EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
the 3rd day of July 2002, by and between MetaSolv Software, Inc., a Delaware
corporation (the "Employer"), and Xxxxxxx X. Xxxxxxxx (the "Executive").
RECITALS
A. The Employer completed the acquisition of the Service Commerce Division
of Nortel Networks on February 1, 2002 (the " Acquisition Closing Date").
B. The Executive was an employee of the Service Commerce Division of
Nortel Networks.
C. The Employer desires that the Executive now provide services for the
benefit of the Employer and its affiliates and the Executive desires such
employment with the Employer.
D. The Employer and the Executive acknowledge that the Executive will be a
member of the senior management team of the Employer and, as such, will
participate in implementing the Employer's business plan.
E. The Employer recognizes that the changing economic market can distract
its key management personnel from maintaining a long term vision for the
Employer.
F. The Employer has determined that it is essential and in the best
interest of the Employer and its stockholders to retain the services of the
Executive and to ensure his dedication and efforts in a changing global economic
environment.
G. The Employer desires to enter into this Agreement with the Executive to
provide the Executive with certain benefits in the event his employment is
terminated.
H. In the course of employment with the Employer, the Executive will have
access to certain confidential information that relates to or will relate to the
business of the Employer and its affiliates. The Employer desires that any such
information not be disclosed to other parties or otherwise used for unauthorized
purposes.
NOW, THEREFORE, in consideration of the above premises and the following
mutual covenants and conditions, the parties agree as follows:
1. Employment. The Employer shall employ the Executive as its Executive
Vice President - America's Sales, or in an equivalent executive officer level
position, and the Executive hereby accepts such employment on the following
terms and conditions. In Executive's capacity as Executive Vice President -
America's Sales, Executive shall also have responsibility for the Asia Pacific
region and Partner Sales.
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2. Duties. The Executive shall work for the Employer in a full-time
capacity. The Executive shall, during the term of this Agreement, have the
duties, responsibilities, powers, and authority customarily associated with the
positions of Executive Vice President - America's Sales, or such equivalent
executive position. The Executive shall report to, and follow the direction of,
the Chief Operating Officer and President of the Employer. The Executive shall
diligently, competently, and faithfully perform all duties, and shall devote his
entire business time, energy, attention, and skill to the performance of duties
for the Employer or its affiliates and will use his best efforts to promote the
interests of the Employer. It shall not be considered a violation of the
foregoing for the Executive to serve on corporate, industry, civic, religious or
charitable boards or committees, so long as such activities do not individually
or in the aggregate significantly interfere with the performance of the
Executive's responsibilities as an employee of the Employer in accordance with
this Agreement.
3. Executive Loyalty. The Executive shall devote all of his time,
attention, knowledge, and skill solely and exclusively to the business and
interests of the Employer, and the Employer shall be entitled to all benefits
and profits arising from or incident to any and all work, services, and advice
of the Executive. The Executive expressly agrees that during the term of this
Agreement, he shall not engage, directly or indirectly, as a partner, officer,
director, member, manager, stockholder, advisor, agent, employee, or in any
other form or capacity, in any other business similar to that of the Employer.
The foregoing notwithstanding, and subject to Paragraph 9 below, nothing herein
contained shall be deemed to prevent the Executive from investing his money in
the capital stock or other securities of any corporation whose stock or
securities are publicly-owned or are regularly traded on any public exchange,
nor shall anything herein contained be deemed to prevent the Executive from
investing his money in real estate.
4. Term of Employment. Unless sooner terminated as hereinafter provided,
this Agreement shall be entered into for a period of two (2) years, commencing
April ___, 2002 (the "Initial Term"). The term of employment shall be renewed
automatically for successive periods of one (1) year each (a "Renewal Term")
after the expiration of the Initial Term and any subsequent Renewal Term, unless
the Chief Operating Officer and President provides the Executive, or the
Executive provides the Chief Operating Officer and President with written notice
to the contrary at least six (6) months prior to the end of the Initial Term or
any Renewal Term; provided, however, that notwithstanding any such notice by the
Employer not to extend, if a Change in Control (as defined in Paragraph 7D
below) shall occur during the term hereof, the term of this Agreement shall not
expire prior to the expiration of twenty-four (24) months after the occurrence
of a Change in Control.
5. Compensation.
A. The Employer shall pay the Executive an annual base salary of
$190,650.00 (the "Base Salary"), payable in substantially equal installments in
accordance with the Employer's payroll policy from time to time in effect. The
Executive's salary shall be subject to any payroll or other deductions as may be
required to be made pursuant to law, government order, or by agreement with, or
consent of, the Executive. Changes to the Base Salary, as adjusted, may be made
following an annual salary review, the first of which shall take place in or
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around February 2003, and all subsequent reviews shall occur in or around
February of each year thereafter.
B. The Employer shall award the Executive the following options
(collectively, the "Options") to purchase shares of MetaSolv, Inc.'s common
stock:
(1) 125,000 shares of common stock on the Acquisition Closing Date
(2) 75,000 six months following the Acquisition Closing Date
(3) 50,000 on the first anniversary of the Acquisition Closing
Date
All options, other than the Options in subparagraph (1) above, shall be granted
at an exercise price equivalent to the fair market value of the common stock, as
determined by the closing sales price on the Nasdaq on the date of the grant,
which shall be the first business day of the month following the respective
dates indicated above. The Options in subparagraph (1) above shall be granted at
an exercise price equivalent to the fair market value of the common stock, as
determined by the closing sales price on the Nasdaq on the Acquisition Closing
Date. The stock options will vest and otherwise be governed by the terms and
provisions imposed by the Employer's stock option program and the stock option
agreement, which the Executive shall be required to enter into as a condition of
such grant.
C. The Executive shall have the opportunity to participate in the
Employer's Performance Bonus Plan, pursuant to the terms and conditions of such
Performance Bonus Plan. The Board of Directors of the Employer (the "Board")
shall determine, in its sole discretion, the Executive's target performance
bonus under the Performance Bonus Plan. For calendar year 2002, the Executive
shall be eligible for a semi-annual target bonus of 75% of Base Salary earned by
the Executive during the applicable bonus period if the Executive and the
Employer have achieved certain defined and documented annual goals. If the
Executive and the Employer overachieve these goals, the bonus may be as high as
93.75% of Base Salary earned by the Executive for such period. For calendar year
2003, and for each calendar year thereafter, the Executive shall be eligible for
a semi-annual target bonus, to be set by the Board as a percentage of the
Executive's then current Base Salary for each six (6) month period if the
Executive and the Employer have achieved certain defined and documented annual
goals. If the Executive and the Employer overachieve these goals, this reward
may be set as a higher percentage of Base Salary earned by the Executive for
each such six (6) month period. The Board may amend the terms and conditions of
the Performance Bonus Plan at any time in its sole discretion.
D. During the term of this Agreement, the Employer shall:
(1) include the Executive in any life insurance, disability
insurance, medical, dental or health insurance, savings, pension
and retirement plans, employee stock option and stock purchase
plans, and other benefit plans or programs (including, if
applicable, any excess benefit or supplemental executive retirement
plans) maintained by the Employer for the benefit of its
executives;
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(2) include the Executive in such perquisites as the Employer may
establish from time to time that are commensurate with his position and
at least comparable to those received by other U.S. executives of the
Employer; and
(3) provide the Executive with such amount of paid time off per
annum as is provided under the Employer's standard employment policies.
6. Expenses. The Employer shall reimburse the Executive for all reasonable
and approved business expenses, provided the Executive submits paid receipts or
other documentation acceptable to the Employer and as required by the Internal
Revenue Service to qualify as ordinary and necessary business expenses under the
Internal Revenue Code of 1986, as amended (the "Code").
7. Termination. The Executive's services shall terminate upon the first
to occur of the following events:
A. At the end of the term of this Agreement, including any Renewal
Terms, as set forth in Paragraph 4 of this Agreement.
B. Upon the Executive's date of death or the date the Executive is
given written notice that he has been determined to be disabled by the Employer.
For purposes of this Agreement, the Executive shall be deemed to be disabled if
the Executive meets the requirements for long term disability under the
Employer's long-term disability plan or program in effect on the date of the
notice; alternatively, if the Employer does not have such a long-term disability
plan or program in effect, then the Executive shall be deemed to be disabled if
the Executive, as a result of illness or incapacity, shall be unable to perform
substantially his required duties for a period of four (4) consecutive months or
for any aggregate period of six (6) months in any twelve (12) month period. A
termination of the Executive's employment by the Employer for disability shall
be communicated to the Executive by written notice and shall be effective on the
tenth (10th) business day after receipt of such notice by the Executive, unless
the Executive returns to full-time performance of his duties before such tenth
(10th) business day.
C. On the date the Employer provides the Executive with written notice
that he is being terminated for "Cause." For purposes of this Agreement, and as
determined by the Employer in its sole discretion, the Executive shall be deemed
terminated for Cause if the Employer terminates the Executive after:
(1) the Executive shall have been convicted of any felony
including, but not limited to, a felony involving fraud, theft,
misappropriation, dishonesty, or embezzlement;
(2) the Executive shall have committed intentional acts of
misconduct that materially impair the goodwill or business of the
Employer or cause material damage to its property, goodwill, or
business; or
(3) the Executive shall have refused to, or willfully failed to,
perform his material duties hereunder; provided, however, that no
termination under this
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subparagraph (3) shall be effective unless the Executive does
not cure such refusal or failure to the Employer's reasonable
satisfaction as soon as practicable after the Employer gives
the Executive written notice identifying such refusal or
failure (and, in any event, within thirty (30) days after
receipt of such written notice).
No act or failure to act on the part of the Executive shall be considered
"willful" unless it is done, or omitted to be done, by the Executive in bad
faith or without reasonable belief that his action or omission was in the best
interests of the Employer.
D. On the date the Employer terminates the Executive's employment
for any reason, other than a reason otherwise set forth in this Paragraph 7,
provided that the Employer shall give the Executive thirty (30) days written
notice prior to such date of its intention to terminate such employment.
E. On the date the Executive terminates his employment for "Good
Reason." For purpose of this Agreement, Good Reason means:
(1) a change in the Executive's status, title, position or
responsibilities (including reporting responsibilities)
inconsistent in any respect with Paragraph 2 of this Agreement; the
assignment to the Executive of any duties or responsibilities
inconsistent with Paragraph 2 of this Agreement; or the removal of
the Executive from or failure to reappoint or reelect him to any of
such positions, except in connection with the termination of his
employment for disability, Cause, as a result of his death, or by
the Executive other than for Good Reason;
(2) the Employer's requiring the Executive to be based at any
place outside a 60-mile radius of the location of the Employer's
corporate headquarters as of the date of this Agreement, except for
reasonably required travel;
(3) following a Change in Control (as defined in this
Paragraph 7E), the failure by the Employer to (a) continue in
effect (without reduction in benefit levels and/or reward
opportunities) any material compensation or employee benefit plan
in which the Executive was participating at any time within ninety
(90) days preceding the date of a Change in Control or at any time
thereafter, unless such plan is replaced with a plan that provides
substantially equivalent compensation or benefits to the Executive
or (b) provide the Executive with compensation and benefits, in the
aggregate, at least equal (in terms of benefit levels and/or reward
opportunities) to those provided for under each other employee
benefit plan, program and practice in which the Executive was
participating at any time within ninety (90) days preceding the
date of a Change in Control or at any time thereafter;
(4) any material breach by the Employer of any provision of
this Agreement; or
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(5) following a Change in Control (as defined in this
Paragraph 7E), the failure of the Employer to obtain an agreement
from any Successors and Assigns (as defined herein) to assume and
agree to perform this Agreement.
Any event or condition described in this Paragraph 7E that occurs prior to a
Change in Control, but which the Executive reasonably demonstrates (1) was at
the request of a third party, or (2) otherwise arose in connection with, or in
anticipation of, a Change in Control that actually occurs, shall constitute Good
Reason for purposes of this Agreement notwithstanding that it occurred prior to
the Change in Control.
For purposes of this Agreement, a "Change in Control" means the first to occur
of (a) the completion of the acquisition by any entity, person, or group of
beneficial ownership, as that term is defined in Rule 13d-3 under the Securities
Exchange Act of 1934, of more than 50% of the outstanding capital stock of the
Employer entitled to vote for the election of directors ("Voting Stock"); (b)
the completion by any entity, person or group (other than the Employer or an
affiliate of the Employer) of a tender offer or an exchange offer for more than
50% of the outstanding Voting Stock of the Employer; (c) the effective time of
(1) a merger or consolidation of the Employer with one or more corporations as a
result of which the holders of the outstanding Voting Stock of the Employer
immediately prior to such merger or consolidation hold less than 50% of the
Voting Stock of the surviving or resulting corporation, or (2) a transfer of
substantially all of the property or assets of the Employer other than to an
entity of which the Employer owns at least 80% of the Voting Stock; and (d) the
election to the Board, without the recommendation or approval of the incumbent
Board, of the lesser of (1) three directors, or (2) directors constituting a
majority of the number of directors of the Employer then in office.
For purposes of this Agreement, "Successors and Assigns" shall mean a
corporation or other entity acquiring all or substantially all of the stock,
assets and/or business of the Employer whether by operation of law or otherwise.
8. Compensation Upon Termination.
A. If the Executive's services are terminated pursuant to
Paragraph 7B or 7C, the Executive shall be entitled to his salary through his
final date of active employment plus any accrued but unused current paid time
off for which the Executive is eligible. The Executive shall also be entitled to
any benefits mandated under the Consolidated Omnibus Budget Reconciliation Act
of 1985 (COBRA) or required under the terms of any death, insurance, or
retirement plan, program, or agreement provided by the Employer and to which the
Executive is a party or in which the Executive is a participant, including, but
not limited to, any short-term or long-term disability plan or program, if
applicable.
B. Except as otherwise provided in Xxxxxxxxx 0X, 0X or this
Paragraph 8B, if the Executive's services are terminated pursuant to Paragraph
7A, 7D or 7E, the Executive shall be entitled to his salary through his final
date of active employment, plus any accrued but unused current paid time off for
which the Executive is eligible. The Executive also shall be entitled to a
single sum payment payable within thirty (30) days after the Executive's
termination date and equal to twelve months of his Base Salary, plus his annual
target performance bonus as
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determined pursuant to the Employer's Performance Bonus Plan multiplied by a
fraction, the numerator of which shall be the number of months during the
current fiscal year the Executive has been employed by the Employer (full credit
shall be given for partial months) and the denominator of which shall be twelve,
provided (a) he signs an agreement acceptable to the Employer that (i) waives
any rights the Executive may otherwise have against the Employer, (ii) releases
the Employer from actions, suits, claims, proceedings and demands related to the
period of employment and/or the termination of employment, and (iii) contains
certain other obligations which shall be set forth at the time of the
termination (including, but not limited to, a reaffirmation of the Executive's
obligations under Paragraph 9 of this Agreement), and (b) the Employer shall be
permitted to offset from the severance pay hereunder any salary paid to the
Executive during the thirty (30) day or one (1) year written notice period,
whichever is applicable, if the Executive performs no substantial services
during such thirty (30) day or one (1) year written notice period. In addition,
all options to purchase common stock of the Employer granted to the Executive
pursuant to the Employer's Long-Term Incentive Plan shall immediately become
Vested Shares as defined in any Stock Option Agreement(s) between the Employer
and the Executive, and the Executive shall have six (6) months following the
date of termination to exercise any unexercised options held by him as of such
date provided, however, any Options not yet granted under paragraph 5(b) shall
be forfeited. The Employer shall also pay for up to three (3) months of
outplacement services for the Executive (or, if earlier, until the Executive
obtains full-time employment), to be provided by an outplacement service
provider selected by the Employer. Additionally, the Executive shall be entitled
to any benefits mandated under COBRA or required under the terms of any death,
insurance, or retirement plan, program, or agreement provided by the Employer
and to which the Executive is a party or in which the Executive is a
participant. If the Executive elects COBRA continuation coverage for himself
and/or his dependents, the Employer shall pay for such coverage for the shorter
of six (6) months or so long as the Executive is eligible for COBRA continuation
coverage.
C. If the Executive's services are terminated pursuant to
Paragraph 7A, 7D or 7E at any time during the twenty-four (24) month period
following a Change in Control, the Executive shall be entitled to his salary
through his final date of active employment, plus any accrued but unused current
paid time off for which the Executive is eligible. In lieu of any entitlements
under Paragraph 8B, the Executive shall be entitled to a single sum payment
payable within thirty (30) days after the Executive's termination date and equal
to two (2) times his Base Salary, plus two (2) times his annual target
performance bonus as determined pursuant to the Employer's Performance Bonus
Plan, provided (a) he signs an agreement acceptable to the Employer that (i)
waives any rights the Executive may otherwise have against the Employer, (ii)
releases the Employer from actions, suits, claims, proceedings and demands
related to the period of employment and/or the termination of employment, and
(iii) contains certain other obligations which shall be set forth at the time of
the termination (including, but not limited to, a reaffirmation of the
Executive's obligations under Paragraph 9 of this Agreement), and (b) the
Employer shall be permitted to offset from the severance pay hereunder any
salary paid to the Executive during the thirty (30) day or one (1) year written
notice period, whichever is applicable, if the Executive performs no substantial
services during such thirty (30) day or one (1) year written notice period. In
addition, all options to purchase common stock of the Employer granted to the
Executive pursuant to the Employer's Long-Term Incentive Plan shall
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immediately become Vested Shares as defined in any Stock Option Agreement(s)
between the Employer and the Executive, and the Executive shall have one (1)
year following the date of termination to exercise any unexercised options held
by him as of such date provided, however, any Options not yet granted under
paragraph 5(b) shall be forfeited. The Employer shall also pay for up to six (6)
months of outplacement services for the Executive (or, if earlier, until the
Executive obtains full-time employment), to be provided by an outplacement
service provider selected by the Employer. Additionally, the Executive shall be
entitled to any benefits mandated under COBRA or required under the terms of any
death, insurance, or retirement plan, program, or agreement provided by the
Employer and to which the Executive is a party or in which the Executive is a
participant. If the Executive elects COBRA continuation coverage for himself
and/or his dependents, the Employer shall pay for such coverage for the shorter
of twelve (12) months or so long as the Executive is eligible for COBRA
continuation coverage.
D. If a "change in control" shall occur (as defined in Section
280G(b)(2)(a)(i) of the Code), and a determination is made by legislation,
regulation, ruling directed to the Executive or the Employer, or court decision,
that the aggregate amount of any payment made to the Executive hereunder, or
pursuant to any plan, program, or policy of the Employer in connection with, on
account of, or as a result of, such change in control constitutes "excess
parachute payments" under the Code that are subject to the excise tax provisions
of Section 4999 of the Code, or any successor sections thereof, the Executive
shall be entitled to receive from the Employer, in addition to any other amounts
payable hereunder, an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes, other than interest and penalties
imposed by reason of the Executive's failure to file timely a tax return or pay
taxes shown due on his return), including, without limitation, any income taxes
(and any interest and penalties imposed thereon) and any excise tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the excise tax imposed; provided, however, if the aggregate amount of
payments to the Executive, without regard to the Gross-Up Payment, does not
exceed one hundred ten percent (110%) of the maximum amount that the Executive
could receive without regard to the payments being subject to the excise tax
provisions of Section 4999 of the Code (the "Tax Limit"), then (i) no Gross-Up
Payment shall be made hereunder, and (ii) the payments shall be reduced to the
Tax Limit. All determinations required to be made under this Paragraph 8,
including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by a certified public accounting firm designated by
the Employer and reasonably acceptable to the Executive which is one of the five
largest accounting firms in the United States (the "Accounting Firm"), which
shall provide detailed supporting calculations both to the Employer and the
Executive within fifteen (15) business days of the receipt of notice from the
Executive that there has been an excess parachute payment, or such earlier time
as is requested by the Employer. All fees and expenses of the Accounting Firm
shall be borne solely by the Employer. Any Gross-Up Payment, as determined
pursuant to this Paragraph 8 shall be paid by the Employer to the Executive
within five (5) days of the receipt of the Accounting Firm's determination. 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 Employer
should have been made
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("Underpayment") consistent with the calculations required to be made hereunder.
In the event that the Employer exhausts its remedies hereunder and the 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 and any such
Underpayment shall be promptly paid by the Employer to or for the benefit of the
Executive. The Executive shall notify the Employer in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Employer of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Employer of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which he gives such notice to the Employer (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Employer notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim, the
Executive shall:
(1) give the Employer any information reasonably
requested by the Employer relating to such claim;
(2) take such action in connection with contesting such
claim as the Employer shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Employer;
(3) cooperate with the Employer in good faith in order
effectively to contest such claim; and
(4) permit the Employer to participate in any proceedings
relating to such claim;
provided, however, that the Employer 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 the 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 provision of
this Paragraph 8D, the Employer 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 the Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the 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 Employer shall
determine. Notwithstanding anything herein to the contrary, if, after the
receipt by the Executive of an amount advanced by the Employer pursuant to this
Paragraph 8D, the Executive becomes entitled to receive any refund with respect
to such claim, the Executive shall (subject to the Employer's substantial
compliance with the requirements of this Paragraph 8D) promptly pay to the
Employer the amount of such refund plus interest at an annual rate equal
to the Applicable Federal Rate provided for in Section 1274(d) of
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the Code from the date the Gross-Up Payment was paid to the Executive until the
date of the repayment to the Employer.
9. Protective Covenants. The Executive acknowledges and agrees that
solely by virtue of his employment by, and relationship with, the Employer, he
has acquired and will acquire "Confidential Information," as hereinafter
defined, as well as special knowledge of the Employer's relationships with its
customers, and that, but for his association with the Employer, the Executive
would not or will not have had access to said Confidential Information or
knowledge of said relationships. The Executive further acknowledges and agrees
(i) that the Employer has long term, near-permanent relationships with its
customers, and that those relationships were developed at great expense and
difficulty to the Employer over several years of close and continuing
involvement; (ii) that the Employer's relationships and goodwill with its
customers are and will continue to be valuable, special and unique assets of the
Employer; and (iii) that the Employer has the following protectable interests
that are critical to its competitive advantage in the industry and would be of
demonstrable value in the hands of a competitor: pricing models, formulas,
software applications and designs and other technologies and devices utilized in
the management of communications. In return for the consideration described in
this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and as a condition precedent to the
Employer entering into this Agreement, and as an inducement to the Employer to
do so, the Executive hereby represents, warrants, and covenants as follows:
A. The Executive has executed and delivered this Agreement as
his free and voluntary act, after having determined that the provisions
contained herein are of a material benefit to him, and that the duties and
obligations imposed on him hereunder are fair and reasonable and will not
prevent him from earning a comparable livelihood following the termination of
his employment with the Employer.
B. The Executive has read and fully understands the terms and
conditions set forth herein, has had time to reflect on and consider the
benefits and consequences of entering into this Agreement, and has had the
opportunity to review the terms hereof with an attorney or other representative,
if he so chooses.
C. The execution and delivery of this Agreement by the
Executive does not conflict with, or result in a breach of or constitute a
default under, any agreement or contract, whether oral or written, to which the
Executive is a party or by which the Executive may be bound. In addition, the
Executive has informed the Employer of, and provided the Employer with copies
of, any non-competition, confidentiality, work-for-hire or similar agreements to
which the Executive is subject or may be bound.
D. The Executive agrees that, during the time of his
employment with the Employer and (i) in the event the Executive's services are
terminated pursuant to Paragraphs 7A, 7D or 7E of this Agreement, for such
period as the Executive is receiving termination pay under Paragraph 8 of this
Agreement, or (ii) in the event the Executive's services are terminated pursuant
to Xxxxxxxxx 0X of this Agreement, for a period of one (1) year after such
termination, the Executive will not, except on behalf of the Employer, anywhere
in the United States of
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America or in any other place or venue where the Employer or any affiliate,
subsidiary, or division thereof now conducts or operates, or may conduct or
operate, its business prior to the date of the Executive's termination of
employment:
(1) directly or indirectly, contact, solicit or direct any
person, firm, corporation, association or other entity to contact or
solicit, any of the Employer's customers or prospective customers (as
hereinafter defined) for the purpose of providing any products and/or
services on behalf of an independent software vendor that are the same
as or similar to the products and services provided by the Employer to
its customers during the term hereof, provided that such products
and/or services of Employer constituted ten percent (10%) or more of
the annual revenues of the Employer;
(2) solicit or accept if offered to him, with or without
solicitation, on his own behalf or on behalf of any other person, the
services of any person who is a then current employee of the Employer
(or was an employee of the Employer during the year preceding such
solicitation), nor solicit any of the Employer's then current
employees (or an individual who was employed by or engaged by the
Employer during the year preceding such solicitation) to terminate
employment or an engagement with the Employer, nor agree to hire any
then current employee (or an individual who was an employee of the
Employer during the year preceding such hire) of the Employer into
employment with himself or any company, individual or other entity; or
(3) directly or indirectly, whether as an investor (excluding
investments representing less than one percent (1%) of the common
stock of a public company), lender, owner, stockholder, officer,
director, consultant, employee, agent, salesperson or in any other
capacity, whether part-time or full-time, become associated with any
business involved in the design, manufacture, marketing, or servicing
of products then constituting ten percent (10%) or more of the annual
revenues of the Employer; or
(4) act as a consultant, advisor, officer, manager, agent,
director, partner, independent contractor, owner, or employee for or
on behalf of any of the Employer's customers or prospective customers
(as hereinafter defined), with respect to or in any way with regard to
any aspect of the Employer's business and/or any other business
activities, constituting ten percent (10%) or more of the annual
revenues of the Employer, in which the Employer engages during the
term hereof.
In the event that the Executive's services are terminated pursuant to
Paragraphs 7B of this Agreement, the term of the Executive's non-competition
obligation imposed by this Section 7 shall be for a period of nine (9) months
after such termination.
E. The Executive acknowledges and agrees that the scope described
above is necessary and reasonable in order to protect the Employer in the
conduct of its business and that,
Page 11 MetaSolv Confidential Information
if the Executive becomes employed by another employer, he shall be required to
disclose the existence of this Paragraph 9 to such employer and the Executive
hereby consents to and the Employer is hereby given permission to disclose the
existence of this Paragraph 9 to such employer.
F. For purposes of this Paragraph 9, "customer" shall be defined as
any person, firm, corporation, association, or entity that purchased any type of
product and/or service from the Employer or is or was doing business with the
Employer or the Executive within the twelve (12) month period immediately
preceding termination of the Executive's employment. For purposes of this
Paragraph 9, "prospective customer" shall be defined as any person, firm,
corporation, association, or entity (i) contacted or solicited by the Executive
(whether directly or indirectly) or (ii) to the Executive's knowledge, contacted
or solicited by any other employee or representative of the Employer, or (iii)
who contacted the Executive (whether directly or indirectly) or (iv) to the
Executive's knowledge, who contacted the Employer within the twelve (12) month
period immediately preceding termination of the Executive's employment for the
purpose of having such persons, firms, corporations, associations, or entities
become a customer of the Employer.
G. The Executive agrees that both during his employment and
thereafter the Executive will not, for any reason whatsoever, use for himself or
disclose to any person not employed by the Employer any "Confidential
Information" of the Employer acquired by the Executive during his relationship
with the Employer, both prior to and during the term of this Agreement. The
Executive further agrees to use Confidential Information solely for the purpose
of performing duties with the Employer and further agrees not to use
Confidential Information for his own private use or commercial purposes or in
any way detrimental to the Employer. The Executive agrees that Confidential
Information includes but is not limited to: (1) any financial, engineering,
business, planning, operations, services, potential services, products,
potential products, technical information and/or know-how, organization charts,
formulas, business plans, production, purchasing, marketing, pricing, sales,
profit, personnel, customer, broker, supplier, or other lists or information of
the Employer; (2) any papers, data, records, processes, methods, techniques,
systems, models, samples, devices, equipment, compilations, invoices, customer
lists, or documents of the Employer; (3) any confidential information or trade
secrets of any third party provided to the Employer in confidence or subject to
other use or disclosure restrictions or limitations; and (4) any other
information, written, oral, or electronic, whether existing now or at some time
in the future, whether pertaining to current or future developments, and whether
previously accessed during the Executive's tenure with the Employer or to be
accessed during his future employment with the Employer, which pertains to the
Employer's affairs or interests or with whom or how the Employer does business.
The Employer acknowledges and agrees that Confidential Information does not
include (x) information properly in the public domain, or (y) information in the
Executive's possession prior to the date of his original employment with the
Employer, except to the extent that such information is or has become a trade
secret of the Employer or is or otherwise has become the property of the
Employer.
H. In the event that the Executive intends to communicate
information to any individual(s), entity or entities (other than the Employer),
to permit access by any individual(s), entity or entities (other than the
Employer), or to use information for the Executive's own
Page 12 MetaSolv Confidential Information
account or for the account of any individual(s), entity or entities (other than
the Employer) and such information would be Confidential Information hereunder
but for the exceptions set out at (x) and (y) of Paragraph G of this Agreement,
the Executive shall notify the Employer of such intent in writing, including a
description of such information, no less than fifteen (15) days prior to such
communication, access or use.
I. During and after the term of employment hereunder, the Executive
will not remove from the Employer's premises any documents, records, files,
notebooks, correspondence, reports, video or audio recordings, computer
printouts, computer programs, computer software, price lists, microfilm,
drawings or other similar documents containing Confidential Information,
including copies thereof, whether prepared by him or others, except as his duty
shall require, and in such cases, will promptly return such items to the
Employer. Upon termination of his employment with the Employer, all such items
including summaries or copies thereof, then in the Executive's possession, shall
be returned to the Employer immediately.
J. The Executive recognizes and agrees that all ideas, inventions,
patents, copyrights, copyright designs, trade secrets, trademarks, processes,
discoveries, enhancements, software, source code, catalogues, prints, business
applications, plans, writings, and other developments or improvements and all
other intellectual property and proprietary rights and any derivative work based
thereon (the "Inventions") made, conceived, or completed by the Executive, alone
or with others, during the term of his employment, whether or not during working
hours, that are within the scope of the Employer's business operations or that
relate to any of the Employer's work or projects (including any and all
inventions based wholly or in part upon ideas conceived during the Executive's
employment with the Employer), are the sole and exclusive property of the
Employer. The Executive further agrees that (1) he will promptly disclose all
Inventions to the Employer and hereby assigns to the Employer all present and
future rights he has or may have in those Inventions, including without
limitation those relating to patent, copyright, trademark or trade secrets; and
(2) all of the Inventions eligible under the copyright laws are "work made for
hire." At the request of the Employer, the Executive will do all things deemed
by the Employer to be reasonably necessary to perfect title to the Inventions in
the Employer and to assist in obtaining for the Employer such patents,
copyrights or other protection as may be provided under law and desired by the
Employer, including but not limited to executing and signing any and all
relevant applications, assignments or other instruments. Notwithstanding the
foregoing, the Employer hereby notifies the Executive that the provisions of
this Paragraph 9 shall not apply to any Inventions for which no equipment,
supplies, facility or trade secret information of the Employer was used and
which were developed entirely on the Executive's own time, unless (1) the
Invention relates (i) to the business of the Employer, or (ii) to actual or
demonstrably anticipated research or development of the Employer, or (2) the
Invention results from any work performed by the Executive for the Employer.
K. The Executive acknowledges and agrees that all customer lists,
supplier lists, and customer and supplier information, including, without
limitation, addresses and telephone numbers, are and shall remain the exclusive
property of the Employer, regardless of whether such information was developed,
purchased, acquired, or otherwise obtained by the Employer or the Executive. The
Executive also agrees to furnish to the Employer on demand at any time during
the term of this Agreement, and upon the termination of this Agreement, any
Page 13 MetaSolv Confidential Information
other records, notes, computer printouts, computer programs, computer software,
price lists, microfilm, or any other documents related to the Employer's
business, including originals and copies thereof. The Executive recognizes and
agrees that he has no expectation of privacy with respect to the Employer's
telecommunications, networking or information processing systems (including,
without limitation, stored computer files, email messages and voice messages)
and that the Executive's activity and any files or messages on or using any of
those systems may be monitored at any time without notice.
L. The Executive acknowledges that he may become aware of "material"
nonpublic information relating to customers whose stock is publicly traded. The
Executive acknowledges that he is prohibited by law as well as by Employer
policy from trading in the shares of such customers while in possession of such
information or directly or indirectly disclosing such information to any other
persons so that they may trade in these shares. For purposes of this Paragraph
L, "material" information may include any information, positive or negative,
which might be of significance to an investor in determining whether to
purchase, sell or hold the stock of publicly traded customers. Information may
be significant for this purpose even if it would not alone determine the
investor's decision. Examples include a potential business acquisition, internal
financial information that departs in any way from what the market would expect,
the acquisition or loss of a major contract, or an important financing
transaction.
M. The Employer does not wish to incorporate any unlicensed or
unauthorized material into its products or services or those of its affiliates.
Therefore, the Executive agrees that he will not knowingly disclose to the
Employer, use in the Employer's business, or cause the Employer to use, any
information or material which is confidential or proprietary to any third party
including, but not limited to, any former employer, competitor or client, unless
the Employer has a right to receive and use such information. The Executive will
not incorporate into his work any material which is subject to the copyrights of
any third party unless the Employer has a written agreement with such third
party or otherwise has the right to receive and use such information.
N. It is agreed that any breach or anticipated or threatened breach
of any of the Executive's covenants contained in this Paragraph 9 will result in
irreparable harm and continuing damages to the Employer and its business and
that the Employer's remedy at law for any such breach or anticipated or
threatened breach will be inadequate and, accordingly, in addition to any and
all other remedies that may be available to the Employer at law or in equity in
such event, any court of competent jurisdiction may issue a decree of specific
performance or issue a temporary and permanent injunction, without the necessity
of the Employer posting bond or furnishing other security and without proving
special damages or irreparable injury, enjoining and restricting the breach, or
threatened breach, of any such covenant, including, but not limited to, any
injunction restraining the Executive from disclosing, in whole or part, any
Confidential Information. The Executive acknowledges the truthfulness of all
factual statements in this Agreement and agrees that he is estopped from and
will not make any factual statement in any proceeding that is contrary to this
Agreement or any part thereof.
10. Notices. Any and all notices required in connection with this
Agreement shall be deemed adequately given only if in writing and (a) personally
delivered, or sent by first class, registered or certified mail, postage
prepaid, return receipt requested, or by recognized overnight
Page 14 MetaSolv Confidential Information
courier, (b) sent by facsimile, provided a hard copy is mailed on that date to
the party for whom such notices are intended, or (c) sent by other means at
least as fast and reliable as first class mail. A written notice shall be deemed
to have been given to the recipient party on the earlier of (a) the date it
shall be delivered to the address required by this Agreement; (b) the date
delivery shall have been refused at the address required by this Agreement; (c)
with respect to notices sent by mail or overnight courier, the date as of which
the Postal Service or overnight courier, as the case may be, shall have
indicated such notice to be undeliverable at the address required by this
Agreement; or (d) with respect to a facsimile, the date on which the facsimile
is sent and receipt of which is confirmed. Any and all notices referred to in
this Agreement, or which either party desires to give to the other, shall be
addressed to his residence in the case of the Executive, or to its principal
office in the case of the Employer.
11. Waiver of Breach. A waiver by the Employer of a breach of any
provision of this Agreement by the Executive shall not operate or be construed
as a waiver or estoppel of any subsequent breach by the Executive. No waiver
shall be valid unless in writing and signed by an authorized officer of the
Employer.
12. Successors; Binding Agreement.
A. This Agreement shall be binding upon and shall inure to the
benefit of the Employer and its Successors and Assigns, and the Employer shall
require any Successors and Assigns to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Employer would be
required to perform it if no such succession or assignment had taken place.
B. Neither this Agreement nor any right or interest hereunder shall
be assignable or transferable by the Executive or his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution, and
this Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
13. Entire Agreement. This Agreement and the Stock Option Agreements
referenced herein set forth the entire and final agreement and understanding of
the parties and contains all of the agreements made between the parties with
respect to the subject matter hereof. This Agreement supersedes any and all
other agreements, either oral or in writing, between the parties hereto, with
respect to the subject matter hereof. No change or modification of this
Agreement shall be valid unless in writing and signed by the Employer and the
Executive.
14. Severability. If any provision of this Agreement shall be found
invalid or unenforceable for any reason, in whole or in part, then such
provision shall be deemed modified, restricted, or reformulated to the extent
and in the manner necessary to render the same valid and enforceable, or shall
be deemed excised from this Agreement, as the case may require, and this
Agreement shall be construed and enforced to the maximum extent permitted by
law, as if such provision had been originally incorporated herein as so
modified, restricted, or reformulated or as if such provision had not been
originally incorporated herein, as the case may be. The parties further agree to
seek a lawful substitute for any provision found to be unlawful; provided, that,
if the parties are unable to agree upon a lawful substitute, the parties desire
and request that a court
Page 15 MetaSolv Confidential Information
or other authority called upon to decide the enforceability of this Agreement
modify those restrictions in this Agreement that, once modified, will result in
an agreement that is enforceable to the maximum extent permitted by the law in
existence at the time of the requested enforcement.
15. Headings. The headings in this Agreement are inserted for convenience
only and are not to be considered a construction of the provisions hereof.
16. Execution of Agreement. This Agreement may be executed in several
counterparts, each of which shall be considered an original, but which when
taken together, shall constitute one agreement.
17. Recitals. The recitals to this Agreement are incorporated herein as
an integral part hereof and shall be considered as substantive and not precatory
language.
18. Arbitration. Any controversy, claim or dispute between the parties
relating to the Executive's employment or termination of employment, whether or
not the controversy, claim or dispute arises under this Agreement (other than
any controversy or claim arising under Paragraph 9), shall be resolved by
arbitration in accordance with the National Rules for the Resolution of
Employment Disputes ("Rules") of the American Arbitration Association through a
single arbitrator selected in accordance with the Rules. The decision of the
arbitrator shall be rendered within thirty (30) days of the close of the
arbitration hearing and shall include written findings of fact and conclusions
of law reflecting the appropriate substantive law. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof in the State of Texas. In reaching his or her decision, the arbitrator
shall have no authority (a) to authorize or require the parties to engage in
discovery (provided, however, that the arbitrator may schedule the time by which
the parties must exchange copies of the exhibits that, and the names of the
witnesses whom, the parties intend to present at the hearing), (b) to interpret
or enforce Paragraph 9 of the Agreement (for which Paragraph 19 shall provide
the exclusive venue), (c) to change or modify any provision of this Agreement,
(d) to base any part of his or her decision on the common law principle of
constructive termination, or (e) to award punitive damages or any other damages
not measured by the prevailing party's actual damages and may not make any
ruling, finding or award that does not conform to this Agreement. Each party
shall bear all of his or its own legal fees, costs and expenses of arbitration
and one-half (1/2) of the costs of the arbitrator.
Page 16 MetaSolv Confidential Information
19. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas, without reference to its
conflict of law provisions. Furthermore, as to Paragraph 9, the Executive agrees
and consents to submit to personal jurisdiction in the State of Texas in any
state or federal court of competent subject matter jurisdiction situated in
Collin County, Texas. The Executive further agrees that the sole and exclusive
venue for any suit arising out of, or seeking to enforce, the terms of Paragraph
9 of this Agreement shall be in a state or federal court of competent subject
matter jurisdiction situated in Collin County, Texas. In addition, the Executive
waives any right to challenge in another court any judgment entered by such
Collin County, Texas court or to assert that any action instituted by the
Employer in any such court is in the improper venue or should be transferred to
a more convenient forum.
IN WITNESS WHEREOF, the parties have set their signatures on the date first
written above.
EMPLOYER: EXECUTIVE:
METASOLV SOFTWARE, INC., a
Delaware corporation
By:/s/ T. Xxxxxx Xxxxxx, Xx. /s/ Xxxxxxx X. Xxxxxxxx
------------------------- ------------------------------
T. Xxxxxx Xxxxxx, Xx. Xxxxxxx X. Xxxxxxxx
Its: President and Chief Operating Officer
Page 17 MetaSolv Confidential Information
