies.
ARTICLE
FOUR
TERMINATION
OF EMPLOYMENT
4.1 Death.
The
Executive’s employment shall terminate automatically upon the Executive’s death
during the Employment Term.
4.2 Disability.
If the
Company determines in good faith that the Disability (as defined below) of
the
Executive has occurred during the Employment Term, the Company may give the
Executive notice of its intention to terminate the Executive’s employment. In
such event, the Executive’s employment hereunder shall terminate effective on
the 30th
day
after receipt of such notice by the Executive (the “Disability Effective Date”);
provided,
that,
within
the 30-day period after such receipt, the Executive shall not have returned
to
full-time performance of the Executive’s duties. For purposes of this Agreement,
“Disability” shall mean the absence of the Executive from the Executive’s duties
hereunder on a full-time basis for an aggregate of 180 days within any
given period of 270 consecutive days (in addition to any statutorily required
leave of absence and any leave of absence approved by the Company) as a result
of incapacity of the Executive, despite any reasonable accommodation required
by
law, due to bodily injury or disease or any other mental or physical illness,
which will, in the opinion of a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive’s legal
representative, be permanent and continuous during the remainder of the
Executive’s life.
4.3 Termination
by Company.
(a) Termination
for Cause.
The
Company may terminate the Executive’s employment hereunder for Cause (as defined
below). For purposes of this Agreement, “Cause” shall mean:
(i) the
willful and continued failure of the Executive to perform substantially the
Executive’s duties hereunder (other than any such failure resulting from bodily
injury or disease or any other incapacity due to mental or physical illness)
after a written demand for substantial performance is delivered to the Executive
by the Board or the Chairman of the Company, which specifically identifies
the
manner in which the Board or the Chairman of the Company believes the Executive
has not substantially performed the Executive’s duties; or
(ii) the
willful engaging by the Executive in illegal conduct or gross misconduct
that is
materially and demonstrably detrimental to the Company and/or its affiliated
companies, monetarily or otherwise.
For
purposes of this provision, no act, or failure to act, on the part of the
Executive shall be considered “willful” unless done, or omitted to be done, by
the Executive in bad faith or without reasonable belief that the Executive’s
action or omission was in the best interests of the Company. Any act, or
failure
to act, based upon authority given pursuant to a resolution duly adopted
by the
Board, upon the instructions of the Chairman or another Board Member of Company,
or based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith
and
in the best interests of the Company and its affiliated companies. The cessation
of employment of the Executive shall not be deemed to be for Cause unless
and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than two-thirds of the entire
membership of the Board then in office, excluding the Executive, at a meeting
of
the Board called and held for such purpose (after reasonable notice is provided
to the Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive is guilty of the conduct described in subparagraph
(i) or (ii) above, and specifying the particulars thereof in detail.
(iii) the
Executive’s conviction of, or plea of nolo contendere to, any felony of theft,
fraud, embezzlement or violent crime.
(b) Termination
without Cause.
All
terminations by the Company that are not for Cause, or on the occasion of
the
Executive death or disability, or that are not terminated during the 60-day
period prior to any Automatic Extension as provided in Section 2.2 or Section
4.5 shall be considered Without Cause.
4.4 Termination
by Executive.
The
Executive may terminate the Executive’s employment hereunder (x) at any
time during the Employment Term for Good Reason (as defined below) or (y)
during
the Window Period (as defined below) Without Good Reason. For purposes of
this
Agreement, the “Window Period” shall mean the 30-day period immediately
following the first anniversary of the Effective Date, and “Good Reason” shall
mean any of the following (without the Executive’s express written consent):
(a) The
assignment to the Executive of any duties inconsistent in any respect with
the
Executive’s position (including status, offices, titles and reporting
requirements), duties, functions, responsibilities or authority as contemplated
by Section 2.3 of this Agreement, or any other action by the Company that
results in a diminution in such position, duties, functions, responsibilities
or
authority, excluding for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive;
(b) Any
failure by the Company to comply with any of the provisions of Section 2.3
or
Section 2.5 of this Agreement, other than an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(c) The
Company’s requiring the Executive to be based at any office or location other
than as provided in Section 2.9 of this Agreement or the Company’s requiring the
Executive to travel on the Company’s or its affiliated companies’ business to a
substantially greater extent than during the three-year period immediately
preceding the Effective Date;
(d) Any
failure by the Company to comply with and satisfy Section 8.1 of this Agreement;
or
(e) Any
purported termination by the Company of the Executive’s employment hereunder
otherwise than as expressly permitted by this Agreement, and for purposes
of
this Agreement, no such purported termination shall be effective.
For
purposes of this Section 4.4, any good faith determination of “Good Reason” made
by the Executive shall be conclusive.
4.5 Termination
without Prejudice.
The
Company or the Executive may terminate this Agreement at any time during
the
60-day period prior to the Automatic Extension.
4.6 Notice
of Termination.
Any
termination of the Executive’s employment hereunder by the Company or by the
Executive (other than a termination pursuant to Section 4.1) shall be
communicated by a Notice of Termination (as defined below) to the other party
hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a
notice which (a) indicates the specific termination provision in this
Agreement relied upon, (b) in the case of a termination for Disability,
Cause or Good Reason, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated, and (c) specifies the Date of
Termination (as defined in Section 4.7 below); provided, however, that
notwithstanding any provision in this Agreement to the contrary, a Notice
of
Termination given in connection with a termination for Good Reason shall
be
given by the Executive within a reasonable period of time, not to exceed
120 days, following the occurrence of the event giving rise to such right
of termination. The failure by the Company or the Executive to set forth
in the
Notice of Termination any fact or circumstance which contributes to a showing
of
Disability, Cause or Good Reason shall not waive any right of the Company
or the
Executive hereunder or preclude the Company or the Executive from asserting
such
fact or circumstance in enforcing the Company’s or the Executive’s rights
hereunder.
4.7 Date
of Termination.
For
purposes of this Agreement, the “Date of Termination” shall mean the effective
date of termination of the Executive’s employment hereunder, which date shall be
(a) if the Executive’s employment is terminated by the Executive’s death,
the date of the Executive’s death, (b) if the Executive’s employment is
terminated because of the Executive’s Disability, the Disability Effective Date,
(c) if the Executive’s employment is terminated by the Company (or
applicable affiliated company) for Cause or by the Executive for Good Reason,
the date on which the Notice of Termination is given, (d) if the
Executive’s employment is terminated pursuant to Section 2.2, the date on which
the Employment Term ends pursuant to Section 2.2 due to a party’s delivery of a
Notice of Termination thereunder, and (e) if the Executive’s employment is
terminated for any other reason, the date specified in the Notice of
Termination, which date shall in no event be earlier than the date such notice
is given; provided, however, that if within 30 days after any Notice of
Termination is given, the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the Date
of
Termination shall be the date on which the dispute is finally determined,
either
by mutual written agreement of the parties or by a final judgment, order
or
decree of a court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected).
4.8 Obligations
of the Company upon Termination.
(a) Good
Reason or During the Window Period; Other Than for Cause, Death or
Disability.
If,
during the Employment Term, the Company (or applicable affiliated company)
shall
terminate the Executive’s employment hereunder other than for Cause or
Disability or the Executive shall terminate the Executive’s employment for Good
Reason during the Window Period:
(i) the
Company shall pay to the Executive (either in a lump sum or on in equal monthly
installments over a six (6)-month period after the Date of Termination, at
the
Company’s option) the sum
of
(1) that portion of Executive’s Base Salary that was not previously paid to
the Executive from the last payment date through the Date of Termination,
and
(2) an
amount equal 12 months salary at the level of the Executive’s Base Salary then
in effect, (such 12 months amount is hereinafter referred to as the “Severance
Amount”);
(ii) all
stock
options, stock appreciation rights, and restricted stock shall immediately
vest;
(iii) all
stock
options and stock appreciation rights shall be payable in Common Stock;
(iv) all
performance share units that would vest in the course of any fiscal year
shall
vest on a pro rata basis; and
to
the
extent not theretofore paid or provided, the Company shall timely pay or
provide
to the Executive any other amounts or benefits required to be paid or provided
or which the Executive is eligible to receive under any plan, program, policy,
practice or arrangement or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits hereinafter referred
to as
the “Other Benefits”).
(b) Death.
If the
Executive’s employment is terminated by reason of the Executive’s death during
the Employment Term, this Agreement shall terminate without further compensation
obligations to the Executive’s legal representatives under this Agreement, other
than for (i) payment of Accrued Obligations (which shall be paid to the
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within
90 days of the Date of Termination) and the timely payment or settlement of
any other amount pursuant the Other Benefits and (ii) treatment of all
other compensation under existing plans as provided by the terms and rules
of
those plans.
(c) Disability.
If the
Executive’s employment is terminated by reason of the Executive’s Disability
during the Employment Term, this Agreement shall terminate without further
compensation obligations to the Executive, other than for (i) payment of
Accrued Obligations (which shall be paid to the Executive in a lump sum in
cash
within 90 days of the Date of Termination) and the timely payment or
settlement of any other amount pursuant to the Other Benefits and
(ii) treatment of all other compensation under existing plans as provided
by the terms and rules of those plans.
(d) Cause;
Other than for Good Reason or During the Window Period.
If the
Executive’s employment is terminated for Cause during the Employment Term, this
Agreement shall terminate without further compensation obligations to the
Executive other than the obligation to pay to the Executive Base Salary through
the Date of Termination plus the amount of any compensation previously deferred
by the Executive, in each case to the extent theretofore unpaid. If the
Executive voluntarily terminates the Executive’s employment during the
Employment Term, excluding a termination either for (i) Good Reason or (ii)
Without Good Reason during the Window Period, this Agreement shall terminate
without further compensation obligations to the Executive, other than for
the
that portion Executive’s Base Salary that was not previously paid to the
Executive from the last payment date through the effective date of the
Executive’s voluntary termination and the timely payment or provision of the
Other Benefits, as provided in any applicable plan, and the Executive shall
have
no further obligations nor liability to the Company. In such case, any amounts
owed to the Executive shall be paid to the Executive in a lump sum in cash
within 90 days of the Date of Termination subject to applicable laws and
regulations.
4.9 Continuation
of Payments During Disputes.
The
Parties agree that in the case of:
(a) termination
which the Company contends is for Cause, but Executive claims is not for
Cause;
or
(b) termination
by Executive under Section 4.4 herein,
the
Company shall continue to pay all compensation due to Executive hereunder
until
the resolution of such dispute, but the Company shall be entitled to repayment
of all sums so paid, if it ultimately shall be determined by a court of
competent jurisdiction, in a final non-appealable decision, that the termination
was for Cause or such termination by Executive was not authorized under Section
4.4 herein, and all sums so repaid shall bear interest at the prime rate
as
published in The
Wall Street Journal
on the
date on which such court makes such determination. Any such reimbursement
of
payments by Executive shall not include any legal fees or other loss, costs,
or
expenses incurred by the Company, notwithstanding any provision of the
Indemnification Agreement, which is attached as Exhibit
A
and is
considered a part of this Agreement.
ARTICLE
FIVE
INDEMNIFICATION
5. Indemnification.
The Executive shall be indemnified and held harmless pursuant to the terms
and
conditions set forth in the Indemnity Agreement substantially in the form
attached as Exhibit
A
hereto.
ARTICLE
SIX
CONFIDENTIALITY
6. Confidentially;
Non-Competition; and Non-Solicitation.
6.1 Confidentiality.
In
consideration of employment by the Company and Executive’s receipt of the salary
and other benefits associated with Executive’s employment, and in acknowledgment
that (a) the Company is engaged in the automotive software business, (b)
maintains secret and confidential information, (c) during the course of
Executive’s employment by the Company such secret or confidential information
may become known to Executive, and (d) full protection of the Company’s business
makes it essential that no employee appropriate for his or her own use, or
disclose such secret or confidential information, Executive agrees that during
the time of Executive’s employment and for a period of two (2) years
following the termination of Executive’s employment with the Company, Executive
agrees to hold in strict confidence and shall not, directly or indirectly,
disclose or reveal to any person, or use for his own personal benefit or
for the
benefit of anyone else, any trade secrets, confidential dealings, or other
confidential or proprietary information of any kind, nature, or description
(whether or not acquired, learned, obtained, or developed by Executive alone
or
in conjunction with others) belonging to or concerning the Company or any
of its
subsidiaries, except (i) with the prior written consent of the Company duly
authorized by its Board, (ii) in the course of the proper performance of
Executive’s duties hereunder, (iii) for information (x) that becomes generally
available to the public other than as a result of unauthorized disclosure
by
Executive or his affiliates or (y) that becomes available to Executive on
a
non-confidential basis from a source other than the Company or its subsidiaries
who is not bound by a duty of confidentiality, or other contractual, legal,
or
fiduciary obligation, to the Company, or (iv) as required by applicable law
or
legal process.
6.2 Non-Competition.
During
Executive’s employment with the Company and for so long as Executive receives
any Severance Benefit or is receiving any Severance Amount provided under
this
agreement in respect of the termination of his employment, Executive shall
not
be engaged as an officer or executive of, or in any way be associated in
a
management or ownership capacity with any corporation, company, partnership
or
other enterprise or venture which conducts a business which is in direct
competition with the business of the Company; provided,
however,
that
Executive may own not more than two percent (2%) of the outstanding securities,
or equivalent equity interests, of any class of any corporation, company,
partnership, or either enterprise that is in direct competition with the
business of the Company, which securities are listed on a national securities
exchange or traded in the over-the-counter market. For purposes of this
Agreement, a lump sum payment equivalent made to Executive shall be judged
in
relation to his most recent annual base salary to determine whether Executive
is
continuing to receive a Severance Benefit or Severance Amount and shall be
measured from the date such payment is received. It is expressly agreed that
the
remedy at law for breach of this covenant is inadequate and that injunctive
relief shall be available to prevent the breach thereof.
6.3 Non-Solicitation.
Executive also agrees that he will not, directly or indirectly, during the
term
of his employment or within one (1) year after termination of his employment
for
any reason, in any manner, encourage, persuade, or induce any other employee
of
the Company to terminate his employment, or any person or entity engaged
by the
Company to represent it to terminate that relationship without the express
written approval of the Company; provided,
however,
that in
the event an employee with whom the Executive had a preexisting relationship
prior to his employment with the Company individually elects to resign as
a
consequence of the Executive’s having left the Company’s employ, this non
solicitation provision this in Section 6.3 shall not prohibit their subsequent
association. It is expressly agreed that the remedy at law for breach of
this
covenant is inadequate and that injunctive relief shall be available to prevent
the breach thereof.
ARTICLE
SEVEN
CHANGE
OF CONTROL
7. Certain
Definitions.
7.1 Change
of Control Effective Date.
The
“Change of Control Effective Date” shall mean the first date during the Change
of Control Period (as defined in Section 7.2) on which a Change of Control
occurs. Notwithstanding anything in this Agreement to the contrary, if a
Change
of Control occurs and if the Executive’s employment with the Company (or
applicable affiliated company) is terminated prior to the date on which the
Change of Control occurs, and if it is reasonably demonstrated by the Executive
that such termination of employment (i) was at the request of a third party
who has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a Change of
Control, then for all purposes of this Agreement the “Change of Control
Effective Date” shall mean the date immediately prior to the date of such
termination of employment.
7.2 Change
of Control Period.
The
“Change of Control Period” shall mean the period commencing on the date of this
Agreement and ending on the third anniversary of such date; provided, however,
that commencing on the date one year after the date hereof, and on each annual
anniversary of such date (such date and each annual anniversary thereof herein
referred to as the “Renewal Date”), the Change of Control Period shall be
automatically extended so as to terminate three years after such Renewal
Date,
unless at least 60 days prior to the Renewal Date the Company shall give
notice to the Executive that the Change of Control Period shall not be so
extended.
7.3 Change
of Control.
For
purposes of this Agreement, a “Change of Control” shall mean:
(a) the
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either (A) the then outstanding Common Shares the Company
(the “Outstanding Shares”) or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in
the
election of directors (the “Outstanding Voting Securities”); provided,
however,
that
for purposes of this Subsection 7.3(a) the following acquisitions shall not
constitute a Change of Control: (w) Company-sponsored recapitalization that
is approved by the Incumbent Board, as defined below; (x) a capital raise
initiated by the Company where the Incumbent Board remains for at least at
least
548 days after the closing date of the raise, (y) an acquisition of another
company or asset(s) initiated by the Company and where the Company’s
shareholders immediately after the transaction own at least 51% of the equity
of
the combined concern of (z) the spin-off of shares of the Company to
shareholders of Auto Data Network; or
(b) individuals
who, as of the date of this Agreement, constitute the Company’s Board (the
“Incumbent Board”) cease for any reason to constitute a majority of such Board
of Directors; provided,
however,
that
any individual becoming a director of the Company shareholders subsequent
to the
date hereof whose election, or nomination for election by the Company’s
shareholders was approved by a vote of a majority of the directors of the
Company then comprising the Incumbent Board shall be considered as though
such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as
a
result of either an actual or threatened election contest or other actual
or
threatened solicitation of proxies or consents by or on behalf of a Person
other
than the Company Board; or
(c) consummation
of a reorganization, merger, amalgamation or consolidation of the Company,
with
or without approval by the shareholders of the Company, in each case, unless,
following such reorganization, merger, amalgamation or consolidation,
(i) more than 50% of, respectively, the then outstanding shares of common
stock (or equivalent security) of the company resulting from such
reorganization, merger, amalgamation or consolidation and the combined voting
power of the then outstanding voting securities of such company entitled
to vote
generally in the election of directors is then beneficially owned, directly
or
indirectly, by all or substantially all of the individuals and entities who
were
the beneficial owners, respectively, of the Outstanding Shares and Outstanding
Voting Securities immediately prior to such reorganization, merger, amalgamation
or consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger, amalgamation or consolidation,
of the Outstanding Shares and Outstanding Voting Securities, as the case
may be,
(ii) no Person (excluding a parent of the Company that may come into being
after the date of this Agreement through any transaction deliberately undertaken
by the Company after an affirmative vote of its Incumbent Directors and the
Company shareholders), any employee benefit plan (or related trust) of the
Company or such company resulting from such reorganization, merger, amalgamation
or consolidation, and any Person beneficially owning, immediately prior to
such
reorganization, merger, amalgamation or consolidation, directly or indirectly,
20% or more of the Outstanding Shares or Outstanding Voting Securities, as
the
case may be) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock (or equivalent
security) of the company resulting from such reorganization, merger,
amalgamation or consolidation or the combined voting power of the then
outstanding voting securities of such company entitled to vote generally
in the
election of directors, and (iii) a majority of the members of the board of
directors of the company resulting from such reorganization, merger,
amalgamation or consolidation were members of the Incumbent Board at the
time of
the execution of the initial agreement providing for such reorganization,
merger, amalgamation or consolidation; or
(d) consummation
of a sale or other disposition of all or substantially all the assets of
the
Company, with or without approval by the shareholders of the Company, other
than
to a company, with respect to which following such sale or other disposition,
(i) more than 50% of, respectively, the then outstanding shares of common
stock (or equivalent security) of such company and the combined voting power
of
the then outstanding voting securities of such Company entitled to vote
generally in the election of directors is then beneficially owned, directly
or
indirectly, by all or substantially all the individuals and entities who
were
the beneficial owners, respectively, of the Outstanding Shares and Outstanding
Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to
such
sale or other disposition, of the Outstanding Shares and Outstanding Voting
Securities, as the case may be, (ii) no Person (excluding the Company, any
employee benefit plan (or related trust) of the Company or such company,
and any
Person beneficially owning, immediately prior to such sale or other disposition,
directly or indirectly, 20% or more of the Outstanding Shares or Outstanding
Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of
common
stock (or equivalent security) of such corporation or the combined voting
power
of the then outstanding voting securities of such corporation entitled to
vote
generally in the election of directors, and (C) a majority of the members
of the board of directors of such company were members of the Incumbent Board
at
the time of the execution of the initial agreement or action of the Incumbent
Board providing for such sale or other disposition of assets of the Company;
or
(e) approval
by the shareholders of the Company of a complete liquidation or dissolution
of
the Company.
(f) The
term
Change of Control shall not refer to any transaction with Commonwealth
Associates, LP or any affiliate of Commonwealth Associates, LP, unless a
majority of the Incumbent Board of Directors has affirmatively determined
that
the nature of such acquisition is hostile or otherwise against the interests
of
the Company and/or management.
ARTICLE
EIGHT
MISCELLANEOUS
8. Miscellaneous.
8.1 Benefit.
This
Agreement shall inure to the benefit of and be binding upon each of the Parties,
and their respective successors. This Agreement shall not be assignable by
any
Party without the prior written consent of the other Party. The Company shall
require any successor, whether direct or indirect, to all or substantially
all
the business and/or assets of the Company expressly to assume and agree to
perform, by instrument in a form reasonably satisfactory to Executive, this
Agreement and any other agreements between Executive and the Company or any
of
its subsidiaries, in the same manner and to the same extent as the
Company.
8.2 Governing
Law.
This
Agreement shall be governed by, and construed in accordance with the laws
of the
State of Delaware without resort to any principle of conflict of laws that
would
require application of the laws of any other jurisdiction except as may apply
to
the Executive pursuant to applicable employment or related laws of the United
Kingdom; provided,
however,
that
Delaware law shall govern with respect to the Executive’s rights under a Change
of Control under Article Seven herein.
8.3 Counterparts.
This
Agreement may be executed in counterparts and via facsimile, each of which
shall
be deemed to constitute an original, but all of which together shall constitute
one and the same Agreement. Each such counterpart shall become effective
when
one counterpart has been signed by each Party thereto.
8.4 Headings.
The
headings of the various articles and sections of this Agreement are for
convenience of reference only and shall not be deemed a part of this Agreement
or considered in construing the provisions thereof.
8.5 Severability.
Any
term or provision of this Agreement that shall be prohibited or declared
invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or declaration, without
invalidating the remaining terms and provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction, and if any
term
or provision of this Agreement is held by any court of competent jurisdiction
to
be void, voidable, invalid or unenforceable in any given circumstance or
situation, then all other terms and provisions hereof, being severable, shall
remain in full force and effect in such circumstance or situation, and such
term
or provision shall remain valid and in effect in any other circumstances
or
situation.
8.6 Construction.
Use of
the masculine pronoun herein shall be deemed to refer to the feminine and
neuter
genders and the use of singular references shall be deemed to include the
plural
and vice versa, as appropriate. No inference in favor of or against any Party
shall be drawn from the fact that such Party or such Party’s counsel has drafted
any portion of this Agreement.
8.7 Equitable
Remedies.
The
Parties hereto agree that, in the event of a breach of this Agreement by
either
Party, the other Party, if not then in breach of this Agreement, may be without
an adequate remedy at law owing to the unique nature of the contemplated
relationship. In recognition thereof, in addition to (and not in lieu of)
any
remedies at law that may be available to the non-breaching Party, the
non-breaching Party shall be entitled to obtain equitable relief, including
the
remedies of specific performance and injunction, in the event of a breach
of
this Agreement, by the Party in breach, and no attempt on the part of the
non-breaching Party to obtain such equitable relief shall be deemed to
constitute an election of remedies by the non-breaching Party that would
preclude the non-breaching Party from obtaining any remedies at law to which
it
would otherwise be entitled.
8.8 Attorney’s
Fees.
If any
Party hereto shall bring an action at law or in equity to enforce its rights
under this Agreement, the prevailing Party in such action shall be entitled
to
recover from the Party against whom enforcement is sought its costs and expenses
incurred in connection with such action (including fees, disbursements and
expenses of attorneys and costs of investigation). In
the
event that Executive institutes any legal action to enforce Executive’s legal
rights hereunder, or to recover damages for breach of this Agreement, Executive,
if Executive prevails in whole or in part, shall be entitled to recover from
the
Company reasonable attorneys’ fees and disbursements incurred by Executive with
respect to the claims or matters on which Executive has prevailed.
8.9 No
Waiver.
No
failure, delay or omission of or by any Party in exercising any right, power
or
remedy upon any breach or default of any other Party, or otherwise, shall
impair
any such rights, powers or remedies of the Party not in breach or default,
nor
shall it be construed to be a waiver of any such right, power or remedy,
or an
acquiescence in any similar breach or default; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval
of
any kind or character on the part of any Party of any provisions of this
Agreement must be in writing and be executed by the Parties and shall be
effective only to the extent specifically set forth in such
writing.
8.10 Remedies
Cumulative.
All
remedies provided in this Agreement, by law or otherwise, shall be cumulative
and not alternative.
8.11 Amendment.
This
Agreement may be amended only by a writing signed by all of the Parties
hereto.
8.12 Entire
Contract.
This
Agreement and the documents and instruments referred to herein constitute
the
entire contract between the parties to this Agreement and supersede all other
understandings, written or oral, with respect to the subject matter of this
Agreement.
8.13 Survival.
This
Agreement shall constitute a binding obligation of the Company and any successor
thereto. Notwithstanding any other provision in this Agreement, the obligations
under Articles 5 and 6 shall survive termination of this
Agreement.
8.14 Savings
Clause.
Notwithstanding any other provision of this Agreement, if the indemnification
provisions in Exhibit
A
hereto
or any portion thereof shall be invalidated on any ground by any court of
competent jurisdiction, then the Company shall nevertheless indemnify Executive
as to Expenses, judgments, fines, penalties and amounts paid in settlement
with
respect to any Proceeding to the full extent permitted by any applicable
portion
of this Agreement that shall not have been invalidated and to the fullest
extent
permitted by applicable law.
8.15 Modifications
and Waivers.
Notwithstanding any other provision of this Agreement, the indemnification
provisions in Exhibit
A
hereto
and the Change of Control provisions Article Seven herein, may be amended
from
time to time to reflect changes in Delaware law or for other
reasons.
8.16 Notices.
All
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been given (i) when delivered by hand
or
(ii) if mailed by certified or registered mail with postage prepaid, on the
third day after the date on which it is so mailed:
| (a) |
if
to Executive:
|
Xxxxxxx
Xxxxx
[______]
| (b) |
if
to the Company:
|
Aftersoft
Group, Inc.
x/x
Xxxxxxx Xxxxxx XXX
Xxx
Xxxx,
XX 00000
Attn:
Chairman, Compensation Committee
or
to
such other address as may have been furnished to Executive by the Company
or to
the Company by Executive, as the case may be.
8.17 No
Limitation.
Notwithstanding any other provision of this Agreement, for avoidance of doubt,
the parties confirm that the foregoing does not apply to or limit Executive’s
rights under Delaware law or the Company’s Corporate Documents.
[Signatures
Follow On Next Page]
IN
WITNESS WHEREOF,
the
parties have set their hands and seals hereunto on the date first above
written.
|
AFTERSOFT
GROUP, INC.
By: /s/
Xxxxxx Mamanteo
Name:
Xxxxxx Mamanteo
Title:
Chairman, Compensation Committee
|
EXECUTIVE
By: /s/
Xxxxxxx Xxxxx
Name:
Xxxxxxx
Xxxxx
|
Schedule
A
Outside
Activities/Investments
Xxxxxxx
Xxxxx
|
Company
or
Project
Name
|
Nature
of Business
|
Date
Hired or Commenced Involvement
|
Position
|
Compensation
|
Annual
Time Commitment, (time away from office)
|
Dated:
November
18, 2008
|
Initials:
|
Executive:
_____
|
Company:
______
|
Schedule
B
Return
on Invested Capital Calculation
Exhibit
A
Indemnification
Agreement
