AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is
made as of the 8th day of July 2005 between Moldflow Corporation, a Delaware
corporation (referred to herein as including all of its subsidiaries, including
MPL, the "Company"), and A. Xxxxxx Xxxxxx ("Executive").
WHEREAS, the Company and the Executive are party to an Executive Employment
Agreement dated as of August 16, 2002 (the "Prior Agreement"); and
WHEREAS, the Company desires to continue to employ Executive and Executive
desires to continue to be employed by the Company on the terms contained in this
Amended and Restated Executive Employment Agreement, which shall supercede all
of the terms and conditions of the Prior Agreement; provided, however that the
parties agree that the terms and conditions of the Prior Agreement shall have
been in effect at all times from the date thereof until the date of this Amended
and Restated Executive Employment Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Employment. The term of this Agreement shall extend from the date hereof
(the "Commencement Date") until the first anniversary of the Commencement Date
and shall automatically be extended for one additional year on each anniversary
thereafter unless, not less than 30 days prior to each such date, either party
shall have given notice that it does not wish to extend this Agreement;
provided, further, that following a Change in Control the term of this Agreement
shall continue in effect for a period of not less than twelve (12) months beyond
the month in which the Change in Control occurred. The term of this Agreement
shall be subject to termination as provided in Paragraph 6 and may be referred
to herein as the "Period of Employment."
2. Position and Duties. During the Period of Employment, Executive shall serve
as the President and Chief Executive Officer and shall have such duties as may
from time to time be prescribed by the Board of Directors of the Company (the
"Board"). Executive shall devote his full working time and efforts to the
business and affairs of the Company.
3. Compensation and Related Matters.
(a) Base Salary and Incentive Compensation. Executive's annual base salary
shall be $249,600. Executive's base salary shall be redetermined annually by the
Board or a Committee thereof. The annual base salary in effect at any given time
is referred to herein as "Base Salary." The Base Salary shall be payable in a
manner consistent with the general payroll policy of the Company. In addition to
Base Salary, Executive shall be eligible to participate in such incentive
compensation plans and Employee Benefit Plans as the Board or a Committee
thereof shall determine from time to time for senior executives of the Company.
As used herein, the term "Employee Benefit Plans" includes, without limitation,
each pension and retirement plan; supplemental pension, retirement and deferred
compensation plan; savings and profit-sharing plan; stock ownership plan; stock
purchase plan; stock option plan; life insurance plan; medical insurance plan;
disability plan; and health and accident plan or arrangement established and
maintained by the Company.
(b) Vacations. Executive shall be entitled to twenty (20) paid vacation
days in each fiscal year, which shall be accrued on a pro rata basis during the
fiscal year, and Executive shall also be entitled to all paid holidays given by
the Company to its executives. Executive shall be entitled to additional
vacation based on any policy of the Company that provides for additional
vacation based on years of service or other criteria.
(c) Additional Benefits. During the Period of Employment the Company will
reimburse the Executive for the cost of a supplemental policy of long-term
disability insurance for the Executive.
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(d) Indemnification and Directors' and Officers' Insurance. During
Executive's employment and for the period of time following termination of the
Executive for any reason during which time Executive could be subject to any
claim based on his position in the Company, Executive shall receive the maximum
indemnification protection from the Company as permitted by the Company's
by-laws and shall receive directors' and officers' insurance coverage equivalent
to that which is provided to any other director or officer of the Company.
(e) Status of Australian Benefits and Accrued Entitlements. Pursuant to
the terms of the Prior Agreement, Executive was relocated by the Company from
employment with the Company's subsidiary, Moldflow Pty. Ltd. (MPL"), an
Australian company, to the Company's headquarters in the United States. As part
of such relocation, Executive became an employee of the Company on September 22,
2000 and ceased to be an employee of MPL on such date. In order to finalize
Executive's relationship with MPL, the parties agree as follows:
(i) Within thirty (30) days of the date of this Agreement, MPL will
pay to Executive a lump sum of A$63,339, less any tax payable, in
full and final settlement of Executive's accrued annual leave
while an employee at MPL. Executive and the Company agree that
Executive shall have no further rights to accrue annual leave at
MPL.
(ii) Within thirty (30) days of the date of this Agreement, MPL will
pay to Executive a lump sum of A$77,077, less any tax payable, in
full and final settlement of Executive's accrued long service
leave which accrued to Executive while an employee of MPL
pursuant to the Long Service Leave Act 1992 (Vic) (the "LSL
Act".) Executive and the Company agree that Executive shall have
no further rights to accrue long service leave at MPL.
(iii) Executive and Company agree that no further superannuation
contributions will be made for Xx. Xxxxxx by MPL and MPL's legal
requirement to make superannuation contributions on behalf of Xx.
Xxxxxx ceased on September 22, 2000 when he became an employee of
the Company.
(iv) The Company will reimburse Executive for Australian personal
income taxes that Executive may be required to pay in connection
with the disposition of the shares of Moldflow stock held by
Xxxxxx Investments, provided that such reimbursement shall not
exceed 25% of the difference between the cost basis of the shares
and $4.50 per share.
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4. Unauthorized Disclosure.
Executive acknowledges that in the course of his employment with the
Company (and, if applicable, its predecessors), he has and will become
acquainted with the Company's business affairs, information, trade secrets, and
other matters which are of a proprietary or confidential nature, including but
not limited to the Company's and its affiliates' and predecessors' operations,
business opportunities, price and cost information, finance, customer
information, product development information, business plans, various sales
techniques, manuals, letters, notebooks, procedures, reports, products,
processes, services, and other confidential information and knowledge
(collectively the "Confidential Information") concerning the Company's and its
affiliates' and predecessors' business. Executive understands and acknowledges
that such Confidential Information is confidential, and he agrees not to
disclose such Confidential Information to anyone outside the Company except to
the extent that (i) Executive deems such disclosure or use reasonably necessary
or appropriate in connection with performing his duties on behalf of the
Company; (ii) Executive is required by order of a court of competent
jurisdiction (by subpoena or similar process) to disclose or discuss any
Confidential Information, provided that in such case, Executive shall promptly
inform the Company of such event, shall cooperate with the Company in attempting
to obtain a protective order or to otherwise restrict such disclosure, and shall
only disclose Confidential Information to the minimum extent necessary to comply
with any such court order; or (iii) such Confidential Information becomes
generally known to and available for use in the Company's industry, other than
as a result of any action or inaction by Executive. Executive further agrees
that he will not during employment and/or at any time thereafter use such
Confidential Information in competing, directly or indirectly, with the Company.
At such time as Executive shall cease to be employed by the Company, he will
immediately turn over to the Company all Confidential Information, including
papers, documents, writings, electronically stored information, other property,
and all copies of them provided to or created by him during the course of his
employment with the Company. The foregoing provisions shall be binding upon
Executive's heirs, successors, and legal representatives and shall survive the
termination of this Agreement for any reason.
5. Covenant Not to Compete.
In consideration for Executive's employment by the Company under the terms
provided in this Agreement and as a means to aid in the performance and
enforcement of the terms of the provisions of Paragraph 4, Executive agrees
that:
(a) during the Period of Employment and for a period of twelve (12) months
thereafter, regardless of the reason for termination of employment, Executive
will not, directly or indirectly, as an owner, director, principal, agent,
officer, employee, partner, consultant, servant, or otherwise, carry on,
operate, manage, control, or become involved in any manner with any business,
operation, corporation, partnership, association, agency, or other person or
entity which is engaged in a business that is directly competitive with any of
the Company's products which are produced or in development by the Company as of
the date of Executive's termination of employment, anywhere in the world;
provided, however, that the foregoing shall not prohibit Executive from owning
up to one percent (1%) of the outstanding stock of a publicly held company
engaged in activities competitive with that of the Company; and
(b) during the term of Executive's employment with the Company and for a
period of twelve (12) months thereafter, regardless of the reason for
termination of employment, Executive will not directly or indirectly solicit or
induce any present or future employee of the Company or any affiliate of the
Company to accept employment with Executive or with any business, operation,
corporation, partnership, association, agency, or other person or entity with
which Executive may be associated, and Executive will not knowingly employ or
cause any business, operation, corporation, partnership, association, agency, or
other person or entity with which Executive may be associated to employ any
present or future employee of the Company without providing the Company with ten
(10) days' prior written notice of such proposed employment.
Should Executive violate any of the provisions of this Paragraph, then in
addition to all other rights and remedies available to the Company at law or in
equity, the duration of this covenant shall automatically be extended for the
period of time from which Executive began such violation until he permanently
ceases such violation.
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6. Termination. Except for termination as specified in Subparagraph 6(a), any
termination of Executive's employment by the Company or any such termination by
Executive shall be communicated by written notice of termination to the other
party hereto. Upon termination from the Company for any reason, and if so
requested, Executive agrees to deliver his resignation as a director of the
Company or any of its subsidiaries or affiliates upon the request of the
Chairman of the Board of Directors. Executive's employment hereunder may be
terminated without any breach of this Agreement under the following
circumstances:
(a) Death. Executive's employment hereunder shall terminate upon his
death.
(b) Disability. If, as a result of Executive's incapacity due to physical
or mental illness, Executive shall have been absent from his duties hereunder on
a full-time basis for one hundred eighty (180) calendar days in the aggregate in
any twelve (12) month period, the Company may terminate Executive's employment
hereunder.
(c) Termination by Company For Cause. At any time during the Period of
Employment, the Company may terminate Executive's employment hereunder for Cause
if such termination is approved by not less than a majority of the Board. For
purposes of this Agreement, "Cause" shall mean: (A) conduct by Executive
constituting a material act of willful misconduct in connection with the
performance of his duties; (B) criminal or civil conviction of Executive,
conduct by Executive that would reasonably be expected to result in material
injury to the reputation of the Company if he were retained in his position with
the Company; (C) continued, non-performance by Executive of his duties hereunder
(other than by reason of Executive's physical or mental illness, incapacity or
disability) which has continued for more than thirty (30) days following written
notice of such non-performance and the reasons for the dissatisfaction from the
Board; or (D) a breach by Executive of any of the provisions contained in
Paragraphs 4 and 5 of this Agreement.
(d) Termination Without Cause. At any time during the Period of
Employment, the Company may terminate Executive's employment hereunder without
Cause if such termination is approved by a majority of the Company's Board of
Directors. Any termination by the Company of Executive's employment under this
Agreement which does not constitute a termination for Cause under Subparagraph
6(c) or result from the death or disability of the Executive under Subparagraph
6(a) or (b) shall be deemed a termination without Cause. If the Company provides
notice to Executive under Paragraph 1 that it does not wish to extend the Period
of Employment, such action shall be deemed a termination without Cause.
(e) Termination by Executive. At any time during the Period of Employment,
Executive may terminate his employment hereunder for any reason, including but
not limited to Good Reason. If Executive provides notice to the Company under
Paragraph 1 that he does not wish to extend the Period of Employment, such
action shall be deemed a voluntary termination by Executive and one without Good
Reason. For purposes of this Agreement, "Good Reason" shall mean: (A) a
substantial diminution or other substantive adverse change, not consented to by
Executive, in the nature or scope of Executive's responsibilities, authorities,
powers, functions or duties; (B) any removal, during the Period of Employment,
from Executive of his title as set forth in paragraph 2 of this Agreement; (C)
an involuntary reduction in Executive's Base Salary except for across-the-board
reductions similarly affecting all or substantially all management employees;
(D) a breach by the Company of any of its other material obligations under this
Agreement and the failure of the Company to cure such breach within thirty (30)
days after written notice thereof by Executive; (E) the involuntary relocation
of the Company's offices at which Executive is principally employed or the
involuntary relocation of the offices of Executive's primary workgroup to a
location more than thirty (30) miles from such offices, or the requirement by
the Company that Executive be based anywhere other than the Company's offices at
such location on an extended basis, except for required travel on the Company's
business to an extent substantially consistent with Executive's business travel
obligations and except for any expatriate assignments proposed by the Company
and agreed to by Executive; or (F) the failure of the Company to obtain the
agreement from any successor to the Company to assume and agree to perform this
Agreement as required by Paragraph 10.
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(f) Date of Termination. "Date of Termination" shall mean: (A) if
Executive's employment is terminated by his death, the date of his death; (B) if
Executive's employment is terminated under Subparagraph 6(b) or under
Subparagraph 6(c), the date on which Notice of Termination is given; (C) if
Executive's employment is terminated by the Company under Subparagraph 6(d),
thirty (30) days after the date on which a Notice of Termination is given; and
(D) if Executive's employment is terminated by Executive under Subparagraph
6(e), thirty (30) days after the date on which a Notice of Termination is given,
unless the Company cures the Good Reason event prompting the Executive to issue
a Notice of Termination.
7. Compensation Upon Termination or During Disability.
(a) If Executive's employment terminates by reason of his death, the
Company shall, within ninety (90) days of death, pay in a lump sum amount to
such person as Executive shall designate in a notice filed with the Company or,
if no such person is designated, to Executive's estate, Executive's accrued and
unpaid Base Salary to the date of his death, plus his accrued and unpaid
incentive compensation (including any bonus payment if any, under Subparagraph
3(a) that is earned with respect to any financial period but which has not yet
been authorized for payment by the Board of Directors or any committee thereof
which shall be paid if and when it is so authorized by the Board of Directors).
Upon the death of Executive all stock options which would otherwise vest over
the next twelve (12) months shall immediately vest in Executive's estate or
other legal representatives and become exercisable, and Executive's estate or
other legal representatives shall have twelve (12) months from the Date of
Termination or the remaining option term, if earlier, to exercise all such stock
options granted to Executive. All other stock-based grants and awards held by
Executive shall be canceled upon the death of Executive in accordance with their
terms. For a period of one (1) year following the Date of Termination, the
Company shall pay such health and dental insurance premiums as may be necessary
to allow Executive's spouse and dependents to receive health and dental
insurance coverage, if any, substantially similar to coverage they received from
the Company or MPL immediately prior to the Date of Termination. In addition to
the foregoing, any payments to which Executive's spouse, beneficiaries, or
estate may be entitled under any employee benefit plan shall also be paid in
accordance with the terms of such plan or arrangement. Such payments, in the
aggregate, shall fully discharge the Company's obligations hereunder.
(b) During any period that Executive fails to perform his duties hereunder
as a result of incapacity due to physical or mental illness, Executive shall
continue to receive his accrued and unpaid Base Salary and accrued and unpaid
incentive compensation,(including any bonus payment if any, under Subparagraph
3(a) that is earned with respect to any financial period but which has not yet
been authorized for payment by the Board of Directors or any committee thereof
which shall be paid if and when it is so authorized by the Board of Directors)
until Executive's employment is terminated due to disability in accordance with
Subparagraph 6(b) or until Executive terminates his employment in accordance
with Subparagraph 6(e), whichever first occurs. Upon the Date of Termination all
stock options which would otherwise vest over the next twelve (12) months shall
immediately vest and become exercisable, and Executive shall have twelve (12)
months from the Date of Termination or the remaining option term, if earlier, to
exercise all such stock options granted to Executive. All other stock-based
grants and awards held by Executive shall vest or be canceled upon the Date of
Termination in accordance with their terms. For a period of one (1) year
following the Date of Termination, the Company shall pay such health and dental
insurance premiums as may be necessary to allow Executive and Executive's spouse
and dependents to receive health and dental insurance coverage substantially
similar to coverage they received from the Company prior to the Date of
Termination, if any.
(c) If Executive's employment is terminated by Executive other than for
Good Reason as provided in Subparagraph 6(e), then the Company shall, through
the Date of Termination, pay Executive his accrued and unpaid Base Salary at the
rate in effect at the time Notice of Termination is given. Thereafter, the
Company shall have no further obligations to Executive except as otherwise
expressly provided under this Agreement. In addition, all vested but unexercised
stock options held by Executive as of the Date of Termination must be exercised
by Executive within three (3) months following the Date of Termination or by the
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end of the option term, if earlier. All other stock-based grants and awards held
by Executive shall vest or be canceled upon the Date of Termination in
accordance with their terms.
(d) If Executive terminates his employment for Good Reason as provided in
Subparagraph 6(e) or if Executive's employment is terminated by the Company
without Cause as provided in Subparagraph 6(d), then the Company shall, through
the Date of Termination, pay Executive his accrued and unpaid Base Salary at the
rate in effect at the time Notice of Termination is given and his accrued and
unpaid incentive compensation (including any bonus payment if any, under
Subparagraph 3(a) that is earned with respect to any financial period but which
has not yet been authorized for payment by the Board of Directors or any
committee thereof which shall be paid if and when it is so authorized by the
Board of Directors). In addition, subject to signing by Executive of a general
release of claims in a form and manner satisfactory to the Company, the Company
shall provide the following benefits to Executive:
(i) The Company shall pay Executive an amount equal one (1) times the sum
of (A) the Executive's Base Salary in effect on the Date of Termination and
(B) the Executive's average annual bonus or other variable cash
compensation (including commissions) over the five (5) fiscal years
immediately prior to the year of termination (the "Termination Amount").
The Termination Amount shall be calculated by the Company within ten (10)
business days following the Date of Termination and communicated to the
Executive in writing and shall then be paid out in a lump sum within 30
days following the Date of Termination.
(ii) Upon the Date of Termination all stock options which would
otherwise vest over the next twelve (12) months shall immediately vest and
become exercisable, and Executive shall have twelve (12) months from the
Date of Termination or the remaining option term, if earlier, to exercise
all such stock options granted to Executive. All other stock-based grants
and awards held by Executive shall be canceled upon the Termination Date in
accordance with their terms.
(iii) In addition to any other benefits to which Executive may be
entitled in accordance with the Company's then existing severance policies,
the Company shall, for a period of one (1) year commencing on the Date of
Termination, pay such health and dental insurance premiums as may be
necessary to allow Executive and Executive's spouse and dependents to
continue to receive health and dental insurance coverage substantially
similar to coverage they received from the Company prior to the Date of
Termination.
(iv) In addition to any other benefits to which Executive may be
entitled, at any time within 12 months following the Date of Termination,
the Executive may notify the Company that he desires to be relocated to
Australia. If Executive provides such notice to the Company, then the
Company will either directly pay or reimburse the Executive for the real
estate commission actually paid upon the sale of his primary US residence,
the other closing costs associated with such sale, the reasonable travel
and moving expenses necessary to relocate the Executive, his spouse, his
family, his household goods and one vehicle to Australia. In addition, the
Company will reimburse the Executive for any required stamp duty payable in
Australia with respect to such relocation. The Executive acknowledges that
the Company, MPL and its related corporations and entities are not required
to provide the Executive with any form of employment or engagement with MPL
if Executive is relocated to Australia, unless the parties expressly agree
otherwise.
(e) If Executive's employment is terminated by the Company for Cause as
provided in Subparagraph 6(c), then the Company shall, through the Date of
Termination, pay Executive his accrued and unpaid Base Salary at the rate in
effect at the time Notice of Termination is given. Thereafter, the Company shall
have no further obligations to Executive except as otherwise expressly provided
under this Agreement. In addition, all stock options held by Executive as of the
Date of Termination shall cease to vest as of the Date of Termination and
Executive shall have 30 days from the Date of Termination or the remaining
option term, if earlier, to exercise all such vested stock options. All other
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stock-based grants and awards held by Executive shall be canceled upon the
Termination Date in accordance with their terms.
(f) Nothing contained in the foregoing Subparagraphs 7(a) through 7(e)
shall be construed so as to affect Executive's rights or the Company's
obligations relating to agreements or benefits that are unrelated to termination
of employment.
8. Change in Control Benefit. Upon a Change of Control of the Company the
following provisions shall apply in lieu of, and expressly supersede, the
provisions of Subparagraph 7(d).
(a) Change in Control.
(i) In the event that within 12 months following a Change of Control
the Executive terminates his employment for Good Reason or if the
Executive's employment is terminated by the Company without Cause, the
Company shall pay Executive an amount equal to 1.5 times the sum of (A) the
Executive's Base Salary and (B) the Executive's cash bonus or other
variable cash compensation (including commissions) that would be payable to
the Executive during the fiscal year in which the Change of Control
occurred if the Company and the Executive had met all of the targets
required for a full payment of such cash bonus or other variable cash
compensation (collectively, the "Severance Amount"). The Severance Amount
shall be calculated by the Company within ten (10) business days following
the Date of Termination and communicated to the Executive in writing and
shall then be paid out in a lump sum within 30 days of the Date of
Termination. For purposes of this Agreement, "Base Salary" shall mean the
annual Base Salary in effect on the Date of Termination. In the event
Executive terminates his employment for Good Reason as provided in
Subparagraph 6(e), he shall be entitled to the Severance Amount only if he
provides the Notice of Termination provided for in Subparagraph 6(a) within
sixty (60) days after the occurrence of the event or events which
constitute such Good Reason as specified in Subparagraph 6(e); and
(ii) Notwithstanding anything to the contrary in any applicable option
agreement or stock-based award agreement, upon a Change in Control, all
stock options and other stock-based awards granted to Executive by the
Company shall immediately accelerate and become exercisable or
non-forfeitable as of the effective date of such Change in Control.
Executive shall also be entitled to any other rights and benefits with
respect to stock-related awards, to the extent and upon the terms provided
in the employee stock option or incentive plan or any agreement or other
instrument attendant thereto pursuant to which such options or awards were
granted; and
(iii) The Company shall, for a period of one (1) year commencing on
the Date of Termination, pay such health and dental insurance premiums as
may be necessary to allow Executive, Executive's spouse and dependents to
continue to receive health and dental insurance coverage substantially
similar to the coverage they received prior to the Date of Termination.
(iv) In addition to any other benefits to which Executive may be
entitled, at any time within 12 months following the Date of Termination,
the Executive may notify the Company, or its successor, that he desires to
be relocated to Australia. If Executive provides such notice to the
Company, then the Company will either directly pay or reimburse the
Executive for the real estate commission actually paid upon the sale of his
primary US residence, the other closing costs associated with such sale,
the reasonable travel and moving expenses necessary to relocate the
Executive, his spouse, his family, his household goods and one vehicle to
Australia. In addition, the Company will reimburse the Executive for any
required stamp duty payable in Australia with respect to such relocation.
The Executive acknowledges that the Company, MPL and its related
corporations and entities are not required to provide the Executive with
any form of employment or engagement with MPL if the Executive is relocated
to Australia, unless the parties expressly agree otherwise.
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(b) Gross Up Payment.
(i) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any compensation, payment or
distribution by the Company to or for the benefit of Executive, whether
paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise (the "Severance Payments"), would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") such that the net amount retained
by Executive, after deduction of any Excise Tax on the Severance Payments,
any Federal, state, and local income tax, employment tax and Excise Tax
upon the payment provided by this subsection, and any interest and/or
penalties assessed with respect to such Excise Tax, shall be equal to the
Severance Payments.
(ii) Subject to the provisions of Subparagraph 8(b)(iii), all
determinations required to be made under this Subparagraph 8(b)(ii),
including whether a Gross-Up Payment is required and the amount of such
Gross-Up Payment, shall be made by PriceWaterhouseCoopers or any other
nationally recognized accounting firm selected by the Company (the
"Accounting Firm"), which shall provide detailed supporting calculations
both to the Company and Executive within fifteen (15) business days of the
Date of Termination, if applicable, or at such earlier time as is
reasonably requested by the Company or Executive. For purposes of
determining the amount of the Gross-Up Payment, Executive shall be deemed
to pay federal income taxes at the highest marginal rate of federal income
taxation applicable to individuals for the calendar year in which the
Gross-Up Payment is to be made, and state and local income taxes at the
highest marginal rates of individual taxation in the state and locality of
Executive's residence on the Date of Termination, net of the maximum
reduction in federal income taxes which could be obtained from deduction of
such state and local taxes. The initial Gross-Up Payment, if any, as
determined pursuant to this Subparagraph 8(b)(ii), shall be paid to
Executive within five (5) days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is
payable by Executive, the Accounting Firm shall be required to (A) conclude
that either (I) there has not occurred a change in the ownership or
effective control of the Company or a change in the ownership of a
substantial portion of the assets of the Company (as such terms are defined
in Section 280G of the Code) or (II) no portion of the Severance Payments
constitutes "parachute payments" (within the meaning of said Section 280G),
in either case on the basis of "substantial authority" (within the meaning
of Treas. Reg. Section 1.6661-3) and (B) provide an opinion to that effect
to both the Company and the Executive, including the reasons therefor and
an opinion that Executive has substantial authority not to report any
Excise Tax on his federal tax return. Any determination by the Accounting
Firm shall be binding upon the Company and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by the Company should
have been made (an "Underpayment"). In the event that the Company exhausts
its remedies pursuant to Subparagraph 8(b)(iii) and Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred, consistent with
the calculations required to be made hereunder, and any such Underpayment,
and any interest and penalties imposed on the Underpayment and required to
be paid by Executive in connection with the proceedings described in
Subparagraph 8(b)(iii), shall be promptly paid by the Company to or for the
benefit of Executive.
(iii) Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-up Payment. Such notification shall be given as
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soon as practicable but no later than ten (10) business days after
Executive knows of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid.
Executive shall not pay such claim prior to the expiration of the 30-day
period following the date on which he gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies Executive in writing
prior to the expiration of such period that it desires to contest such
claim, provided that the Company has set aside adequate reserves to cover
the Underpayment and any interest and penalties thereon that may accrue,
Executive shall:
(A) give the Company any information reasonably requested by the
Company relating to such claim,
(B) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney selected by the Company,
(C) cooperate with the Company in good faith in order to
effectively contest such claim, and
(D) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Company shall bear
and pay directly all costs and expenses (including additional interest
and penalties) incurred in connection with such contest and shall
indemnify and hold Executive harmless, on an after-tax basis, for any
Excise Tax or income tax, including interest and penalties with
respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing
provisions of this Subparagraph 8(b)(iii), the Company shall control
all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct
Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute
such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts,
as the Company shall determine; provided, however, that if the Company
directs Executive to pay such claim and xxx for a refund, the Company
shall advance the amount of such payment to Executive on an
interest-free basis and shall indemnify and hold Executive harmless,
on an after-tax basis, from any Excise Tax or income tax, including
interest or penalties with respect thereto, imposed with respect to
such advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of
Executive with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be,
any other issues raised by the Internal Revenue Service or any other
taxing authority.
(iv) If, after the receipt by Executive of an amount advanced by the
Company pursuant to Subparagraph 8(b)(iii), Executive becomes entitled to
receive any refund with respect to such claim, Executive shall (subject to
the Company's complying with the requirements of Subparagraph 8(b)(iii))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If,
after the receipt by Executive of an amount advanced by the Company
pursuant to Subparagraph 8(b)(iii), a determination is made that Executive
shall not be entitled to any refund with respect to such claim and the
Company does not notify Executive in writing of its intent to contest such
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denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
(c) Definitions. For purposes of this Paragraph 8, the following terms
shall have the following meanings:
"Change in Control" shall mean any of the following:
(a) any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Act") (other than the
Company, any of its subsidiaries, or any trustee, fiduciary or other person
or entity holding securities under any employee benefit plan or trust of
the Company or any of its subsidiaries), together with all "affiliates" and
"associates" (as such terms are defined in Rule 12b-2 under the Act) of
such person, shall become the "beneficial owner" (as such term is defined
in Rule 13d-3 under the Act), directly or indirectly, of securities of the
Company representing forty percent (40%)or more of either (A) the combined
voting power of the Company's then outstanding securities having the right
to vote in an election of the Company's Board ("Voting Securities") or (B)
the then outstanding shares of Company's common stock, par value $0.01 per
share ("Common Stock") (other than as a result of an acquisition of
securities directly from the Company); or
(b) persons who, as of the Commencement Date, constitute the
Company's Board (the "Incumbent Directors") cease for any reason,
including, without limitation, as a result of a tender offer, proxy
contest, merger or similar transaction, to constitute at least a majority
of the Board, provided that any person becoming a director of the Company
subsequent to the Commencement Date shall be considered an Incumbent
Director if such person's election was approved by or such person was
nominated for election by a vote of at least a majority of the Incumbent
Directors; but provided further, that any such person whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of members of the Board or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board, including by reason of agreement intended to avoid or
settle any such actual or threatened contest or solicitation, shall not be
considered an Incumbent Director; or
(c) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company where the stockholders of the
Company, immediately prior to the consolidation or merger, would not,
immediately after the consolidation or merger, beneficially own (as such
term is defined in Rule 13d-3 under the Act), directly or indirectly,
shares representing in the aggregate more than fifty percent (50%) of the
voting shares of the Company issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any),
(B) any sale, lease, exchange or other transfer (in one transaction or a
series of transactions contemplated or arranged by any party as a single
plan) of all or substantially all of the assets of the Company or (C) any
plan or proposal for the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a "Change of Control" shall not be deemed to
have occurred for purposes of the foregoing clause (a) solely as the result of
an acquisition of securities by the Company which, by reducing the number of
shares of Common Stock or other Voting Securities outstanding, increases the
proportionate number of shares beneficially owned by any person to forty percent
(40%) or more of either (A) the combined voting power of all of the then
outstanding Voting Securities or (B) Common Stock; provided, however, that if
any person referred to in this sentence shall thereafter become the beneficial
owner of any additional shares of Voting Securities or Common Stock (other than
pursuant to a stock split, stock dividend, or similar transaction or as a result
of an acquisition of securities directly from the Company) and immediately
thereafter beneficially owns forty percent (40%) or more of either (A) the
combined voting power of all of the then outstanding Voting Securities or (B)
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Common Stock, then a "Change of Control" shall be deemed to have occurred for
purposes of the foregoing clause (a).
9. Notice. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or sent by recognized overnight
carrier, addressed as follows:
if to the Executive:
At his home address as shown
in the Company's personnel records;
if to the Company:
Moldflow Corporation
000 Xxx Xxxxxxxxxxx Xxxx, Xxx. 000
Xxxxxxxxxx, XX 00000
Attention: Chairman of the Board of Directors
Copy to: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
10. Successor to Company. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company expressly to assume
and agree to perform this Agreement to the same extent that the Company would be
required to perform it if no succession had taken place. Failure of the Company
to obtain an assumption of this Agreement at or prior to the effectiveness of
any succession shall be a breach of this Agreement and shall constitute Good
Reason if the Executive elects to terminate employment.
11. Miscellaneous. No provisions of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is agreed to in
writing and signed by Executive and such officer of the Company as may be
specifically designated by the Board. No agreements or representations, oral or
otherwise, express or implied, unless specifically referred to herein, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. This Agreement shall expressly
supercede and replace the Prior Agreement and any other employment agreements,
arrangements and/or understandings between the Executive, the Company, MPL or
any other related corporation or entity. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the Commonwealth of Massachusetts (without regard to principles of conflicts of
laws).
12. Validity. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Arbitration; Other Disputes. In the event of any dispute or controversy
arising under or in connection with this Agreement, the parties shall first try
in good faith for a period of 30 days to settle such dispute or controversy by
mediation under the applicable rules of the American Arbitration Association
before resorting to arbitration. Following such time period, the parties will
settle any remaining dispute or controversy exclusively by arbitration in
Boston, Massachusetts in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
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any court having jurisdiction. Notwithstanding the above, the Company shall be
entitled to seek a restraining order or injunction in any court of competent
jurisdiction to prevent any continuation of any violation of Paragraph 4 or 5
hereof.
15. Litigation and Regulatory Cooperation. During and after Executive's
employment, Executive shall reasonably cooperate with the Company in the defense
or prosecution of any claims or actions now in existence or which may be brought
in the future against or on behalf of the Company which relate to events or
occurrences that transpired while Executive was employed by the Company;
provided, however, that such cooperation shall not materially and adversely
affect Executive or expose Executive to an increased probability of civil or
criminal litigation. The Company shall also provide Executive with compensation
on an hourly basis (to be derived from his Base Salary) for requested litigation
and regulatory cooperation that occurs after his termination of employment, and
reimburse Executive for all costs and expenses incurred in connection with his
performance under this Paragraph 15, including, but not limited to, reasonable
attorneys' fees and costs.
IN WITNESS WHEREOF, the parties have executed this Agreement effective on
the date and year first above written.
MOLDFLOW CORPORATION
By: /s/ Xxxxxx Xxxxxxxxx
--------------------
Name: Xxxxxx Xxxxxxxxx
Title: Chairman, Compensation Committee
EXECUTIVE
/s/ A. Xxxxxx Xxxxxx
---------------------
A. Xxxxxx Xxxxxx
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